The document discusses Google's dominance in search and online advertising markets and its philosophy of openness. It examines criticisms of Google having too much power and potentially favoring its own services, while Google argues it faces significant competition and promotes open standards. The document also explores the implications of Google's success for the technology industry and debates around issues like privacy, intellectual property and the nature of open source.

1. Is
Evil?
Joe Buzzanga
Oct. 2011

3. E sarà mia colpa, Se cosi è
(And will it be my fault, if things are so?)
Stendhal, Le Rouge et Le Noir, Chapitre 4, livre 1, apocryphal
quote attributed to Machiavelli

4. Topics
 Market Power
 Case Study in Market Power: Microsoft
 Fear, Loathing and Monsanto
 The Accusers and their Grievances
 Google On Google
 The Open Ideology
 Concluding Unscientific Postscript
4

5. A Billion Dollar Equation
http://youtu.be/hp7130Bjec4
5

6. In the Beginning….
 The web was small, and search was young
―In 1998, the year Google was incorporated, Yahoo!,
which had hundreds of millions of users, was declared
the winner of the ―search engine wars‖ – it got twice
as many visitors as its nearest competitor and had
―eviscerated the competition.‖
Source: Eric Schmidt’s testimony, Senate Antitrust Hearing, p.2 Sept. 21, 2011
http://www.bgr.in/2011/09/22/googles-eric-schmidts-testimony-at-
ftc-anti-trust-senate-committee-hearing/
6

7. But Today..Market Power
7

8. And Growing..
Source: NY Times, Oct. 13, 2011
8

9. Market Power=Marvelous Margins
Some Examples
9

10. Market Power
10

11. Quasi-Monopoly Rents and Profits
11

12. Market Power: The Case of Microsoft
12

13. Bill Gates Contribution to Humanity
Pay me for software !
1976 open letter to hobbyists in Homebrew
Computer Club Newsletter, Vol. 2, Issue 1, 1976
http://www.digibarn.com/collections/newsletters/homebrew/V2
_01/gatesletter.html
13

14. The OS that Conquered the World
“windows is a hairball of an operating system”
---scott mcnealy, CEO Sun Microsystems
14

15. U.S vs Microsoft
 U.S. vs Microsoft: May,18, 1998
 “Cut off the Air Supply” of Netscape
 Attributed to Microsoft executive Paul Maritz, during
Microsoft antitrust trial
15

16. U.S. vs Microsoft
―MICROSOFT'S POWER IN THE RELEVANT MARKET
33. Microsoft enjoys so much power in the market for Intel-compatible PC
operating systems that if it wished to exercise this power solely in terms of
price, it could charge a price for Windows substantially above that which could be
charged in a competitive market. Moreover, it could do so for a significant period
of time without losing an unacceptable amount of business to competitors. In other
words, Microsoft enjoys monopoly power in the relevant market.
34. Viewed together, three main facts indicate that Microsoft
enjoys monopoly power. First, Microsoft's share of the market
for Intel-compatible PC operating systems is extremely large
and stable. Second, Microsoft's dominant market share is
protected by a high barrier to entry. Third, and largely as a
result of that barrier, Microsoft's customers lack a
commercially viable alternative to Windows.”
Source: Judge Jackson, Findings of Fact, U.S. Vs Microsoft, http://www.justice.gov/atr/cases/f3800/msjudgex.htm
16

17. Fun With Bill
?
17

18. Awkward Transition
18

19. Fear, Loathing and Monsanto
http://www.pubpat.org/monsanto-seed-patents.htm
19

20. Consider Your Friendly Wireless Carrier
Source: NY Times, Oct. 9, 2011
:http://www.nytimes.com/2011/10/10/
20

21. Dominance Attracts Attention
21

22. The Complaints
 Google invades my privacy (consumers)
 Google violates intellectual property (media companies)
 Google search results are unfair (businesses)
 Google favors its content properties in it’s supposedly
“scientific” search results rankings (businesses)
 Google destabilizes governments
22

23. Evil Empire?
23

24. Google On Google
We’re the Good Guys
 Motto: “Don’t be evil”
 Mission: “Our mission is to organize the world’s
information and make it universally accessible and useful”
(Google 2010 10K, page 3)
 The Open Ideology
 The Cult of Numbers or Everything is an Engineering
Problem
24

25. Evil Empire?
―There is at Google a utopian spirit not unlike that found at
the Burning Man, the annual anarchic-animistic retreat in
Nevada’s Black Rock desert… Brin and Page have been regular
attendees.
…Burning Man’s ten stated principles include a devotion to
―acts of giving‖; creating social environments that are
unmediated by commercial sponsorships, transactions or
advertising‖; and a ―radically participatory ethic‖ that can
lead to ―transformative change‖
--Source: Auletta, Ken, Googled, New York, Penguin Books,
p.18 25

26. Google On Google: Products
26

27. Google’s Product
 Search
 Not software
 Not hardware
 Not content
 Not distribution
 Brilliant but vulnerable
 Google utterly reliant on an open web
27

28. Google on Google: Playing Defense
―Basically, any product that stands between the user and Google and
has the potential to distract the choice of search destination is a
threat. A great example is Firefox. Like many browsers, Firefox has a
search bar built into the upper right corner. This leads to a
substantial number of Google searches for which Google pays Firefox a
handsome fee.
They want to take any layer that lives between themselves and the
consumer and make it free (or even less than free). Because these
layaers are basically software products with no variable costs, this
is a very viable defensive strategy ‖
--Source: The Freight Train That is Android, Abovethecrowd.com, March 24, 2011,
http://abovethecrowd.com/2011/03/24/freight-train-that-is-android/
 Android, Chrome, Google Apps, etc are a Defensive strategy to
protect search
 keep the open web strong and remove any proprietary or
competing product layers between Google and users
 Funded by monopoly profits?
28

29. Google’s Customers
 It’s not you and I
Who are our customers?
Our customers are over one million of advertisers, from small businesses
targeting local customers to many of the world's largest global
enterprises, who use Google AdWords to reach millions of users
around the world.
Source: Google Investor Relations FAQ
http://investor.google.com/corporate/faq.html#money
29

30. Google Revenues
--Source: Google 2010 10K, p.29
96% of Revenues is Advertising (2010)
(can this be consistent with the lofty mission?)
30

31. Early View of Advertising
―Currently, the predominant business
model for commercial search engines is
advertising. The goals of the
advertising business model do not
always correspond to providing quality
search to users….
For this type of reason and historical
experience with other media [Bagdikian
83], we expect that advertising funded
search engines will be inherently
biased towards the advertisers and
away from the needs of the consumers.”
Source: Brin & Page: The Anatomy of a Large
Scale Hypertextual Web Search Engine, Figure 1: High Level Google Architecture
Appendix A, Advertising and Mixed Motives,
Stanford University, 1998
31

32. But today…
The Revolution will be Ad-Supported
32

33. Some Google Highlights (source Google 2010 10K)
“Google Instant (launched late last year) starts searching with every
keystroke, thereby saving users time on every search. To date, Google
Instant has now saved our users over 100 billion keystrokes and
counting. Going forward, this is just the tip of the iceberg in terms
of the kind of interactivity one should expect to see in search.
Google Translate works in 58 languages
…we've now scanned (and enable searchers to discover) more than 15
million books, which we estimate to be more than 10 percent of all
the books published since Gutenberg—and we're still going strong.
These books span hundreds of languages and over three million are
already available online as Google eBooks.
YouTube, which is only six years old, now serves over two billion
videos per day from a selection of over 500 million.
Android, our own mobile operating system for smartphones, first
shipped only two years ago, and now it's the most used in the world
with over 300,000 devices activated daily.
Chrome (Google’s web browser) was released two and a half years ago.
Today, at version 10 Chrome is over six times faster than it was then
and over 120 million people now use it. What’s more, it’s helping
push browser standards forward everywhere.” 33

34. A Syllogism on Domination
1
Search is the oxygen of the internet economy
Google Dominates Search
Google is the oxygen of the internet economy
1.―Search is the oxygen of the information economy‖
Doug Merrill, Google CIO, Aug. 2007
http://www.youtube.com/watch?v=2GtgSkmDnbQ
34

35. Why Google is Different than Microsoft
 Search actually works
 No customer lock in; no switching cost
 Search is the “oxygen” of the web--- and the web disrupts
everything
 More transformative than MSFT Windows
 Open Ideology
 Share the same engineering arrogance and hubris
35

36. U.S. vs Google
―Senator Herb Kohl, a Democrat from Wisconsin and chairman of the panel,
said Google’s mission appears to have changed over the years, as it has
acquired companies like Motorola Mobility and Zagat. Early on, Google’s
―goal was to get the user off Google’s home page and on to the Web sites it
lists as soon as possible,‖ Mr. Kohl said. But critics now say Google
favors its own businesses over others in its search results and other
businesses like advertising and mobile.‖
Source: NY Times, Sept. 21, 2011 Times Google
36

37. Google’s Response
 Significant competition from other search engines and
other ways of finding information
―Among major search engines, Microsoft‟s Bing has
continued to gain in popularity, perhaps because it comes
pre-installed as the search default on over 70 percent of
new computers sold. Microsoft‟s Bing is the exclusive
search provider for Yahoo!…
…Microsoft‟s Bing launched in June 2009 and has grown so
rapidly that some commentators have speculated that it
could overtake Google as early as 2012.‖
Source: Eric Schmidt’s Testimony, Senate Antitrust
Hearing, Sept. 22, 2011
37

38. Google’s Response
―Google‟s search results are ultimately a
scientific opinion as to what information users
will find most useful.”
Source: Schmidt testimony, Senate Antitrust Hearing, p.3
38

39. The Virtuous Google
39

40. The Virtuous Google
40

41. The Open Ideology
41

42. Google View: We’re the Good Guys
―At Google we believe that open is better than closed.‖
--Source: Schmidt Testimony, Sept 21, 2011, p.6
―We have also made strategic investments in critical product
areas, like Android, Chrome, and Chrome OS—following our
core philosophy of building open platforms with optionality,
and creating infrastructure that allows everyone on the web
to succeed‖.
--Source: Google 2010 10K, p.3
• Develop an open marketplace
• Support Standards
• Provide APIs
• Release source code
42

43. Apple vs Google
―We did not enter the search business, Jobs said. They entered the
phone business. Make no mistake they want to kill the iPhone. We
won’t let them, he says. …This don’t be evil mantra: ―It’s bullshit.‖
Source: Steve Jobs, Wired, Jan. 30, 2010
http://www.wired.com/epicenter/2010/01/googles-dont-be-evil-mantra-is-bullshit-adobe-is-
/
lazy-apples-steve-jobs
43

44. Apple vs Google
 A Googler (Tim Bray):
―The iPhone vision of the mobile Internet’s future omits
controversy, sex, and freedom, but includes strict limits on who can
know what and who can say what. It’s a sterile Disney-fied walled garden
surrounded by sharp-toothed lawyers. The people who create the apps
serve at the landlord’s pleasure and fear his anger.
I hate it.
I hate it even though the iPhone hardware and software are
great, because freedom’s not just another word for anything, nor is it
an optional ingredient.
The big thing about the Web isn’t the technology, it’s that it’s the
first-ever platform without a vendor (credit for first pointing this out
goes to Dave Winer).‖
--Source: Ongoing by Tim Bray (personal blog)
http://www.tbray.org/ongoing/When/201x/2010/03/15/Joining-Google
44

45. The Open Ideology
http://googleblog.blogspot.com/2009/12/meaning-of-open.html
45

46. Is Android Really “Open”
So, What’s Android’s Definition of Open Source?
For Google and Android, open source basically means you can download and
compile the code, and this makes it open source. However, Android
developers can download code and do what they want with it, but they can’t http://www.visionmobile.com/blog/2011/
07/the-open-governance-index-
see updates immediately like Firefox changes. They have to wait until Googlemeasuring-openness-from-android-to-
gives them the updates they need. As far as openness, transparency, and webkit/
community, they don’t exist with Android. Google still rules the roost.
Is There a Better Open Source Definition?
According to the software industry, the term open source has three core
principles. These are:
•A license that insures the code can be modified, reused and distributed
•A community development approach.
•Assurance the user has total freedom over the device and software
•Android has maintained their open source stature in totally legal ways. You
can download the code, use it, and redistribute it. However, the community
development atmosphere and total freedom to control devices that
utilize the software platform are very lacking.
http://www.techdrivein.com/2011/08/how-open-source-is-android-after-all.html
46

47. The Ideology of “Open”
While we are committed to opening the code for our developer tools, not all Google products
are open source. Our goal is to keep the Internet open, which promotes choice and
competition and keeps users and developers from getting locked in. In many cases,
most notably our search and ads products, opening up the code would
not contribute to these goals and would actually hurt users.
http://googleblog.blogspot.com/2009/12/meaning-of-open.html
47

48. The Open Ideology
Closed Open
48

49. The Open Ideology :What is Property?
La propriété, c'est le vol! (Property is Theft!)
--Proudhon
 Private property a historically specific concept tied to the
industrial revolution and its economic infrastructure
 There is an edgy and radical element in the open source
movement.
 Google’s role is ambiguous
49

50. The Cunning of History
50

51. The Network Revolution
Open
Closed
Microprocessors
Open Network Protocols
( TCP/IP)
Software
•Circuit Switched •Packet Switched
•Analog •Native Digital
•Command And Control •Flat, Anarchic
•Dumb End Points •Smart End Points
•Separate Networks •Media Unified on IP
51

52. Publishing’s Future?
Source: NY Times, Oct.16, 2011
http://www.nytimes.com/amazon
52

53. The Open Ideology: The Extreme View
―For the first time in human history, we face an economy in
which the most important goods have zero marginal cost.
Two different philosophies about the nature of human
intellectual production are in confrontation. One of them has
all the chips; the other has all the right answers. This is
part of the long struggle in the history of human beings for
the creation of freedom. This time, we win.‖
--Source: Eben Moglen, Freeing the Mind: Free Software and the Death of
Proprietary Culture, Keynote Address, University of Maine Law School,
June 29, 2003, p.3, 15
53

54. Concluding Unscientific Postscript
 Evil is a moral concept, companies are amoral
 Google is virtuous: maximizes shareholder value
 The Google wave has already crested
 Google’s Strengths are its weaknesses
 STM and other content providers are collateral damage
 Short term protection by the power structure
 Long term?
54