Is Google’s ‘free services’ strategy a win, generally, for all of us?

Photo by Mykl Roventine from flickr.com

Photo by Mykl Roventine from flickr.com

I think Nic Carr has done an excellent job with his high level description of what Google is about. Its actually quite simple.

Google collects all the data it can about everything/anything … and uses that data to offer more and more targeted (and hence more successful) advertising.

Its the ultimate ‘complimentary’ service, where advertising is to data what mustard is to hot dogs. Give your hot dogs away for free, and you’ll sell heaps of mustard. Google gives away services for free, and uses the data collected from those services to sell more advertising.

In a way it is scary, because in a digitised world, everything is data. So Google sells more mustard for almost everything that happens on the Internet. Notice also, however, how Google is trying to turn as much as it can of the ‘real’ world into Internet ‘data’. Google maps (they recently launched their own satellite), street view, books, and now microfiches. Here’s a prediction: watch as Google attempts to bring in more and more ‘non-Internet’ data into the Internet.

In an other way, it is also scary because it is extremely difficult to compete with free. Google gets more profit when it gives away their services for free (because they collect more data to help them sell advertising better). 99.999% of other web sites cant make money from free. Unless, ofcourse, you put up Google ads on your website. This is scary because the only way you can compete with Google’s “free” is for you to share your profits with Google. The US Justice Department is considering an anti-trust case against Google for these kinds of reasons. This is serious stuff, I hope they can make headway.

In an other way yet again, it is scary, because if you fall foul with Google and they decide to pull the plug on your Adsense earnings (as google did with ambisonia), then you are left high and dry. Attempts to engage with the Google machine to contest their actions is met with intimidating silence. Why would they bother with one (or probably thousands of) tiny little sites?

What Nic Carr doesn’t address is the impact of Google’s “we make money from analysing your data so all our services are free” on other web sites. Is Google’s ‘free’ strategy a win, generally, for all of us? … or is it a loss? Do we get more from Google’s free services than we would have gotten from all the services that cant survive because they cant compete with free?

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2 Responses to Is Google’s ‘free services’ strategy a win, generally, for all of us?

  1. Google’s business model has been very well market tested:

    Radio and Television for “Free” supported by advertising in the U.S. grew up during the 20’s, 30, 40, and 50’s. And keeps on growing.

    Now that broadcasting on the Internet is becoming more practical, the combination of “broadcasting creative content” financed by advertising gets a new lease on life.

    But wait!……

    Have you noticed that broadcasting on the airwaves has been “going digital”? And that more and more “broadcasting” is being held captive by a coaxial or fiber conductor which can have its content flow intercepted and analyzed without knowledge of the recipients of the “freely broadcast” services?
    That is scary, too!

    Especially if it is NOT in the interest of the Powers That Be to allow Broadcasting For Free over the airwaves to continue to exist.

  2. thanks Steve,

    An other related point is that apparently Google is going to start airing advertising on (from memory) cable television. This is extremely interesting because this time it is Google moving offline … but the question that raises is what data are they leveraging for targeting the online advertising? … and where are they getting that data from?

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