Link of the Day - Create Your Own Franchise Company
A question increasingly asked is whether Google is becoming a dangerous monopoly. It is a very serious question. If we end up with one company controlling search - the gateway to information - it could be catastrophic if it abused its position. Google is already technically a monopoly with nearly 70% of US search and as much as 90% in the UK on some surveys. But it is highly unusual for two reasons. First, it lacks the typical symptom - charging excessively for its products. Nearly all of Google's products from search to document storage are free. What kind of monopoly is that?
Second, Google is unusual in that unlike Microsoft, which controls over 90% of PC operating systems and associated software, or even Cisco with over 90% of enterprise routers, there are no insurmountable barriers for new entrants. It is true that Google makes vast profits from search-linked adverts that it exploits ruthlessly - and the more it appears as the default search engine on users' toolbars, the more it risks abusing its power. But even so, you only have to switch to another bookmark. For Yahoo, at least on my computer, simply type "Y" into the URL field and up it comes. If you tried Yahoo in a blind tasting, could you tell the difference? I can't. Type in part of a distinctive sentence from today's Guardian and see for yourself. Others, such as Microsoft's revamped Live Search and Ask.com, seem less good.
So why is Google popular and is it dislodge-able? It all comes down to that frightful word "brand". But Google is unprecedented because it built up its brand without any paid advertising. We did it for them. It became a verb in record time. It became one of the world's most profitable brands in barely a decade. Think Coca-Cola versus Pepsi (leaving aside the hundreds of millions spent preserving their brands). The story is that Coke's ill-fated Classic was planned to taste more like Pepsi which used to win in blind tastings - though Coke would win if samplers knew what drinks they were tasting. There is a fatalism shared by the likes of Wall Street's Henry Blodget that it is inevitable that internet companies gain market shares of over 90% because they are "natural monopolies". Piffle. New search companies don't have to spend hundreds of millions on marketing and branding as they would for a soft drink or an operating system.
Google is more vulnerable than people think. It is brilliant at displaying the answers most linked to - but not if what you want is buried deep in the search pile. If a nimble startup delivers a more intelligent engine, people will soon change, as they did when they ditched AltaVista for Google a decade ago. Yahoo, Microsoft and Google have all been upstaged in video and networking sites by brand new startups. Why not search as well? Google could also be dented by paid-for ads or if it started abusing its monopoly enough to provoke coordinated opposition on sites such as Facebook. The company's "Don't be Evil" motto is part of its brand despite its failure to stand up to Chinese censorship. If it had, other companies might have followed its lead and eaten into Chinese obduracy.
Google is still a one-product company with search-related ads generating nearly all of its profits. This could change if a better engine emerges or if it becomes the latest victim to Lord Acton's dictum: "All power tends to corrupt." If that happened I could retain all the Google products I treasure (maps, documents, Gmail etc) and spend a few seconds changing my default search engine. Is there a solution? Sooner or later, Google's founders will hand over their fortunes to a foundation. Americans do that. Perhaps, since its leaders still have voting control, they should do it now. It could carry on as a stock market company governed by an independent trust, mandated to ensure that "Don't be Evil" is never abused. Now where did I get that idea from?
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