Editor’s note: Cord Blomquist is a technology policy analyst with the Competitive Enterprise Institute and does three vanity searches a day.
WASHINGTON, D.C. – It owns the most visited site on the net, has revenues in the billion of dollars, and recently launched a bid to extend its share of the online advertising market. I’m not talking about Google, but Microsoft. The boys in Redmond have the world’s most visited website and hauled in over $44 billion dollars last year, more than four times Google’s take.
Yet Google has been the company in the cross-hairs of regulators and legislators for its alleged monopoly on Internet advertising and user searches. That’s because by some measures Google is a Goliath. Over 55 percent of searches take place on Google’s sites, and Google’s text-ad division is number one in the market. But, while Google is a dominant player in the Web world, it is no monopoly.
That’s because by other measures Google isn’t a giant. Other big search companies are poised to take it on. Yahoo brought in over $5 billion in 2006, while AOL-Time Warner’s revenues matched that of Microsoft at $44 billion. These companies may be lagging in user count now, but they’re not down and certainly not out. Both are one killer-app or marketing blitz away from stealing Google’s thunder.
The assault on Google isn’t limited to search; it’s coming from anywhere there’s an online ad dollar to be made. Rupert Murdoch’s News Corp., which made a huge foray into the online world with its purchase of MySpace, is also nabbing ad revenue and creating a new kind of online advertising through its social network. NBC, another “old media” giant, has started placing episodes of popular shows online after they’ve aired, squeezing more advertising dollars from that content. General Electric, NBC’s parent company, took in more dough than the entire domestic ad industry last year, a whopping $163 billion. Google might be a giant, but it’s a giant among mega-giants.
Privacy advocates will claim the real danger isn’t Google’s hold on tiny text ads, but in the constant stream of information that is constantly being added to Google’s database. Information from searches, emails, calendars, and the myriad other services is collected, analyzed and stored (for a maximum of 24 month). But fears of this treasure trove of data are best mitigated by markets, not government mandates.
After all, Google’s Web 2.0 offerings are just that, offerings. No one has been coerced into using Gmail or posting pictures with Picasa. Privacy advocates could immediately protect consumers from data collection dangers by encouraging them to turn on, tune in, and log out. This is getting easier as increasingly savvy users avoid being locked into proprietary services—they don’t travel down any one-way streets. Companies have recognized this and realize that for consumers to adopt new services they need an easy way back out. Google is no different, offering easy ways to export contacts, calendar information, photos, and other content from their services.
In addition to opting out of services, spreading your Web activity across several search engines is a less costly and more effective privacy strategy than trying to place laws on something as untamable as online information. For those still convinced that the Googleplex has its all-seeing eye is focused on them, there are proxy services and onion routers to run your Web traffic through dozens of servers worldwide, making it nearly impossible to unravel the origin of data.
All of this data is not being used to create an Orwellian dystopia, but an online ad revolution. Personalized ads represent a boon for the industry and Google is leading the charge. If the legions of Ph.D.s are right, the Web’s most annoying feature, the ubiquitous banner ad, may be forever changed. Fewer in number and more useful, the ads of tomorrow will hone in on users’ real needs and wants. Utilizing the Google family of services, future searches will know if a query for “ring” should present ads for engagement rings, Lord of the Rings, or Saturn’s rings. Ads that appear alongside searches will become a resource, instead of a nuisance, thanks to more intelligently assessing users’ intentions. This will make our back-link powered, dumb search of today seem, well…dumb.
These benefits aside, is there a reason for government to step in and protect us from this super-sized data dump? Not if it’s the same PATRIOT Act-empowered federal government that has been itching to raid the very same data stores. Privacy advocates are asking the government to regulate private firms, while at the same time fighting off government mandates on data retention and the swarm of National Security Letters. (Remember when those were called subpoenas?) These consumer advocates are blind to the irony of asking the worst invader of our privacy to protect our sensitive data.
The government’s track record is abysmal even in protecting its own data. Have we forgotten the missing laptops from the Department of Veterans Affairs or the recent admission by the Commerce Department that more than 1,100 of its laptops have “vanished” since 2001? The private sector has had its failings as well, but no single event has matched the enormity of these data disasters.
Ultimately, the data hungry hard drives of Redmond, Silicon Valley, and Bangalore will be best tamed by the discipline of competition, not one-size-fits-all mandates from Congress. And competition is plentiful amongst the geek set. The one-upmanship found in processors, operating systems, and Web services will carry over to privacy. So long as it valued by consumers, and no doubt it is, the anonymity and data protection that can be found within the open standards and open networks of the Internet will be packaged, sold, and further improved upon.
But the crushing force of government regulation threatens the vibrant privacy and data protection market and would seek to replace its ever-improving performance with static minimum government standards. Regulators see these static provisions as acceptable because they don’t recognize the dynamic nature of the marketplace. Of course, the market is always changing, that’s how Google has gone from not even a blip on the radar a few years ago to a major market player. Other tech giants like Apple and Hewlett-Packard have had the same garage-to-riches story as Google, but this goes unnoticed in Washington.
Google is dominant now, but won’t be forever. Privacy policies are perhaps worrisome now, but the market is responding and companies are revising and improving with each passing day. The real solution to increasing online privacy and competition isn’t in expanding government regulation, but making sure that regulation doesn’t stop the next silicon savants from expanding beyond the garage.