I was at the Google Media Holiday Party tonight, an annual bash the company gives to show the press that the folks there aren't as hostile to our profession as it seems.
I still think that Google is one of the most misunderstood companies out there. Being contrarians, nobody in the press likes to write yet another positive article about the company that's become a behemoth, an advertising monopoly, the primary invader of everyone's privacy, the abuser of copyrights, the scattershot company that goes so far afield of its core business it wants to build a ladder to the moon and take on the cell phone industry. Google bashing articles are in. So the company throws a party.
Sergey and Larry were absent this year, but senior folks such as Eric Schmidt, Marissa Meyer (who seems to be in charge of everything that falls into the category of "search" and must have no social life,) economist Hal Varian, open source maven Chris DiBona, Google.org director Dr. Larry Brilliant (isn't that a great name?) and others that I didn't get a chance to talk to were there.
I joined a small group talking with Eric Schmidt about things like Android, Google's attempt to open up the cellular industry. He wasn't saying much, of course. So I asked him if Google wanted to become a communications company, given Android, rumors of a Google-branded cell phone and its decision to bid on the 700 MhHz wireless spectrum.
Eric's non-answer was to say, "We already are a communications company." It's true. Google already has its own private internet, and allows Google users to speed up their internet transmissions by tapping into it.
So look at the potential. A cell phone, a piece of the wireless spectrum, its own huge network of fiber and server farms, and you have a telecommunications company.
Since Google is bidding on the wireless spectrum it is strictly forbidden by the FCC from talking about what it wants to do with it. So Schmidt had to dodge direct questions.
But I've been thinking about the idea of Google as a catalyst for industries lately. Why does Google get into so many strange businesses? I think the answer is simple. Others aren't doing it, at least not properly. Somebody has to.
Google hates monopolies (except online advertising monopolies.) Monopolists charge too much and stifle innovation. The internet presents so many ways of breaking monopolies and lowering prices, but governments are pretty good at listening to monopoly lobbyists. So Google tries to act as a catalyst for breaking monopolies and unleashing the potential of the internet.
Of course, when the internet is unleashed, Google benefits. There's no other company with such a 1:1 relationship between the number of people online and its own revenues. Just get people there and Google will make money from them, with one ad or another. As DiBona said in a Guardian interview, "as the internet gets bigger, so goes Google."
I asked Schmidt if Google was just trying to be a catalyst to steer industries in the right direction. Schmidt just schmiled.
Everywhere there's an old monopoly failing to take advantage of the internet to increase services and cut costs, there's an opportunity. The cellular industry has been a closed, monopolistic system, locking people into two year contracts just in order to upgrade their hand set. It keeps prices high and service quality low.
So Google comes along and creates an open handset that allows apps developers to innovate, and is unlocked so it can run on any cell network. The cellular carriers will resist, but just suppose the Google phone starts catching on. Google has a phone into which it can shove its apps without having to deal directly with the cellular carriers.
If the Google phone itself doesn't become a big hit, it just might start breaking apart the closed industry. Other carriers start accepting unlocked phones, stop subsidizing the price of hand sets with higher access fees, and people start getting a choice of which carrier to use. It gets easier to use the cell phone to go online, and cheaper to boot. The Google phone fades away, but Google still wins.
Google bids on the spectrum and changes the rules: Its cell network will take any phone that manufacturers want to put on it, and Google subsidizes the whole system with advertising (which is Google's real business.)
Or the other telcos realize they have to drop their prices and find a new business model in order to compete with Google, making it easier and cheaper to use cell phones as portable online devices. Google's cell business doesn't take off, but it still wins. And it sells its spectrum to someone else.
How about municipal wi-fi? One muni wi-fi consultant, Craig Settles at Successful.com, told me recently that he thought Google was just dabbling in muni wi-fi, but would neither put up nor shut up. Google offered to install and run a free wi-fi system San Francisco, but it never came to be.
But suddenly muni wi-fi systems started springing up across the country.
Settles thinks Google actually did a lot of harm by getting municipalities to think that they should all get it for free, but I don't know. It at least got them to thinking about how to offer the service.
So Google doesn't become a wi-fi supplier. It was a catalyst, and the more free or low-cost wi-fi we have across the country, the more people get online. Google comes out ahead.
Why does Google do apps and email? It does have advertising on email, but apps are a tougher cookie when it comes to mixing advertising in the batter. Well, first of all, Google wants to kill off Microsoft -- again, a monopolistic company that charges too much, in Google's opinion.
If I outfit my new laptop (which I was forced to accept loaded with Vista) with all the usual Microsoft apps, the software will cost more than the hardware. Does that make sense?
So Google starts offering free apps online. Would Microsoft have ever started moving in that direction without Google as the catalyst? Duh. So suppose Microsoft ends up winning the online apps war after all. The software is now cheaper, and runs online rather than in the home machine. Without an operating system monopoly that all apps must conform to, there's more competition in applications. More people go online and spend time there. Google wins.
Look at Dibona's group. Among other things, he runs the summer of code event, bringing together students and mentors to work on open source projects. But it's really about getting people to use Google APIs to create apps for Google software platforms. Google socks it to Microsoft and boosts its own platforms. And the idea of opening up online platforms to outside apps developers catches on. Look at Facebook.
How about alternative energy? That one's really far afield. Dr. Brilliant told me it's good for business because Google wants to lower energy cost and consumption. So it pays solar thermal energy companies to set up systems for Google, and puts money into the industry through Google.org.
This doesn't really benefit Google's business (hence the .org involvement,) but its something Larry (Page, not Brilliant) wants to see more of. A pet project. With funding and purchases, Page hopes to give an extra boost to the alternative energy business.
Over and over again, these peripheral businesses show their benefit not by being direct moneymakers for Google, but by busting monopolies and getting more people online (or serving other pet projects from executives.)
Who says Google's scattershot strategy is dumb? It doesn't have to take over these industries, it just has to make the investments to move existing, old-fashioned corporations in a direction that will benefit Google.
Who better to do it? As Dr. Brilliant told me this evening when talking about investing in alternative energy, "We've got the money."