Entrepreneur Watch

Google politics?

Eric Schmidt is telling Republican politicians that they ought to pay more attention to the Internet if they want to get elected. Reuters has a report.

That's good, but I have a request for Google. How about creating a special search category for Politics/candidates/ballot initiatives, with local searches? The idea would be to look for specific sites talking about candidates and ballots. Type in your location and get everything related to local elections.

This would encourage politicians and advocates to use the internet more robustly. The best thing about it is that it could start providing an alternative to inundating everybody with TV ads. Less wealthy candidates could get their information out there without relying on PACs. Any political site or blog could get attention. You could easily find recommendations from groups you trust, rather than waiting for their flyers in the mail.

The impact could be huge. Congress seems incapable of passing any real campaign finance reform measures. But if we had a good, informative place to get real info on local elections, it could reform the political scene all on its own.

It won't eliminate TV ads, of course, but the more such a service is used, the less effective rich advertisers become.

Come on, Google. It's one of the best ways to fight a predominant evil rampant today.

Is google responsible for videos posted on its sites?

Nate Anderson at ArsTechnica has a good post on the question of Google's responsibility over video postings.

It's pegged to the strange lawsuit from Italian authorities that wants to hold Google responsible for a video of some Italian students harrassing an autistic student. The Italians seem to think that posting such a video is a bad thing, although the video started an investigation into the act and a debate over how to deal with such activities. That's rather like saying, "Thanks for the info, we'll look into it, and by the way, we're going to arrest you for letting the world see the evidence."

Should newspapers and TV shows be prohibited from reporting violence because violence is bad?

The main point is that, in order to prevent "bad" stuff from being posted, someone has to decide what is "bad."  Censorship happens, but it happens differently in every country. Each nation, including the U.S., is trying to make the Internet conform to its own laws and standards.

Is that reasonable? Nobody owns the Internet, and the only way to impose local standards on a network without borders is to emulate the Great Firewall of China, an onerous attack on information by a dictatorship so repressive that it can only stay in power by keeping its people ignorant of its own actions.

But I don't see any near-future scenario in which the Internet gets treated as an entity unto itself, unbound by local laws. Not even if some international organization were formed to decide appropriate ways to regulate it. From the beginning, the Internet has been, by definition, unregulated.

The second question is if it's even possible to pro-actively enforce all countries' laws. It would require screening everything  before it's posted. That's why in the U.S., DCMA gave such sites immunity from prosecution as long as they remove illegal postings once informed of them.

But DCMA is not universal, and even in the U.S. it is being challenged in court by copyright holders.

A fundamental concept of Web 2.0 is to move power from the hands of the corporate elite to the masses. Corporations, such as media networks, can be regulated. But if we try to regulate individuals' postings by regulating the sites that host them, we destroy that shift. It puts power and responsibility back in the hands of corporations, which will be forced to censor everything -- as all the search engines are forced to do in China.

The Internet represents an enormous advance in the concept of freedom of speech and freedom of information. As always, there are downsides to such freedom.

But never in history have the negative aspects of greater freedom of speech outweighed the positive ones. Never.

If Google wants to avoid evil, it needs to fight against regulating the Internet whenever possible. It's a heady responsibility.

Google leads, Microsoft follows

So Microsoft is getting into municipal wi-fi services. There have been some strange postings on the internet about this, expressing the opinion that this is not just a matter of Microsoft following Google. They're wrong. That's exactly what Microsoft is doing.

Business Week Portland reporter Olga Kharif says in a posting:

"The move by Microsoft ... is more than just a me-too gesture following Google's (GOOG) decision to build out ... a Wi-Fi network in San Francisco. "

But there is no evidence in the article that I can see to support this argument. Kharif goes on to say people in the municipal wi-fi market can capture more eyeballs to home page and search products.  If so, then Google's wi-fi efforts, especially if it decides to go nationwide, will hurt Microsoft. So Microsoft decided it had better get into the business as well by offering wi-fi services that will  try to circumvent this. Isn't that the definition of following Google's lead?

Sorry, but I think Kharif's statement that this is not just a "me-too" move was either inspired by the fact that she bought Microsoft's spin on this, or just made the statement to sound like she has a different angle on the story.

This is Microsoft's classic strategy. It did not get into applications until after Lotus Development and Word Perfect led the way. It got into browsers after Netscape led the way. It didn't take search seriously until Google showed the potential. It came out with Zune after Apple Computer showed how it's done.

The difference, of course, is that Microsoft used its operating system as leverage to give a boost to its new offerings, while its competitors fumbled in their panic at Microsoft's direct attacks.

Microsoft's OS lead is not giving it the same advantage these days. Kharif points out in her article that Microsoft is falling behind Google. Despite the fact that it puts MSN as the default home page when you use Windows/Internet Explorer, MSN and MSN Search are losing ground to Google. People are not as easily led to the default settings anymore.

Plus, Google doesn't seem to be stumbling much.

In fact, Google seems to be more prone to buying leading companies these days instead of trying to re-invent everything the way Microsoft does. Does anyone think Zune really has much of a chance?

Sorry, Mr. Ballmer, but the old strategy doesn't seem to work any more. What you ought to do is start following Google's latest strategy. Buy, don't invent.

As for linking up with wi-fi, it looks like a weak defensive move to me. Google did it first.

More on Google YouTube

The anonymous person who alleged some evil deals as part of Google's acquisition of YouTube, which was posted on Mark Cuban's blog, may take heart that one of his claims has been confirmed. But it's the most innocuous of his claims.

From an AP story:

    Without elaborating in a statement late Monday, Google said it is withholding 12.5 percent of the     stock owed to YouTube for one year "to secure certain indemnification obligations."

This is one of the claims Mr. (or Ms.) Anonymous posted:

> It didn't take a team of Harvard trained investment bankers to come up
> with the obvious solution and that is to set aside a portion of the
> buyout offer to deal with copyright issues. It's not uncommon in
> transactions to have holdbacks to deal with liabilities and Youtube
> knew they had a big one. So the parties (including venture capital
> firm Sequoia Capital) agreed to earmark a portion of the purchase
> price to pay for settlements and/or hire attorneys to fight claims.
> Nearly 500 million of the 1.65 billion purchase price is not being
> disbursed to shareholders but instead held in escrow.

So file this claim under info he got from talking to people involved in the deal. But as he says, this is not unusual. The worst claims, including the idea that Google told the media companies to sue competitors, still sounds like pure speculation to me, as I said before.

It's a shame Google can't comment on this. There are too many claims of evils from Google based on inaccurate information.

A more interesting post from Cuban  points out that YouTube essentially claims ownership of the videos posted (an opinion he also discussed here). That will screw up any protection from safe harbor rules protecting sites that merely act as a conduit for other people's postings. If YouTube/Google owns the offending videos, they can be sued.

Google Print ads? Not likely.

So Google is starting up a real test of putting ads into print newspapers. A lot of commentary seems to be fairly positive on the prospects. I think it's likely that this system will fail to meet expectations.

The best overview I've found about the project is the article in the New York Times. Google will take bids from its huge stable of small advertisers to give them an entree into newspapers, a market they cannot generally reach. They can bid on last-minute openings that the papers were not able to sell.

Great, but as the Times points out, a paper like the Seattle Times has "tens of thousands of advertisers we deal with face to face." Google is adding a pool of 100 advertisers for this test. Newspapers already tap their advertisers for last-minute, dicsounted ads to fill these spaces. How much will Google really be able to add?

But more importantly, can Google really add value to their online advertisers?

There are two innovations in online advertising that make Google ads successful. The first is targeting the ads to the content. That is done online by bidding on key words. Google will also drop ads that do not add value, as evidenced by the fact that few people click on them.

In print, potential advertisers will be able to target sports, business, lifestyle and other sections. But print advertisers can do that already.

What they can't do is place an ad with a particular article, say, Palm Pilot ads with a NYT Circuits article on PDAs. Newspapers and magazines do NOT let advertisers know what kind of Circuits article is running that day, because it's a potential conflict of interest. PDA advertisers would hound reporters to make sure their products are included in the article, trying to influence the editorial. So you'll have PDA ads running with an article about, say, new XBox games. The relevance is minimal.

Without the precision targeting Google provides on-the-fly online, these ads will be less effective.

The second issue is payment. Online advertisers don't pay for the ad unless someone clicks on it. This may not lead to a sale, but at least advertisers know that people have at least looked at their product. In print, there is no way to know if any reader actually notices your ad.

But you have to pay up front, just for getting your ad in the paper. Unless the advertiser offers a special discount for citing the ad, the company will not know if the ad has been successful at all. That does not provide the same cost/benefit as online ads.

Google's online model works. It does not translate well to offline advertising. Google will face the same problem in trying to place radio ads.

At the end of the test period, everyone is going to be disappointed.

 

Yahoo and CNET?

The Motley Fool has an interesting article speculating on a marriage between CNET and Yahoo.

This sounds plausible. When Yahoo dropped Google as its licensed search engine a few years ago, it ceded the search market to Google. Typical fear of competitors. "We don't want to support a competitor, so let's offer an inferior product to our customers instead. They'll use it because they're already on our site."

Instead, Google got all the momentum with a better product--momentum that could have gone to Yahoo as well.

Yahoo's new strategy is to retreat back into portal-dom. All its acquisitions and recent announcements, including Yahoo Food and a deal with Beliefnet to expand its personals offerings, are designed to keep people on Yahoo's site, instead of sending them off in search of content elsewhere. Yahoo is increasingly becoming a media company.

With this approach, Yahoo is trying to avoid direct competition with Google. I'm sure Yahoo will continue to try to improve its search engine, but the executives apparently believe they have more opportunity elsewhere.

I don't know how much opportunity there is to make money off online content, however. Most content companies, including Yahoo and CNET, have never learned the Google lesson: ads work better when they're not obnoxious. Their click rate is abysmal, and both companies are suffering as a result.

A marriage could end up being a long-established fatal strategy. Combine two struggling companies on the theory that the will add up to one successful company. Ususally the result is that both decline more rapidly.

Let Yahoo have the content. Google has the proven business model.

Microsoft and Novell

At the Microsoft/Novell press conference, in progress as I write this, Microsoft CEO Steve Ballmer says that the two companies are working together to creat interoperability between Novell's SuSe Linux and Microsoft's Windows. The collaboration is to "erase the divide between Open Source and proprietary" software, says Ballmer. "This solution respects both business models." Their collaboration is designed to appeal to anyone running "a mix of Windows and Linux environments."

This is a clear attempt to boost Novell's version of Linux, and give Microsoft access to that version, which it now hopes will become dominant. "We want those customers choosing Linux and Windows to pick Novell," says Ballmer.

I believe this deal is directly targeted at Google. Microsoft is worried about the future of Windows for the first time in decades. That's because web-based applications, led by Google, provides the first real competition to Windows.

This does NOT mean Microsoft is dropping Windows. Ballmer says both companies will continue to work on their own systems. The message from Microsoft, he says, will still be "Windows, Windows, Windows."

Believe him. This is an old strategy of Microsoft's. The company is famous for hedging its bets. Before Windows took off, Microsoft was co-developing an OS with IBM. It didn't know which system would win. It also invested in Unix company SCO back then, just in case it provided a big challenge to Windows.

Microsoft simply knows that the best strategy is to pursue any avenue that might lead to success, even preparing for the need to drop or radically modify its cash cow.

Thus, Microsoft is creating a possible migration path to Linux--in a version it can control.

Remember that Microsoft is also developing a Web-based system of apps, giving Ray Ozzie, who heads that effort, the title of "Chief Software Architect," the title Bill Gates used to have. The company will eat its own offspring if necessary.

And Microsoft CEO Steve Ballmer knows that a Google PC could provide a real challenge to Windows. A Google PC will run on some form of Linux. Microsoft may need to get a more efficient OS than Windows, which has become heavier than Morgan Spurlock, the guy who made the film "Supersize Me" and ate nothing but McDonald's for a month.

That announcement is a hedge, the kind that keeps Microsoft from obsolescence.

There is a certain amount of irony in the announcement. Before he became CEO at Google, Eric Schmidt was CEO at Novell, but could not turn the company around. Now Microsoft is giving Novell a boost, with Wall Street upgrading Novell's stock. Can Microsoft CEO save Novell when Schmidt couldn't?

But more importantly, can Novell help save Microsoft?