Sunday, November 06, 2005

Google's Reign of Terror.

If you've bee watching closely you'll see a lot of "odd" and vaugely hostile remarks being made about Google by other businesses. Everybody from WalMart to BellSouth to Microsoft seems to be looking nervously over their shoulder.

WalMart?!! Yes, even WalMart. And the reason is very instructive.

They fear efficient markets. No, more plainly: they fear the free flow of information. What each of these businesses--and many more--have to fear is that Google will "commoditize" information by making it free. Or that's the conclusion I draw when I read "Just Googling It Is Striking Fear Into Companies." Here's the Wal-Mart version of this fear as depicted in the New York Times article:
In Google, Wal-Mart sees both a technology pioneer and the seed of a threat, said Mr. Breyer, ...[a member of the Wal-Mart board.] The worry is that by making information available everywhere, Google might soon be able to tell Wal-Mart shoppers if better bargains are available nearby.
It's making information free and frictionlessly easy to get that is Google's area of specialization. That's what a search engine is all about. And that is at the nub of the fear of Google. Google really believes in all that idealistic stuff about the internet being all about making information free and easy to get. And Google is getting better at it. And most frightening of all: it's working for Google as a business plan. They give a way the information for free and live off a little bit of advertising. And the company is getting hugely, amazingly rich and is gaining the freedom to continue to do just what they think is right.

This article is mostly about Google is assualting the internet's last frontier. And in a neat turn around that frontier is found down at the local neighborhood level. Consider: Decide you want to walk for pizza while messing around at Mello Joy? Google up Lafayette pizza joints. Easy. Fast. Efficient. And frighteningly Free. Cars, real estate, and many other businesses depend critically upon your not knowing where a better deal is. Google threatens that and we are begining to see even organizations like Wal-Mart--whose raison d'ĂȘtre is price efficiency--are getting nervous.

But I suspect that Google is not about to stop there. They've made themselves into players on the wholesale fiber market by devloping or buying their way into an internet backbone. Why? They don't say. But it gives them freedom to walk away from the big networks if the networks decide that they want a cut of Google's pie as it flows over their monopoly last mile lines. (The chair of Bell giant SBC recently named Google as one of those companies that should be paying him to allow them to get to you.) They are also apparently willing to step into the really crucial last mile. (Owning backbone allows you to control costs, owning customers is what the last mile is all about.) Google has set itself up as player in the emerging municipal wifi market by offering to build an advertising-supported wifi net in San Francisco.
In telecommunications, the company has made a number of moves that have grabbed the attention of industry executives. It has been buying fiber-optic cable capacity in the United States and has invested in a company delivering high-speed Internet access over power lines. And it is participating in an experiment to provide free wireless Internet access in San Francisco.

That has led to speculation that the company wants to build a national free GoogleNet, paid for mostly by advertising. And Google executives seem to delight in dropping tantalizing, if vague, hints. "We focus on access to the information as much as the search itself because you need both," Mr. Schmidt said in an analysts' conference call last month.
There are some serious battles brewing and they aren't all between incumbents or between incumbents and municpalities.

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