Flowers for a funeral

Google and China

Censorship and hacker attacks provide the epitaph for Google in China

“WE’RE in this for the long haul,” wrote a Google executive four years ago when the company launched a self-censored version of its search engine for the China market. Now Google says it might have to pull out of the country because of alleged attacks by hackers in China on its e-mail service and a tightening of China’s restrictions on free speech on the internet. Its change of heart, as the company rightly points out, could have “far-reaching consequences”.

Google’s “new approach to China”, as the company’s chief legal officer, David Drummond, called it on January 12th on the company’s official blog, will certainly infuriate China’s government. The authorities are sensitive to foreign complaints about internet controls in China. In November, during a visit by President Barack Obama, his obliquely worded criticism of Chinese online censorship was itself censored from official reports. If it does close down in China, Google would be the first big-brand foreign company to do so citing freedom of speech in many years.

Mr Drummond’s blog-posting also contained unusually direct finger-pointing by a foreign multinational at China as a source of hacker attacks. It said that in mid-December Google detected a “highly sophisticated and targeted attack” on its corporate computer systems “originating from China”. It found that at least 20 other large companies from various industries had also been attacked. A primary goal, of the hacking of Google, it said, appeared to be to gain access to the e-mail of Chinese human-rights activists who use Google’s “Gmail” service. The hackers succeeded in partially penetrating two such accounts.

“Third parties” had also, wrote Mr Drummond, “routinely” gained access to the Gmail accounts of dozens of other human-rights advocates in America, Europe and China itself. Unlike the mid-December attack, these breaches appeared to involve “phishing” scams or “malware” on users’ computers rather than direct attacks on Google’s systems. All this, he said, along with attempts over the past year to impose further limits on free speech on the web, had led Google to “review the feasibility” of its Chinese business.

The company has decided to stop censoring the results of its China-based search engine, Mr Drummond said this might result in having to shut down and Google’s offices in China. In the face of much criticism from Western human-rights advocates, Google justified its decision to set up in 2006 by pointing out that China often blocked its uncensored engine, Better to offer a censored service (with warnings to users that results were filtered), the company argued, than nothing at all. China would certainly not allow an uncensored search engine to be based on its territory.

Google’s decision at the time was presumably driven in part by the lure of China’s rapidly expanding internet market. In part because of intermittent blocking of, and the slowness of access to the company’s foreign-based servers, Baidu, a Beijing-based company listed on America’s NASDAQ exchange, dwarfed Google’s share of the search-engine business in China. The launch of did little to dent Baidu’s domination.

Nor has Google’s acquiescence in self-censorship of its searches made China any less wary of its other, uncensored, services. Google’s video-sharing site, YouTube, has been blocked since March, because of footage of Chinese police beating Tibetan monks. Its photo-album site, Picasa Web Albums, suffered the same fate soon after. Access to Google’s blog service, Blogger, has long been intermittent. It is currently unavailable in Beijing.

Google’s frustrations are widely shared. In the build-up to the Beijing Olympics in August 2008, China lifted longstanding blocks on several websites, as it tried to present a more open image to foreign visitors. Since then, controls have been stepped up to unprecedented levels. Internet access in the western region of Xinjiang has been all but cut off since ethnic riots erupted there in July.

The unrest also prompted a shutdown of foreign social-networking sites such as Twitter and Facebook. The role of such sites in protests in Iran, after its stolen elections in June, had already alarmed the government. Its fear of dissent around the 60th anniversary in October of the founding of communist China prompted even greater vigilance against sensitive debate online. But there has been no sign of relaxation since then. In recent weeks the authorities have tightened restrictions on the registration of websites under the .cn domain name (only businesses may apply). A crackdown on internet pornography has led to closer scrutiny by internet service providers of non-porn websites.

In December Yeeyan, a site with translations of articles from foreign newspapers including the Guardian and the New York Times, was closed for several days. It was allowed to reopen after putting tighter controls in place on the publication of politically sensitive pieces. Ecocn, a site offering translations of articles from this newspaper, was also briefly shut down as officials trawled for pornography, but resurfaced unscathed. The volunteers who run this informal operation make translations of sensitive articles available only to users they trust.

The anti-porn drive turned up the heat on Google too. Last year was among several search engines in China accused by the authorities of providing links to pornographic sites. The state-controlled press gave particular prominence to Google’s alleged transgressions, which the company promised to investigate. The Chinese media have also published frequent criticisms in recent months of Google’s alleged violations of Chinese copyrights in its Google Books venture.

In Silicon Valley, its home, Google’s change of tack in China was widely applauded. But some were asking whether it was “more about business than thwarting evil” to quote TechCrunch, a widely read website. Besides pointing to Google’s failure to eat into Baidu’s market share, cynics noted that, whereas, according to Mr Drummond, Google’s revenues in China are “truly immaterial”, its costs are not. It employs about 700 people in China, some of them royally paid engineers, who may now may have to look for other jobs. Hacker attacks and censorship, critics say, are convenient excuses for something Google wanted to do anyway, without appearing to be retreating commercially. Google strongly rejects this interpretation.

In China, however, the government is clearly fearful that the company’s public stand against censorship will be celebrated by many Chinese internet-users. Chinese news accounts of the company’s decision failed to mention the reason for Google’s actions. Chinese web portals buried the story. Many internet-users in China have become adept at finding ways of circumventing China’s blocks on overseas websites, including the installation of “virtual private network” software. Numerous tributes to Google that rapidly appeared on Chinese internet discussion forums, and flowers laid outside Google’s office in Beijing, showed that the attempts at censorship had failed. Few, however, believe the company’s announcement will dissuade China from keeping on trying.


Full article and photo:

Google search goes real-time

• Messages from social networks to gain prominence
• Image search and translation technologies also unveiled

Google's vice president of engineering, Vic Gundotra

Google’s vice-president of engineering, Vic Gundotra, introduces the company’s latest advances.

Google has moved to head off some of the threat from young rivals such as Twitter and Facebook by announcing plans to prominently display results from social networking sites in its search pages.

The new development, which the Californian technology giant dubs “real-time search”, aims to bring users more up-to-date information as they scour the web for information. Over the next few days, anybody searching online using Google will see their traditional search results augmented by a string of constantly updating messages drawn from social networks, news sites and blogs.

The move is part of a wider push to make Google’s search index even faster and more up to date, as people increasingly use services like Twitter to transmit information about events as they happen.

Google executive Amit Singhal said that with more information being put on the web every day, it was vital that the company learned how to give users the most relevant results – and as quickly as possible.

“Information is being posted at a pace I have never seen before,” he said. “In this information environment, seconds matter.”

As well as watching for developments on news sites, Google is working closely with Twitter, Facebook and MySpace to include updates from their users – and Singhal said he would not rule out any potential source of up-to-the-second information in the future.

Though executives were keen to use the launch event – which was held near the company’s headquarters in Mountain View, California – as a display of power, it was also intended to quieten growing speculation that an inability to conduct real time searches could become Google’s achilles heel.

Some critics have posited that websites like Facebook and Twitter could eventually rival Google, thanks to their ability to tap into millions of public messages being sent constantly between individuals. That threat comes in addition to more traditional search engines like Microsoft’s have threatened to forge exclusive deals with some content providers as a way to claw back market share.

Instead, Google has acted to bring those services into the fold, though it would neither confirm nor deny whether there was a financial relationship behinds its links with social networking sites. Not everybody thinks the move was make or break for Google, however, even if it gives users more timely information.

“There’s no doubt that it’s good to have,” said Danny Sullivan, a prominent observer of Google’s activities, writing on his SearchEngineLand website. “It’s incredibly difficult to be a leading information source and yet when there’s an earthquake, people are instead turning to Twitter for confirmation faster than traditional news sources on Google can provide.”

The company also used the event to unveil a number of other advances it said were significant technological advances.

These included an experimental program called Google Goggles that allows users to take a photograph of an object or product and ask Google what it is, getting a selection of information back just as if they had conducted a web search on the item in question.

Vic Gundotra, the company’s vice-president of engineering, said there were already more than a billion items stored in the company’s systems and that there were fierce ambitions to make this technology – which has eluded experts for generations – as widely available as possible.

“Today marks the beginning of this journey,” he said. “It’s our goal to be able to visually identify any image.”

Gundotra also showcased a forthcoming translation product which allows users to speak any phrase into a mobile phone and then translate it, almost instantly, into any one of a number of languages. The resulting phrase could then be spoken back by Google through the phone’s speaker, potentially allowing travellers to use any high-end handset as a universal translation device. The first elements of the software should be available to the public in the first quarter of 2010.

The company said such technologies were possible thanks to improvements in speed and power, but added that there were more plans coming soon – and that the ultimate goal was to make searching for information as fast as physically possible.

“It takes one 10th of a second for light to travel around the world,” said Singhal. “At Google we will only be satisfied until that is the only barrier between you and information.”


See on YouTube: Real Time Search


Full article and photo:

Microsoft, Google Take Maps in New Direction

The battle between Microsoft Corp. and Google Inc. has shifted into new territory: a race to see who can make online maps that make people feel like they’re really there.

After lagging behind Google Maps, Microsoft this week unveiled an overhaul of its Bing Maps Web site that supplements the traditional bird’s eye view of cities and other locations with rich photographs on the ground. In addition to the street-level images pioneered by Google Maps that let people “move” along the roads pictured, Microsoft’s technology stitches together images uploaded by users into three-dimensional photo collages. The technology, called Photosynth, lets users post on Bing Maps interior shots of everything from restaurants to museums to hotels.

Microsoft’s new program lets users upload photos to Bing Maps, such as this picture of a gallery inside New York’s Metropolitan Museum of Art.

The Microsoft technology and similar efforts by Google are further signs that online maps are evolving from a digital version of an atlas into something more akin to a videogame. Both Microsoft, based in Redmond, Wash., and Google, Mountain View, Calif., are experimenting with a variety of tools that make hunting for locations far more immersive.

Having better maps gives Microsoft and Google more than just bragging rights. It also potentially gives companies who use their Internet maps—such as hotels and restaurants—a new tool for attracting business and standing out from competitors.

“Bing has pushed what Google was doing a step forward,” says Greg Sterling, an analyst with Sterling Market Intelligence.

John Hanke, vice president of Google maps, said Microsoft is playing “catch up” with most of its new map features, pointing out that Google also lets people post images that show up in Google maps in the locations they were shot.

The photo collages on Bing, which Microsoft calls “synths,” go beyond ordinary panoramic images that allow people to pivot around a street scene from a single fixed point. Users can create the synths with a conventional digital camera by snapping dozens or even hundreds of shots of the interior of, say, a furniture store, from a variety of vantage points.

Consumers can then use a free program from Microsoft that stitches the images together in such a way that they can experience a crude simulation of moving around inside the store by clicking around the photo collage with their mouse. Anybody can then make the synth accessible through Bing Maps, represented by a pin icon on the spot where the images were shot.

On the new test version of Bing Maps, a search for the Metropolitan Museum of Art in New York calls up an aerial shot of the museum, from which people can swoop down to a view of the facade of the building from 5th Ave. Microsoft’s Bing street view images, as with Google, are taken by company-hired vehicles outfitted with an array of cameras that shoot 360-degree images as the driver cruises around a city.

The outside of the museum on Bing Maps is also festooned with green icons, which people can click to view nearly a dozen synths of the Greek and Roman section and other exhibits, allowing a viewer to examine artwork from different angles and to zoom in on details.

Bill Garrison, a Seattle real estate agent, posted a synth of a property he is selling in the city after a friend at Microsoft helped him shoot the pictures. The synth lets a viewer travel through the home, even allowing a peek at the view through a kitchen window from different angles.

Mr. Garrison says the synth is “much better” than traditional photo panoramas but says the images download too slowly for most house hunters to tolerate. “If it could just be smoothed out and speeded up,” he says.

Blaise Aguera y Arcas, chief architect of Bing Maps, said the performance of the synth feature will be improved. Although Microsoft hasn’t formally begun approaching businesses to do synths of their establishments, he predicts 3D interior shots will eventually “come to be expected” by customers who research restaurants and other places online. Microsoft believes the synth feature is easy enough for amateurs to use.

There are already companies like EveryScape Inc. that specialize in photographing the interior of hotels and other businesses to create immersive images for Web users. Rebecca MacQuarrie, director of marketing at EveryScape, said she wasn’t familiar with Bing’s new synth technology but believes most businesses will favor its professionally photographed environments.

Nick Wingfield, Wall Street Journal


Full article and photo:

How Google Can Help Newspapers

Video didn’t kill the radio star, and the Internet won’t destroy news organizations. It will foster a new, digital business model.

It’s the year 2015. The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.

Even better, the device knows who I am, what I like, and what I have already read. So while I get all the news and comment, I also see stories tailored for my interests. I zip through a health story in The Wall Street Journal and a piece about Iraq from Egypt’s Al Gomhuria, translated automatically from Arabic to English. I tap my finger on the screen, telling the computer brains underneath it got this suggestion right.

Some of these stories are part of a monthly subscription package. Some, where the free preview sucks me in, cost a few pennies billed to my account. Others are available at no charge, paid for by advertising. But these ads are not static pitches for products I’d never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting.

This is a long way from where we are today. The current technology—in this case the distinguished newspaper you are now reading—may be relatively old, but it is a model of simplicity and speed compared with the online news experience today. I can flip through pages much faster in the physical edition of the Journal than I can on the Web. And every time I return to a site, I am treated as a stranger.

So when I think about the current crisis in the print industry, this is where I begin—a traditional technology struggling to adapt to a new, disruptive world. It is a familiar story: It was the arrival of radio and television that started the decline of newspaper circulation. Afternoon newspapers were the first casualties. Then the advent of 24-hour news transformed what was in the morning papers literally into old news.

Now the Internet has broken down the entire news package with articles read individually, reached from a blog or search engine, and abandoned if there is no good reason to hang around once the story is finished. It’s what we have come to call internally the atomic unit of consumption.

Painful as this is to newspapers and magazines, the pressures on their ad revenue from the Internet is causing even greater damage. The choice facing advertisers targeting consumers in San Francisco was once between an ad in the Chronicle or Examiner. Then came Craigslist, making it possible to get local classifieds for free, followed by Ebay and specialist Web sites. Now search engines like Google connect advertisers directly with consumers looking for what they sell.

With dwindling revenue and diminished resources, frustrated newspaper executives are looking for someone to blame. Much of their anger is currently directed at Google, whom many executives view as getting all the benefit from the business relationship without giving much in return. The facts, I believe, suggest otherwise.

Google is a great source of promotion. We send online news publishers a billion clicks a month from Google News and more than three billion extra visits from our other services, such as Web Search and iGoogle. That is 100,000 opportunities a minute to win loyal readers and generate revenue—for free. In terms of copyright, another bone of contention, we only show a headline and a couple of lines from each story. If readers want to read on they have to click through to the newspaper’s Web site. (The exception are stories we host through a licensing agreement with news services.) And if they wish, publishers can remove their content from our search index, or from Google News.

The claim that we’re making big profits on the back of newspapers also misrepresents the reality. In search, we make our money primarily from advertisements for products. Someone types in digital camera and gets ads for digital cameras. A typical news search—for Afghanistan, say—may generate few if any ads. The revenue generated from the ads shown alongside news search queries is a tiny fraction of our search revenue.

It’s understandable to look to find someone else to blame. But as Rupert Murdoch has said, it is complacency caused by past monopolies, not technology, that has been the real threat to the news industry.

We recognize, however, that a crisis for news-gathering is not just a crisis for the newspaper industry. The flow of accurate information, diverse views and proper analysis is critical for a functioning democracy. We also acknowledge that it has been difficult for newspapers to make money from their online content. But just as there is no single cause of the industry’s current problems, there is no single solution. We want to work with publishers to help them build bigger audiences, better engage readers, and make more money.

Meeting that challenge will mean using technology to develop new ways to reach readers and keep them engaged for longer, as well as new ways to raise revenue combining free and paid access. I believe it also requires a change of tone in the debate, a recognition that we all have to work together to fulfill the promise of journalism in the digital age.

Google is serious about playing its part. We are already testing, with more than three dozen major partners from the news industry, a service called Google Fast Flip. The theory—which seems to work in practice—is that if we make it easier to read articles, people will read more of them. Our news partners will receive the majority of the revenue generated by the display ads shown beside stories.

Nor is there a choice, as some newspapers seem to think, between charging for access to their online content or keeping links to their articles in Google News and Google Search. They can do both.

This is a start. But together we can go much further toward that fantasy news gadget I outlined at the start. The acceleration in mobile phone sophistication and ownership offers tremendous potential. As more of these phones become connected to the Internet, they are becoming reading devices, delivering stories, business reviews and ads. These phones know where you are and can provide geographically relevant information. There will be more news, more comment, more opportunities for debate in the future, not less.

The best newspapers have always held up a mirror to their communities. Now they can offer a digital place for their readers to congregate and talk. And just as we have seen different models of payment for TV as choice has increased and new providers have become involved, I believe we will see the same with news. We could easily see free access for mass-market content funded from advertising alongside the equivalent of subscription and pay-for-view for material with a niche readership.

I certainly don’t believe that the Internet will mean the death of news. Through innovation and technology, it can endure with newfound profitability and vitality. Video didn’t kill the radio star. It created a whole new additional industry.

Mr. Schmidt is chairman and CEO of Google Inc.


Full article and photo:

Google allows publishers to limit free content

Google Inc. is allowing publishers of paid content to limit the number of free news articles accessed by people using its Internet search engine, a concession to an increasingly disgruntled media industry.

There has been mounting criticism of Google’s practices from media publishers – most notably News Corp. chairman and chief executive Rupert Murdoch – that argue the company is profiting from online news pages.

In an official blog posted late Tuesday, Josh Cohen, Google’s senior business product manager, said the company had updated its so-called First Click Free program so publishers can limit users to viewing no more than five articles a day without registering or subscribing.

Previously, each click from a user of Google’s search engine would be treated as free.

“If you’re a Google user, this means that you may start to see a registration page after you’ve clicked through to more than five articles on the website of a publisher using First Click Free in a day … while allowing publishers to focus on potential subscribers who are accessing a lot of their content on a regular basis,” Cohen wrote in the post.

Murdoch on Tuesday told a Washington D.C. conference that media companies should charge for content and stop news aggregators like Google from “feeding off the hard-earned efforts and investments of others.”

News Corp. already charges for online access to The Wall Street Journal and it plans to expand that to other publications, including British newspapers The Sun and The Times.

A fundamental problem facing the media industry, Murdoch told the U.S. Federal Trade Commission workshop, is that “technology makes it cheap and easy to distribute news for anyone with Internet access, but producing journalism is expensive.”

“Right now there is a huge gap in costs,” he added, referring to news compilation sites like Google.

Cohen stressed that publishers and Google could coexist, with the former able to charge for their content and still make it available via Google under the revamped click program.

“The two aren’t mutually exclusive,” Cohen said on the blog.

“After all, whether you’re offering your content for free or selling it, it’s crucial that people find it,” he added. “Google can help with that.”

Cohen said that Google will also begin crawling, indexing and treating as “free” any preview pages – usually the headline and first few paragraphs of a story – from subscription Web sites.

People using Google would then see the same content that would be shown free to a user of the media site and the stories labelled as “subscription” in Google News.

“The ranking of these articles will be subject to the same criteria as all sites in Google, whether paid or free,” Cohen said. “Paid content may not do as well as free options, but that is not a decision we make based on whether or not it’s free. It’s simply based on the popularity of the content with users and other sites that link to it.”


Full article:

Google’s Earth

I’m fond of Google, I have to say. I like Larry Page, who seems, at least in the YouTube videos I’ve watched, shy and smart, with salt-and-pepper bangs; and Sergey Brin, who seems less shy and jokier and also smart. Ken Auletta, the author of this absorbing, shaggy, name-droppy book, doesn’t seem to like either of them much — he says that Page has a “Kermit the Frog” voice, which isn’t nice, while Brin comes off as a swaggering, efficiency-obsessed overachiever who, at Stanford, aced tests, picked locks, “borrowed” computer equipment from the loading dock and once renumbered all the rooms in the computer science building. “Google’s leaders are not cold businessmen; they are cold engineers,” Auletta writes — but “cold” seems oddly wrong. Auletta’s own chilliness may be traceable in part to Brin’s and Page’s reluctance to be interviewed. “After months of my kicking at the door, they opened it,” he writes in the acknowledgments. “Google’s founders and many of its executives share a zeal to digitize books,” he observes, “but don’t have much interest in reading them.”

They’ll probably give more than a glance at “Googled.” I read the book in three huge gulps and learned a lot — about Google’s “cold war” with Facebook, about Google’s tussles with Viacom, about Google’s role in the “Yahoo-Microsoft melee” and about Google’s gradual estrangement from its former ally, Apple. Auletta is given to martial similes and parallels, from Prince Metternich in 19th-century Europe to Afghanistan now: “Privacy questions will continue to hover like a Predator drone,” he writes, “capable of firing a missile that can destroy the trust companies require to serve as trustees for personal data.” And he includes some revealing human moments: Larry Page, on the day of Google’s hugely successful stock offering, pulls out his cellphone and says, “I’m going to call my mom!”

But what Auletta mainly does is talk shop with C.E.O.’s, and that is the great strength of the book. Auletta seems to have interviewed every media chief in North America, and most of them are unhappy, one way or another, with what Google has become. Google is voracious, they say, it has gargantuan ambitions, it’s too rich, it’s too smug, it makes big money off of O.P.C. — other people’s content. One unnamed “prominent media executive” leaned toward Auletta at the 2007 Google Zeitgeist Conference and whispered a rhetorical question in his ear: What real value, he wanted to know, was Google producing for society?

Wait. What real value? Come now, my prominent executive friend. Have you not glanced at Street View in Google Maps? Have you not relied on the humble aid of the search-box calculator, or checked out Google’s movie showtimes, or marveled at the quick-and-dirtiness of Google Translate? Have you not made interesting recherché 19th-century discoveries in Google Books? Or played with the amazing expando-charts in Google Finance? Have you not designed a strange tall house in Google SketchUp, and did you not make a sudden cry of awed delight the first time you saw the planet begin to turn and loom closer in Google Earth? Are you not signed up for automatic Google News alerts on several topics? I would be very surprised if you are not signed up for a Google alert or two.

Surely no other software company has built a cluster of products that are anywhere near as cleverly engineered, as quick-loading and as fun to fiddle with, as Google has, all for free. Have you not searched?

Because, let me tell you, I remember the old days, the antegoogluvian era. It was O.K. — it wasn’t horrible by any means. There were cordless telephones, and people wore comfortable sweaters. There was AltaVista, and Ask Jeeves, and HotBot, and Excite, and Infoseek, and Northern Light — with its deep results and its elegant floating schooner logo — and if you wanted to drag through several oceans at once, there was MetaCrawler. But the haul was haphazard, and it came in slow. You chewed your peanut-butter cracker, waiting for the screen to fill.

Then Google arrived in 1998, sponged clean, impossibly fast. Google was like a sunlit white Formica countertop with a single vine-ripened tomato on it. No ads in sight — Google was anti-ad back then. It was weirdly smart, too; you almost never had a false hit. You didn’t have to know anything about the two graduate students who had aligned and tuned their secret algorithms — the inseparable Page and Brin — to sense that they were brilliant young software dudes, with all the sneakered sure-footedness of innocence: the “I’m Feeling Lucky” button in that broad blank expanse of screen space made that clear. Google would make us all lucky; that was the promise. And in fact, it did.

So why are the prominent media executives unhappy? Because Google is making lots of ad money, and there’s only so much ad money to go around. Last year almost all of Google’s revenue came from the one truly annoying thing that the company is responsible for: tiny, cheesy, three-line text advertisements. These AdWords or AdSense ads load fast, and they’re supposedly “polite,” in that they don’t flicker or have pop-ups, and they’re almost everywhere now — on high-traffic destinations like The Washington Post or MySpace or, and on hundreds of thousands of little Web sites and blogs as well. “It’s all of our revenue,” Larry Page said in a meeting that Auletta attended in 2007.

The headlines say things like “Laser Hair Removal,” “Christian Singles,” “Turn Traffic Into Money,” “Have You Been Injured?” “Belly Fat Diet Recipe,” “If U Can Blog U Can Earn,” “Are You Writing a Book?” and so on. Countless M.F.A., or Made for AdSense, Web sites have appeared; they use articles stolen or “scraped” or mashed together from sites like Wikipedia, and their edges are framed with Google’s text ads. The ads work on a cost-per-click scheme: the advertiser pays Google only if you actually click on the ad. If you do, he’s billed a quarter, or a dollar, or (for some sought-after keywords like “personal injury” or “mesothelioma lawyers”) $10 or more.

But think — when was the last time you clicked on a three-line text ad? Almost never? Me neither. And yet, in 2008, Google had $21.8 billion in revenue, about 95 percent of which flowed from AdWords/AdSense. (A trickle came from banner and video ads sold by Google’s new subsidiary, DoubleClick, and from other products and services.) These unartful, hard-sell irritants — which have none of the beauty or the humor of TV, magazine, radio or newspaper advertising — are the foundation of Google’s financial empire, if you can believe it. It’s an empire built on tiny grains of keyword-searchable sand.

The advertising revenue keeps Google’s stock high, and that allows the company to do whatever it feels like doing. In 2006, when Google’s stock was worth $132 billion, the company absorbed YouTube for $1.65 billion, almost with a shrug. “They can buy anything they want or lose money on anything they choose to,” Irwin Gotlieb, the chief of GroupM, one of Google’s biggest competitors in the media market, told Auletta. If Microsoft is courting DoubleClick, Google can swoop in and buy DoubleClick for $3.1 billion. If the business of “cloud” computing seems to hold great promise, Google can build 20 or 50 or 70 massive data centers in undisclosed locations around the world, each drawing enough power to light a small city. Earlier this month, Google announced it would pay $750 million in stock for a company called AdMob, to sell banner ads on cellphones. “Once you get to a certain size, you have to figure out new ways of growing,” Ivan Seidenberg, the chief executive of Verizon, said to Auletta. “And then you start leaking on everyone else’s industry.” That’s why Auletta’s C.E.O.’s are resentful.

True, the miracles keep coming: Google Voice, which can e-mail you a transcript of your voice mail messages; and Chrome, a quick, clever Web browser; and Android, the new operating system for mobile devices. One of the latest is an agreement to print books on an A.T.M.-style on-demand printer, the Espresso Book Machine. But perhaps there are too many miracles emanating from one campus now; perhaps brand fatigue is setting in. Google’s famous slogan, “Don’t be evil,” now sounds a little bell-tollingly dystopian.

When they were at Stanford, Page and Brin criticized search engines that had become too “advertising oriented.” “These guys were opposed to advertising,” Auletta quotes Ram Shriram, one of Google’s first investors, as saying. “They had a purist view of the world.” They aren’t opposed now. Now they must be forever finding forage for a hungry, $180 billion ad-maddened beast. Auletta describes an unusual job-interview test that Sergey Brin once gave to a prospective in-house lawyer: “I need you to draw me a contract,” Brin said to her. “I need the contract to be for me to sell my soul to the Devil.” That was in 2002, the year Google began work internally on what would become AdSense.

Now Page and Brin fly around in a customized Boeing 767 and talk sincerely about green computing, even as the free streamings of everyone’s home video clips on YouTube burn through mountaintops of coal. They haven’t figured out a way to “monetize” — that is, make a profit from — their money maelstrom, YouTube, although I notice that Coffee-mate and Samsung banners appear nowadays in Philip DeFranco’s popular video monologues. “The benefit of free is that you get 100 percent of the market,” Eric Schmidt, Google’s chief executive, explained to Auletta. “Free is the right answer.” For a while, perhaps — but maybe free is unsustainable. For news­papers, Auletta writes, “free may be a death certificate.” Maybe in the end, even on the Internet, you get what you pay for.

Nicholson Baker’s most recent novel is “The Anthologist.”


Full article and photo:

Web-wide war

Bing and online newspapers

Microsoft opens a new front in its battle with Google

EVEN technology pundits can sometimes be right. Jason Calacanis, an entrepreneur and noted agent provocateur, recently argued that there is a simple solution to the woes of both Microsoft and big media companies. The world’s largest software firm should pay Time Warner, News Corporation and others firms to block Google, the search giant, from indexing their content—and make it searchable exclusively through Bing, Microsoft’s new search service. Media companies would thus get badly needed cash and Bing a chance to gain market share from Google.

This week it emerged that Microsoft and News Corp are talking about just that. Although the discussions may come to naught, or prove a mere ploy in the media firm’s ongoing negotiations with Google, the news caused a stir. It is a sign not only of how far Microsoft is willing to go in order to turn Bing into a serious rival to Google, but also of how the entire internet could well evolve.

It should come as no surprise that News Corp would be the first to discuss such a deal. Rupert Murdoch, its boss, has long criticised Google for “stealing” his newspapers’ stories by pasting links to them on Google’s own site. He has also announced loudly and often that he wants to charge for more of the content that his firm puts online. What is more, he needs to renegotiate the deal that in 2006 gave Google the exclusive right to place search ads on MySpace, a social network owned by News Corp. Back then Google agreed to shell out $900m over three years for the privilege, although it may in the end pay less, as traffic on MySpace has not met the targets specified.

Google is unlikely to want to pay such a high price again, given that declining traffic and thus disappointing advertising revenues. Google also knows that Mr Murdoch will think twice before blocking the biggest source of traffic for his newspapers’ websites. More than a quarter of all visitors to the Wall Street Journal’s site, for instance, come from Google, which is in line with most other newspapers, according to Hitwise, a market-research firm.

Microsoft, for its part, cannot afford to let Google rule the search business and, by extension, a big part of the online advertising that is expected pay for many services in the age of cloud computing. In recent years the firm has invested billions in its search capabilities. With Bing, it has at last come up with a plausible alternative, which works better than Google for some searches, such as comparing prices of consumer electronics or looking for cheap flights. To boost Bing’s market share, Microsoft in July agreed with Yahoo!, another online giant, to merge both firms’ search activities.

Yet all this may not be enough. Since its launch in June, Bing’s market share has grown by two percentage points to nearly 10% of all searches in America, but Yahoo!’s has dropped by the same figure to 18%. Exclusive content deals may just be what Microsoft needs to reach a combined 30%, which some experts see as the minimum to make a dent in Google’s business. Microsoft appears ready to spend whatever is needed: up to 10% of the company’s overall operating income over the next five years, according to Steve Ballmer, the firm’s boss. This would, all things being equal, add up to some $11 billion.

Yet what looks like good news for media firms is rather worrisome for champions of an open internet. To them, exclusive content deals are another big step away from an online world with few borders, where everybody plays according to the same rules. Already, they say, Apple dictates which applications are allowed to run on the iPhone, Facebook tries to discourage members from surfing elsewhere, and Google’s navigation software is only free for users of its own operating system for smart-phones. “We’re heading into a war for the control of the web—and against the web as an interoperable platform”, warns Tim O’Reilly, the internet guru who coined the term “web 2.0”.

Mr O’Reilly is definitely on to something. The question, however, is whether this “war 2.0” is really so unwelcome. A handful of well-funded and robust platforms locked in heated competition could be better for consumers and generate more innovation than Mr O’Reilly’s vision of an internet made of many “small pieces loosely joined”.

The Economist


Full article and photo: