This week saw two unrelated events, which point to an other interesting opportunity for Google to get themselves into financial hot water. The sudden demise, and likely associated jail terms with the demise, of what was neatly described as the PayPal of crime. Liberty Reserve was apparently the go to bank for drug cartels, child pornographers, and other evil types. Allegedly they laundered over six Billion dollars (roughly the GDP of Rwanda) before the Feds moved in to shut them down this week. At the center of the process was the anonymity they offered to their clientele, allowing them to ship money around the world securely and quickly. It’s the oldest game in the book, this time executed electronically on a grand scale.
The announcement coincided nicely with the announcement by Google that Gmail users can now attach money to an email and ship it to anyone else with an email account. The service is cheap (less than 3% service fee) or free if you have linked your bank account to your Gmail account. If you don’t want to link your account to your bank, you can attach a debit or credit card. This means that essentially anyone with the smarts to create a free and anonymous Gmail account and a stack of cash to load up a one time and anonymous debit card, can send cash anonymously to pretty much anyone anywhere… kinda like the good folk at Liberty Reserve. Obviously right out the box this isn’t the same as the money laundering on a massive scale, but if history teaches us anything it’s that any opportunity for nefarious exploitation, especially one that can be exploited at scale, will be. I wonder how Messrs, Brin, and Page will look in orange jump suits….
If you were expecting a splashy launch of a Google Flying car or Google Tats (a transparent ink which allows users to program their tattoos to be anything they want to be as often as they like) at the recent Google I/O developers conference you would have been disappointed. At last years show Google announced Glass, the creepy wearable spyglasses that is currently getting them into a world of pain as the real world looks at their wearers as potential serial killers, but this year it was a major launch free occasion. That’s not to say there wasn’t a lot to talk about. If there is one word which comes to mind looking at the very wide range of stuff our friends at Google would like to offer us, that word is “Pervasive”.
It used to be that Apple was the one word answer to all of our technology needs. Yes you had to give up a little bit of freedom and a pretty hefty chunk of change, but Apple would wrap you up in love and join all your tech ends together for you. Now you have a choice… you can be apple flavored or Google flavored, or be like me Google flavored but mostly on Apple devices… oh and one Windows thingy still.
As always… outside of search, where they continue to be pack leaders; Google is following its spot-a-trend-and-copy-it solution. Some of the latest innovations include:
- Google TV – which is Apple TV or Ruku.
- Google Hang Outs – which is Skype plus GotoMeeting and YouTube.
- Conversational Search – which is a Smarter Siri.
- Google Play – which is Spotify meets YouTube (ad free).
- And lets not forget (though, many wish they could) the horrible Google+ – which wants to be Facebook when it grows up.
The list goes on. Some of these will be great, some will fail horribly; but Google has the brains and the bucks to pursue these avenues. Clearly their bottom line is to offer an attractive and typically free solution for every possible online/new media point of exposure. For the likes of Apple or Samsung, it must be like trying to fight the Hydra. They don’t mind who they copy (go ahead and sue them it will take four years, and four years is an awfully long time in tech) and eventually when the dust settles they will be everywhere. Now, where is Steve Jobs when we really need him?
If there is one trend driving the ad business crazy right now, and has been for a while, it the active flight by content consumers from all things advertising. The major TV networks put the excellent HuluPlus together as a way to offer recent and past TV with “limited commercial interruption”, which means roughly 30 seconds of commercial per break rather than the more traditional 2-3 minute slots. As someone who is pretty much physically allergic to all forms of commercials, I regard that as a step in the right direction. Although the move to DVR has been slower than I would have thought the amount of people actually watching long form TV complete with commercials has now dropped to below half (44% in a recent survey). Add to that the growth of Video on Demand and all forms of online content the days of the traditional commercial seem to be headed into new territories. Radio has been in a death spiral fueled by the excellent Pandora and the horrible Sirius for a while. Newspapers, which used to weigh measurable fractions of entire pounds, now merely weigh a few grams. The online media world is rapidly moving to a more personalized kind of exposure with advertisers bidding on very detailed profiles of consumers targeting them closely with messages, which they think will resonate.
In another step in this direction, the recent discussions between Google and the major music labels seem to be headed in a similar direction. Google’s goal is to play catch-up to the trendy Spotify music solution, and their approach is interesting. Google hasn’t traditionally had a meaningful music offering, missing out to iTunes, Pandora, and others. But, they did buy YouTube and they see that as their grubstake. Google has been slathering YouTube with pre-run commercials for a while now, to the point where it’s almost unwatchable. In addition to pestering seekers after amusing kitten videos with ad after ad to the point where the Ad-allergic like myself find it unusable.
Now there is a solution. In a supposedly private negotiation, which is such a poorly kept secret that I just hear about it from my Bulldog (who isn’t that much of a news junkie), Google is cutting a deal with the major labels to offer their music content as part of a (presumably) Google Play branded initiative which will offer a Spotify like music service which also removes the ads from your YouTube viewing experience. It’s a cunning plan… let’s annoy the consumers to the point where they will pay a small amount to get rid of the commercials. Oh, and we will throw in all the music you can eat for good measure. The controversy comes over how the music guys get paid for their content. They would like a per-track feed, Google is offering a rev share on what they get. Either way it’s another short step to an ad free environment.
If you were Google, you might be forgiven for wondering what’s in the water that is prompting the world to hate you quite as much as they are this week. The answer is easy… a goal of owning and managing the worlds data to your own advantage is getting folks a little jumpy. In a crowded week for Google haters, the launch of the very cool Google Glass product is getting push back from state legislators who are already pushing to make them illegal for driving to casino operators who are already banning them from the gaming floor. Civil rights groups and privacy activists are forming strange bedfellows with bar operators and strip club proprietors against these devices. None of this stops me wanting to buy a pair (as long as they come in my prescription).
At the same time, a ground swell against Glass is getting underway. Monopoly regulators in Europe are calling foul on Google’s aggressive use of patents it purchases from Motorola against arch nemesis Apple in Germany. In a double EU whammy, the tax regulators are clearly coming after Google for their creative financial planning. Just in case you thought Google was in fact a warm, fuzzy Silicone Valley Company it’s not… it’s really based in Bermuda. It’s EU operations are ostensibly transacted through Ireland with a pass through to Bermuda… minimizing EU tax exposure. Unfortunately recently they recruited a bunch of folk for “sales” roles in UK, France, and Germany… and by doing that, they inadvertently qualified themselves to be more aggressively taxed in those countries. Clearly the EU has it in for big G, and is determined to get them any way they can.
The problem Google faces is that they make a great target for anyone with a beef against corporate America, technology in general, and information in particular. They are also incredibly secretive and harder to get a straightforward answer from than Ben Bernanke on Quaaludes. Apple gives us cool toys and Amazon let’s us buy pretty much anything we want to any time anywhere, Google seems to be infiltrating pretty much a very place where we touch information. If they didn’t invent, it they “borrow it” (witness Android and AdWords both critical products they “borrowed” from Apple and Yahoo respectively). Add to that their enthusiasm for minimizing their tax burden which enrages legislators, their willingness to use patents to hobble competitors, and their absolute power over how we navigate the Internet; and it’s not hard to see why they are getting increasingly rough treatment… and it doesn’t seem to bother them very much.
A while ago, Wired Magazine declared the web dead… the premise was that we are increasingly navigating the online world through Apps which deliver exactly what we want rather than the messy, spammy, and sometimes slow traditional online world. That was no doubt an exaggeration, albeit an entertaining one. It does point to a key factor that more and more content and data is locked behind the walled gardens of Apps, and thus not visible to searchers outside those Apps. Whilst it’s possible for app developers to expose content to search engines, most don’t and it’s getting to be a problem for both searchers and the search engines themselves. It’s clearly an issue, which is causing Google to loose sleep at night, and there are signs this week that this may be changing.
Google announced, at the TechCrunch conference yesterday, that it is integrating with an initial handful of large content sites so that when app users open the app, they are invited to log in with their Google+ account. That then allows Google to index data about the users behavior, which can then be exposed to searchers through regular Google search. In theory, searches for movies would get data on trending films from Fandango or music on SoundCloud. It’s an interesting idea; Google is essentially harvesting data and content from the walled gardens by collecting activity in those gardens from Google+ users. Google+ has been accused of being a social media platform without a reason to exist… and this, in part, at least contributes to it’s reason to exist. Logically this will become more compelling as it rolls out to a much larger fraction of the millions of Aps out there. If it’s easily available, app developers are likely to include it and we will all benefit… we will see.
The Tom Cruise movie Minority Report is often held up as an example of what the future may hold, a world where the digital world overlays the real one and retailers greet shoppers with digital assistants offering deals customized to your interests. That’s still a ways off…well the time travel part is anyway, but Google is clearly leading the charge to get us there. I’m reading the new book from Eric Schmidt (Google’s Chairman) at the moment, and it’s clear that he sees the future in very Minority Report ways. He envisages a digital world where the rich countries live in an immersed digital culture and even Kalahari bushmen have cellphones to report in on herd movement.
This week has seen progress in multiple Minority Report ways. For example, the first reports are coming in from the lucky folk who were able to pay $1,500 to get hold of a pair of Google Glass glasses. The initial results are mixed but encouraging. It seems that if you actually read the instructions they apparently they work pretty well. They understandably garner lots of interest from passersby… much like early horseless carriages must have done. A widely reported side effect is the ‘creep’ factor that people assume they are being recorded by the wearers… and don’t appreciate it. The glasses communicate with your wireless phone to display search results, maps directions etc directly to the user. Another example of the importance of the mobile device in your pocket… in fact you could think of Glass as not much more than a wearable heads up display for your phone.
Another Google step towards Minority Report World comes in the release in the Apple App store of Google Now. The release is a few months behind the release on Android but now it’s made it into the store so even us poor iPhone users can play with this neat App. The premise is that your phone takes notes on what you are interested in, where you go, and where you are. It also gives you heads up on your schedule, email, and other essential parts of your digital world. Combine Google Glass with Google Now, and the digital overlay tailored to your world gets a couple of steps closer.
The part which isn’t getting as much play as the Gee Wizardry of Glass is how all this monetizes. It’s fair to say that Google missed the boat with the tablet and is still playing catch-up with Android on the iPhone. If the future is at least in part a digital overlay, then Glass represents the first serious take at delivering it. The fact that Google has amassed the largest basket of advertisers who will already pay for clicks in search, plays directly into this opportunity. When I look at Google Now I’m presented with cards for various local restaurants, it’s only a short step from there for Google to present me with offers from local retailers since Google Now knows my location and has been collecting my interests. Now add Google Glass to the mix as a way to deliver information and commercial messages as I move around, and we really do have the potential for the Minority Report experience which customizes commercial messages to my interests and locations. It also makes sense for advertisers to bid more for an impression on Glass when the wearer is in proximity to the product or location. Being in proximity to an object or location is a different kind of search… and arguably a very powerful kind of search as it took effort and time to get there. It truly is a brave new world, very much in line with Schmidt’s vision… and (so far anyway), a world pretty much controlled by Google.