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In a remarkably short period of time, Google has gone from being an upstart to being the world’s most valuable media group, ahead of the outmoded gorilla Time Warner. Its financial record is awesome — and it is dispiriting that Britain cannot seem to create new global businesses like this. In the first nine months of the year, Google has broadly doubled its sales to $4.2 billion (£2.4 billion), and its net profits have risen more than fivefold to $1.1 billion, a staggering after-tax margin of 26 per cent.
Big, of course, is not necessarily bad, although it gives critics a larger target to aim at. The worry, though, is what Google is doing to maintain this kind of progress, and its growing influence on the rest of the media landscape. The idea that Google is a media company seems at first glance risible, but the impact that it has on everybody else is so profound that it is a mistake to exclude it.
Most of the world still relies on Google to deliver fast, accurate and unbiased search. The company owes its success to delivering a search engine with a simple home page, and, as it has gradually adopted advertising, by making clear what has been paid for and what not. Yet, at the same time, Google has been gradually working more closely with large content companies — signing a deal with Time Warner and taking a stake in AOL — to help to make their content available to its search engines. It has a similar relationship with Yahoo!
Optimisation is something of an ambivalent term in the search engine community. Anybody can pay for it, and the idea is that optimisers will boost a business’s presence in the web rankings, although not all practices are legitimate. Sites are ranked, for example, by the number and types of links to them. If those links are fraudulent, it is possible to fool the search engine, although Google employees try to watch out for this.
The problem with optimisation, though, is that it is difficult to find out where to draw the line between white hat and black hat techniques. As part of the Time Warner deal, previously inaccessible AOL content is being made available to Google. AOL material will be “appropriately ranked” in the future, it is said, although it is hard to know what appropriate ranking actually means.
Google is emphatic that the integrity of its search will be unaffected, and certainly there is no dramatic change, even though the company has invested $1 billion in a content business such as AOL. But the impression created — and beyond a bald press release, there is little detail publicly available — is that Google will work more closely with big internet companies, while the small ones have to fend for themselves.
This is hardly the first thing that Google has done to raise concern. The search engine has been cheerfully scanning in library books, some of which include copyright materials, as part of a plan to make relevant snippets available to searchers. Fine for the boost of free knowledge, but troubling for book publishers, which supply the marketing and distribution that make authors, particularly new ones, possible. A court case looms.
Nevertheless, far from all that Google has done is troubling. Newspapers get what they deserve when Google News reveals which news stories are derivative and which are genuinely insightful. Its success in decoupling advertising from editorial is not much fun for the media industry, but something that publishers and broadcasters will have to deal with by raising quality and charging more.
Yet, that does not mean that Google is right every time. If Google is tempted to keep throwing its weight around, the bloody-minded will want to do their search elsewhere.
Such thinking, after all, helped to prop Apple up for two decades before the iPod arrived as a residue of customers insisted on buying its computers as an act of defiance against Microsoft.
Switching from Google to Microsoft, the owner of MSN Search, may not be the obvious way to conduct the next rebellion, but it is tempting to do it, to make a tiny pinprick of a point.
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