Google vs Facebook: The War That Isn’t

With all the snow in the East (and elsewhere), pundits are apparently staying inside, and are bored with themselves.

So they need to write “provocative” columns to garner headlines.

James B. Stewart’s piece in the Wall Street Journal reminded me of this need to be provocative to garner attention.

Like so many others, he wants to set up a David vs. Goliath story. He writes,

“What is shaping up is a monumental Google-Facebook showdown to win the hearts, minds and wallets of Internet users world-wide.”

It simply ain’t so.

I thought about the things I use Google for the most:

  • Search (in all its permutations), and including browsing (on my desktop, Blackberry, and Android Tablet)
  • Email
  • Maps and Directions
  • Translation
  • Calendar
  • Document, book and video storage and viewing
  • News
  • Application development using Open Source

None of these is a strength of Facebook.

None.

Yes, in the sphere of social networking, Facebook is wildly popular, and for business networking, so is Linked-In.

So what?

Why does Google have to be all things to all people for it to have value?

As we reported earlier, Google earned $2.5 billion for its shareholders in the last three months. Microsoft, in its much, much smaller online business lost.

True, Google does not want to see anyone garnering large numbers of visitors on the Internet without competing. An it may or may not succeed with the innovative produce that are keeping Sergey Brin and thousands of Google employees working flat out.

To buttress his argument, Stewart offers the following anecdotal comment:

How will Google and Facebook compete? The goal of each is to be the point of entry for Web users, the theory being that whoever controls the gateway will deliver the most effective advertising platform. As I discovered in reporting last week’s column, Facebook is so important to some users that it is on their computer screens 24 hours a day, seven days a week. I feel like I’m constantly using Google, but I don’t sleep with it.

Who says that Google wants to be or should be the the “portal” to the Internet?

AOL tried that and failed. Yahoo tried that and failed.

Information wants to be free. Google wants to help make that so.

Stewart Brand, is credited with originating the phrase. He founded the Whole Earth Catalog with main idea that technology could be liberating rather than oppressing.[2] The first modern recorded occurrence of the expression was at the first Hackers’ Conference in 1984, in the following context:

On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.[3]

Brand’s conference remarks are transcribed in the Whole Earth Review (May 1985, p. 49) and a later form appears in his The Media Lab: Inventing the Future at MIT:[4]

Information Wants To Be Free. Information also wants to be expensive. … That tension will not go away.[3]

According to historian Adrian Johns, the slogan expresses a view that had already been articulated in the mid 20th century by Norbert WienerMichael Polanyi and Arnold Plant, who advocated the free communication of scientific knowledge.

If you don’t believe me, go back to Google’s IPO and re-read these statements:

Google is not a conventional company. We do not intend to become one… .

Sergey and I founded Google because we believed we could provide a great service to the world—instantly delivering relevant information on any topic. Serving our end users is at the heart of what we do and remains our number one priority… .

Sergey and I founded Google because we believed we could provide a great service to the world—instantly delivering relevant information on any topic. Serving our end users is at the heart of what we do and remains our number one priority…. .

Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.

We aspire to make Google an institution that makes the world a better place. With our products, Google connects people and information all around the world for free. We are adding other powerful services such as Gmail that provides an efficient one gigabyte Gmail account for free. By releasing services for free, we hope to help bridge the digital divide. AdWords connects users and advertisers efficiently, helping both. AdSense helps fund a huge variety of online web sites and enables authors who could not otherwise publish. Last year we created Google Grants—a growing program in which hundreds of non-profits addressing issues, including the environment, poverty and human rights, receive free advertising. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1% of Google’s equity and profits in some form. We hope someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the world’s problems.

Wealth has not changed the founders’ view. And if Silicon Valley gossip can be believed, one of the forces that impelled the founders to take back the reins was their unhappiness with how CEO Eric Schmidt was more willing than they to have China censor information.

To his credit, Stewart also quotes Google’s founder Larry Page as saying,

“Social Search, Google’s social-networking feature, is “just the tip of the iceberg” and represents only “one percent of the capabilities that can be deployed in that realm.”

I acknowledge that due to my being way over the hill, at 62, I use Facebook a lot less than my children.  I do use Facebook and my kids use it more than I do. But none of us use it anywhere near as much as we use Google’s many products.

It’s no surprise that most pundits ignore principles.

They also ignore the fundamental fact that Google and Facebook are nowise “competitors” any more than eating and sleeping compete for your time.

The GoogleGazer believes it is unlikely that Google will ultimately simply mimic or “me too” Facebook. They will attempt to further integrate finding,  using, and disseminating  social information in creative ways.

I agree with Stewart’s closing remarks, which in many ways fight the balance of his essay:

As I said last week, I wish I were a Facebook shareholder, but I’m not a member of that exclusive circle. I have been a Google shareholder since its public offering, and in my experience, widespread doubts about Google often have been an opportunity to buy.

 

 

Microsoft Lost $2.5 Billion Online in Last 12 Months; Google Earned that in Just Three Months

Business Insider, which keeps track of such things,and prepared the above chart,  noted that while slightly down from the previous quarter, Microsoft lost $543 million in the quarter just ended, and over $2.5 billion online in the last twelve months. With division sales of $691 million and losses of $543 million, that’s about $.79 in losses for each $1 in online sales.

A great business.

$2.5 billion in losses is staggering.

“A billion here, a billion there, and pretty soon you’re talking real money,” the late Senator Everett Dirksen famously said on the Johnny Carson Show.

Microsoft is also caryying $6.37 of Goodwill on its Online division’s balance sheet, which may yet need to be written down.

That loss is about equal to what Google made in the quarter just ended on quarterly sales of $6.37 billion, up 29% from the year before. See here for details.

As the world moves to cloud computing, the Wall Street Journal has defined Cloud Computing as:  “selling processing power, data storage and software hosting services over the Internet.”

As Microsoft continues to bleed, the competition is getting steeper and stronger. Verizon just agreed to buy Terradata for  $1.4 billion. Amazon has now entered the bulk email business, and has added AWS Elastic Beanstalk, which it calls “an even easier way for developers to quickly deploy and manage applications in the AWS cloud.” Elastic Beanstalk automatically handles the deployment details of capacity provisioning, load balancing, auto-scaling, and application health monitoring. Amazon says, “The first release of Elastic Beanstalk is built for Java developers using the familiar Apache Tomcat software stack which ensures easy portability for your application. There is no additional charge for Elastic Beanstalk – you only pay for the AWS resources needed to store and run your applications.” While Amazon does not break out segment earnings,  AWS is believed to be profitable and to account for more than most of the $953 million in 2010 sales that Amazon calls “Other,” and which grew 50% from  $653 million in 2009, suggesting that AWS will exceed $1 billion in 2011.

We would be remiss if we did not note that Google announced a passing of the CEO baton to Larry Page.

Clint Boulton opined in e-Week that the change ” raises questions about the future of the company effectively marketing Google Apps for businesses. Google’s slip here would make Microsoft, with its enterprise clout, the prohibitive favorite for cloud collaboration software.” While noting that Dave Girouard and his team have, “quite impressively, tacked on 1 million business customers a year since the product’s inception as a business platform in February 2007,”  he then opines that he predicts that Larry Page will cede the business market to Microsoft as he doesn’t think Page cares about business and so Boulton sings the praises of Microsoft 365,  which he finds “polished.”

The GoogleGazer thinks that is exceedingly unlikely to happen, and views the notion of ceding Google’s business markets to Microsoft and its social markets to Facebook as nothing more than sour grapes and wishful thinking on the part of the dying but still breathing coterie of Microsoft Forever cheerleaders.


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