John Batelle’s “The Search” – Ch. 4-9

            Batelle spends the next six chapters covering Google from its inception (stemming from Larry Page’s interest in the linking structure of the Web and the difficulty of tracing links backwards – a problem solved with PageRank, which ranks search results based on the number of links into a sight as well as the number of links into the linking sites, based on the academic community’s concepts of peer review, citation, annotation, and rank) to its public offering and the dizzying growth process along the way.  Google outdid numerous competitors (in a field where people were determining on the fly what defined success) by being the first company to capture all three necessary ingredients “to profit from search and control its own destiny”: i) high-quality organic search results, ii) a paid search network (originally anathema to Google’s founders), and iii) its own traffic.

            Despite Google’s long-time aversion to advertising, it felt compelled to compromise, initially offering text-only ads (as opposed to large banner ads) on a cost-per-thousand (CPM) or “impressions” basis, based on the searcher’s keywords.  As that approach proved to be unsustainable and the economy soured, they switched to a “self-service” model called “Adwords,” where advertisers could pay for keyword-based ads directly online, and where they were charged based on a more successful cost-per-click (CPC) approach (as had been using).

            As their growth continued, especially following their replacement of Inktomi as Yahoo’s search engine, they wrestled with their approach to marketing.  Constrained by their budget, with lots of buzz being generated (thanks to the effectiveness of their search), they opted for an ultimately successful PR-centric approach over expensive paid media.  (Besides quality search results, they also offered a reliable system that seemed to tolerate any level of customer demand.  This was due to their distributed computing platform, a “massively parallel formation of cheap processing and storage” whose proprietary design became one of Google’s main assets.)

            2001 was a year of rapid growth enroute to a turning point for the company in 2002.  There was the selection of a CEO (Eric Schmidt), a challenging task given the requirements of the position – strong engineering skills, a tolerance of Page and Brin’s strong control, and strong leadership and management abilities.  Then there was the need to cope with the company’s accelerating growth and maintain the focus that Page and Brin had always had.  They were acquiring companies (Blogger, Picasa, etc.) and adding more data, tools, and services (Google News, phone book information, image search, mobile applications, etc.).  They also developed a company motto (“Don’t be evil” – a motto which became harder to follow as the business grew and confronted social conflicts such as how to do business with China) and a mission statement (ambitiously, “to organize the world’s information and make it universally accessible and useful”) and trimmed middle management in order to maintain more direct control and involvement with their engineers’ initiatives.

            In 2002, Google updated AdWords to use auction and pay-per-click features similar to Overture’s more successful approach, but with a twist: the ad’s popularity (clickthrough rate) was included in determining its overall ranking (as opposed to simply ranking them by the amount each company pays per click).  Soon thereafter, they made a critically important deal with AOL, whereby AOL would use Google’s search as well as Google’s paid listings (essentially “syndicating” AdWords).  (Recently, it has become apparent that this deal did not work out as well as Google had hoped, as they have decided to seek the return of what’s left of their AOL investment, though some speculate that this may be a tactic to yield a renegotiation of the terms or simply an effort to break with AOL before any deals with Yahoo and/or Microsoft are made).

           As Google’s success grew, so did a growing backlash against them and a fear that they were becoming the next Microsoft-like monopolistic behemoth.  But they pressed on into 2003, adding Froogle and an acquisition of Blogger and then a new chapter to their business and advertising model: AdSense, a service which placed contextually-relevant ads on any participating publishers’ websites, allowing them to monetize their web traffic and grow their advertiser network (considered to be their second-most important asset after their core infrastructure).

            Google constantly refines its search ranking methodology, in a constant struggle to outwit unscrupulous search engine optimizers; the issue of how they do it gained closer attention with one of their search algorithm updates in late 2003.  Such changes can and do severely impact the livelihoods of small internet retailers affected by them, and Google was being no more open about the rationale behind these decisions than they were about their financials.  There was serious speculation that some of their tweaks were being made in order to prevent advertisers from gaining top search rankings based solely on relevance and to pressure them into paying for AdWords.  Nonetheless, their paid search has evolved into a very successful business model, shifting marketing focus from “content attachment” to a much more efficient and potentially profitable “intent attachment.”  Batelle goes on to discuss how search has impacted various businesses and industries, from music (e.g., Napster) to news (e.g., declining subscriptions as news becomes a searchable commodity that is more easily sharable and interactive online) to local search/point-of-purchase applications.  He also discusses hazards of the search world that Google has faced and continues to grapple with, from fair handling of trademarked terms and other search term disputes to dealing with click fraud to privacy concerns (e.g., contextual ads placed in Gmail e-mails) to doing business in China without violating the company motto. 

             2004 was a true turning point for Google as it finally went public, in typical (non-traditional) Google fashion, using a Dutch auction IPO format and a dual-class shareholding structure (like many family-owned media companies) that would maintain strong company control in the hands of Page and Brin.  Despite a series of missteps in the months leading up to it, the IPO was resoundingly successful.

            The story of Page and Brin grappling with the growth of Google seems like a microcosm of society as a whole grappling with the growth of the internet and related technology innovations since the 1990’s.  The growth has had fantastic benefits for everyone, but it’s moving along so rapidly that it’s been hard to keep up and to manage its implications – good and bad.  For Page and Brin, their university project has turned into perhaps the fastest-growing business of all time, making them fabulously wealthy along the way; yet the growth has been so rapid that they’ve struggled to manage the complexity of the company, the competing demands of customers and advertisers, and the balance between loyalty to their principles and political-economic demands (e.g., doing business in China).  Many companies have tried and failed to grasp the internet wave (consider the DEC example mentioned in a previous chapter).  Consumers (Dan Gillmor’s “former audience”) have also benefitted greatly through an exponential increase in access to information, yet have wrestled with how to handle its downside – privacy concerns, internet scams, online pornography and predators, etc.  The resolution to this story, both for Google and for society, is probably many years and chapters away.


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