Tuesday, November 30, 2010

Google: the sometimes honest broker

The Wednesday papers have an interesting juxtaposition of two stories: bad Google and good Google.

The bad Google is that the EU (is finally) going after Google with an anti-trust complaint. After openly seeking Total World Domination for years, bad Google will enjoy the same sort of proctological exam that Microsoft once did. For those that watched the US and EU futilely attempt to stop Redmond’s bid for Total World Domination, two issues seem like déjà vu all over again.

First is the issue of tying. As the AP notes, yes we expect YouTube to show up first in Google searches, but its maps? Its finance? In a 2007 YouTube video, then-Google search executive Marissa Mayer noted that Google favored its own finance site when searches previously listed Yahoo first. Meanwhile, The Register details the complaints of the British firm Foundem and how it fell to the back of Google’s rankings after a 2006 algorithm shift.

The other is that Google’s ranking process is notably opaque — and the company intends to keep its algorithms a trade secret — which means that whether or not it’s fair, no one can say for sure. (Shades of Microsoft’s secret APIs that were revealed long after 1-2-3 and WordPerfect were wiped out while Novelware had entered its terminal glidepath.)

That’s bad Google, and the accusations (and rationalizations) seem no different than any other quasi-monopolist. Despite its activist nature, the current administration is certain to go easier on the US firm than the EU will — just as happened under the last two presidents.

The good Google is — according to the WSJ — going after Amazon and other lesser proprietary publishers (NB: Apple, B&N) to provide a truly open document file format. If that’s not enough, the new Google Editions will help brick & mortar retailers compete with both Amazon & B&N by setting up their own shops. (Presumably, this is much as Amazon zShops helped home-based resellers bypass eBay).

E-books are not going anywhere until there is the inevitable single universal format, available from all resellers and supported by all hardware. I suppose we could temporarily support two formats (cf. VHS and Beta, 8-track and cassette, or RCA vs. CBS in vinyl), but in this case it will be the market-leading proprietary AZW being challenged by the open format where (as is customary) everyone gangs up on Amazon.

Google can and will be open on books precisely because it is a monopolist elsewhere in the food chain. Its monopoly rents from search allow it to be indifferent as to book content and reader business models, because it knows it will make money searching for this content no matter who sells it. (Just as Intel was indifferent as to how the Internet grew as long as people used Intel-equipped PCs as clients.)

For years Google (out of copyright) books have been available both in PDF and (for selected texts) the EPUB open format. In it latest effort, Google seems to be winning the cooperation of (once suspicious) publishers and authors to sell content in an open format.

A key question is when Google’s strategy will attract the enemy-of-my-enemy allies against Amazon. Right now Apple dominates full-featured tablets with the iPad (the way Amazon dominates single-purpose e-readers with the Kindle), suggesting that it will be in no hurry to join Google’s parade — particularly since they are rivals in so many other areas.

On the other hand, the iPad business model makes money selling hardware with negligible ebook sales — and so Apple has little to lose by switching formats. Meanwhile, B&N is more interested in selling books in its store rather than nook hardware — so will it try to become the leader of open book content or continue to imitate Amazon’s proprietary book strategy?

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