Guy's Economics and the Internet Blog

Google - a dream or a nightmare?

A weird thing happened to me last night. I found myself "Googling" in my dreams!

I had been watching a TV programme just before I went to bed. Something in the programme had intrigued me and I made a mental note to find out more about it next day. So the thought was there in my head and somehow it wouldn't wait for me to wake up again this morning and start up my computer. As the alarm went off I found myself mentally scrolling through what looked like Google results, trying to work out which of my hits would help me answer my question. I guess it just goes to show how much Google has already occupied so much of my life.

Google has of course already extended is activities well beyond its original search engine territory. There is its gmail service, not to mention the very blogger tool that I have used to post this piece. And then the acquisition of the social networking site YouTube. On top of that there is its free web-based Documents and Spreadsheets service.

Some people are worried about where this is all leading. John Naughton, who writes the weekly Networker column in the Observer newspaper recently noted that Google had put together its e-mail, instant messaging, calendar, word processing and spreadsheets tools into a cheap ($50 per annum) commercial package called "Google Apps Premier Edition" which it is aimed at small businesses, educational institutions and other small organisations. As Naughton says this could look good value compared with Microsoft Office, particularly if Windows licences can also be dispensed with by running the software via Firefox browser using the Linux operating system (both free). However much they might deny it Microsoft and Google are increasingly rivals and up to a point it is a good thing that Microsoft can't have everything its own way. For some years Microsoft has effectively had a monopoly in the PC operating system and office software market. Such monopolies can often lead to overpriced products and a lack of pressure to innovate.

But Naughton thinks that Google has got other plans too that could give it more control over future Internet use than Microsoft has had over local networks. Apparently Google has been purchasing huge quantities of the fibre-optic cabling that provides network bandwidth. At the same time they have been creating data centres consisting of clusters of servers both in the US and in many other parts of the world. Naughton puts these two things together and suggests that the reason for them is that Google is expecting the expansion of online video transmissions, which has been started by the success of services like YouTube, to really take off. A company that could both store and transmit the large amounts of data needed for this would be in a very strong position. And, as we have seen with Microsoft, it isn't always healthy for one company to be in such a dominant position.

On the other hand there are also some who think that Google's decision to spend a lot of money on YouTube but leave its day to day management in the hands of its founders is a bad idea that could eventually cost the company dear. What is at issue here is copyright protection and the degree to which Google can deliver on its promise to ensure that YouTube content adheres to copyright laws.

It is too early yet to say whether this will turn into a Google dream or a nightmare.

References

[1] John Naughton. Microsoft first - then Google wants world domination. The Observer, 25th February 2007.
[2] Faultine. Will Google come to regret getting involved in YouTube? The Register 1st March 2007.

posted by Guy @ 2:36 PM