Authors: Ken Auletta
Tags: #Industries, #Computer Industry, #Business & Economics
Googled (28 page)
As Google’s director of media platforms, Eileen Naughton, said, “It is absolutely our intention to be in every cable box.” To accomplish this, she knew, would require the cooperation of the cable companies that own the box. And that cooperation depended on trust. Naughton said, “Google aims to improve the advertising quality in traditional media.” If traditional media trusts her word, then Google is servicing them, not supplanting them. If they mistrust Google, they will never allow its software to invade the cable box. A decade ago, when Bill Gates tried to persuade the cable companies to trust Microsoft to be the operating system for digital cable boxes, he didn’t get past first base.
Television executives had reason to be paranoid about the seventy billion dollars spent each year on TV advertising, as did advertising agencies. Not only was Google telling its customers they could do a better job of targeting ads and telling them which spots worked, but it was also extolling its array of other products. Among them were Google Print Ads, which by early 2008 was selling ads for seven hundred newspapers and allowing them to use an “ad creation tool” to craft inexpensive advertisements; Google Audio Ads, which was hoping to build on the deal it had made with Clear Channel Communications, the largest radio station owner in the United States, to sell 5 percent of ad inventory; and Google TV Ads, which on the Google Web site is described as “a searchable directory of specialists” to create television commercials. Was Sorrell right? Was Google intent on taking over the media buying function? “Yes, he’s right,” said Terry Semel, the former Yahoo CEO. “Google and Yahoo are always working on platforms to sell ads. All [of the new Google programs] at the end of the day will have the capability to sell ads in any medium.”
So why would a company like Procter & Gamble need a middleman media buyer like Irwin Gotlieb’s GroupM? Smita Hashim, the group product manager for Google Print Ads, said “that’s a good question,” and conceded that, “the roles will start shifting.” But Hashim, like Desai and others at the company, quickly assert that Google requires the “expertise” of ad agencies. With passion, Desai insisted that Google is engaged in a “win-win” game. If these programs succeed, the advertising revenues of traditional media as well as Google’s will rise. This is a familiar Google refrain, one that relies on what might be called Google “magic”: everyone wins. If old media gets with the program, makes a push to be more Internet-centric and share with Google, there will be no losers, no zero-sum games in this brave new digital world.
But these claims did not allay the anxiety of Sorrell, who feared Google would vie to obviate his creative teams as well as his sales and media-planning teams. The wellspring of this concern was not the Google TV Ads program, which does not generate the kind of slickly produced commercials his agencies create. He was troubled by Google’s hiring of Andy Berndt, who was copresident of one of Sorrell’s ad agencies, Ogilvy & Mather. Berndt was recruited in 2007 to run a new Google unit, the Creative Lab. Google denied that this was an attempt to enter the advertising business, and Berndt said his job is to focus on the Google brand, “to remind people why they love Google,” and to create ads only for his new employer. His staff consisted of just twenty people, he said, and would expand to only thirty-five. He said “the short version” of why he joined Google is simple: “When the spaceship lands in your backyard and the door opens, you just get in the spaceship.”
To most consumers, Google remained an iconic brand, a force for good, a company that made search easy and fast and free; a company that retained its bold, entrepreneurial spirit and was both a beneficent employer and a benefactor to shareholders.
To most media industries, Google was becoming a dreaded disrupter. The engineering efficiencies touted by Google were also perceived as threats to the sales forces of the television and radio and print industies. Weeks after the DoubleClick purchase, Beth Comstock, then the president, integrated media, for NBC Universal, and now the chief marketing officer for its parent, General Electric, said, “If Google could introduce us to tens of thousands or even a thousand advertisers we currently can’t have, that would be a great thing. But when they start moving up the pyramid and they think you can put a self-serve model to what we know of as a very highly customized, high touch, more intuitive kind of business—it’s a content co-creation in some cases—you can’t do that with self-service and algorithms.” In her dealings with Google, she said, “There is this undertone of: Is that all they’re looking for? Why are they into television advertising?” Are they intent on replacing NBC’s sales force? She would have gladly outsourced the selling of remnant advertising to Google; what she wanted to retain control of was the selling of premium advertising. Like Karmazin, she wanted her salesperson in on the process, persuading clients to spend more.
Days after the DoubleClick transaction, Microsoft and AT&T publicly called on federal regulators to block the deal, saying it would reduce competition and give Google access to too much private data. Sorrell called on regulators to review the acquisition, declaring, “It raises issues as to whether we are happy to let Google have our clients’ data and our own data, which Google could use for its own purposes.” A senior executive at Time Warner, who did not want to be identified because its AOL division is a Google partner, told me at the time, “You always have to worry when someone gets so much more powerful than all the competition out there. This is why I come down to this: I hope the government starts understanding this power sooner rather than later.”
Tim Wu, a professor of law at Columbia University and a former Supreme Court clerk, looks at the issue from a different angle. He said he’s not “worried about Google becoming large.” One can make the argument, for example, that size brings standardization, he said. “I’m less concerned how they’re behaving in their own market than what a company does to other markets.” Will Google use its power to unfairly dominate other markets, as Microsoft used its operating system dominance to cripple the Netscape browser? “If Google remains true to its mission of being an ‘honest broker,’ I’m pleased. If they have an agenda, that’s when I become fearful.” He wasn’t sure Google had an agenda, but was plainly worried: “If they’re willing to block sites to placate China, are they willing to block sites to placate powerful advertisers?”
Here the issue of privacy becomes entwined with the issue of power. Together, Google and DoubleClick amass a mountain of consumer data. The more “personalized” this data, as Eric Schmidt said, the better the search answers. “When I decide to go to the movies,” said Schmidt, “I’d like to rely on the recommendations of friends. How do we capture that? The more we know who you are, the more we can tailor the search results.”
Of course, when a company retains as much data as Google does and also proclaims, “We are in the advertising business,” as Eric Schmidt does, this arouses more privacy concerns. And since Google believes advertising is information users want if it is“relevant,” it follows that sharing data serves users, which exacerbates these fears. Or as Sergey Brin told Wall Street analysts during Google’s third-quarter conference call in October 2007, “I am really excited to tell you today what we have done over the past quarter in ads and apps. As you all know, for advertising our real philosophy is to create a win-win between advertisers and customers by presenting users with really relevant information which is interesting to them, but is likely to cause a transaction to commence.” With technology making inroads toward improving how users’ real desires are gauged and finding patterns of behavior, the data-mining discipline Sergey Brin studied at Stanford enters a new age. The pressures on Google—and all sellers of advertising—to share more data will intensify.
Privacy fears escalate when Google executives express peculiar ideas about privacy—ideas that suggest they don’t grasp the reasons people are fearful. Each fall, Google hosts a two-day Zeitgeist Conference on its Mountain View campus, inviting a cross section of people from various fields. Much of the conference is moderated by journalist James Fallows, and a cavalcade of prominent scientists, musicians, artists, public officials, and others make presentations or appear on panels. The last event of Google’s Zeitgeist is when Brin and Page come on stage—in jeans, of course—to answer Fallows’s and the audience’s questions. At the 2007 conference, Randall Rothenberg of the Interactive Advertising Bureau rose to ask Brin to access the importance of privacy.
Brin declared that “the number one” privacy issue was “stuff that is untrue about people on the Web.” Because information “travels so fast” online, and because “anyone can publish anything,” these untruths gain currency. The number two privacy issue, he said, was the “hijacking of credit cards.” He dismissed concern about the information collected on cookies “as more of the Big Brother type”—in other words, fantasies. “Do they [users] trust what you’re doing? That’s not so much a privacy issue.” By this logic, if we trust Google, there is little reason to fear they will misuse our data. Afterward, at a small press lunch with the founders and Schmidt, Page signaled his agreement with Brin. “Sergey is just saying there are practical privacy issues that are different than the ones debated.” As was true when the founders pushed to add a delete button and allow Google’s Gmail scanning technology to more aggressively deliver ads when users typed certain keywords and to forgo a delete button—a mistake Brin told me showed “we just weren’t good” at anticipating fears, but “I think we’ve now learned”—once again, Brin and Page displayed an inability to imagine why anyone would question their motives and a deafness to fears that can’t easily be quantified.
CHAPTER TEN
Waking the Government Bear
W
hile a full chorus of incensed media—advertising agencies, publishers, newspapers, television and telephone companies, and tech companies like Microsoft—complained about the growing power of Google, the Bush administration, steadfast in its belief that a free market provides its own regulation, was silent. Stepping into this breach was Brooklyn-born public interest advocate Jeffrey Chester, executive director of the Center for Digital Democracy in Washington, D.C. Chester founded this two-person organization with an annual budget of two hundred thousand dollars in 2001. He has mounted a ferocious campaign to induce the world’s governments to handcuff Google. Its first petition was filed before the FTC in the fall of 2006, prodding them to investigate how online marketing encroaches on privacy. In the spring of 2007, Chester, then sixty-two, began to press for an antitrust investigation of the rapid consolidation of the online advertising sector, and urged the FTC to reject Google’s proposed merger with DoubleClick. He petitioned the European Commission to do the same.
hile a full chorus of incensed media—advertising agencies, publishers, newspapers, television and telephone companies, and tech companies like Microsoft—complained about the growing power of Google, the Bush administration, steadfast in its belief that a free market provides its own regulation, was silent. Stepping into this breach was Brooklyn-born public interest advocate Jeffrey Chester, executive director of the Center for Digital Democracy in Washington, D.C. Chester founded this two-person organization with an annual budget of two hundred thousand dollars in 2001. He has mounted a ferocious campaign to induce the world’s governments to handcuff Google. Its first petition was filed before the FTC in the fall of 2006, prodding them to investigate how online marketing encroaches on privacy. In the spring of 2007, Chester, then sixty-two, began to press for an antitrust investigation of the rapid consolidation of the online advertising sector, and urged the FTC to reject Google’s proposed merger with DoubleClick. He petitioned the European Commission to do the same.
A voracious reader of trade publications, Chester became obsessed by what he saw as the pernicious power of the Internet to compile data on consumers. Chester is difficult to ignore. His Brooklyn-accented voice is loud and piercing. He hounds people. He speaks passionately and rapidly, leaping in midsentence from privacy to monopoly to a conversation he had that morning with an FTC staffer. He wears horn-rims and short-sleeved shirts with the neck open and the pockets bristling with pens. His tiny office on Connecticut Avenue is adorned with movie posters that assail McCarthyism and corporate power. He has little regard for the advertising industry, but knows that if he railed against commercialism and consumerism it would open him up to attack as a left-wing former social worker, which, of course, he is. So he sticks to the privacy issue. “The basic model for interactive advertising,” he said, “combines this very powerful data-collection business designed to know your interests in a daily, updated way that is then utilized to create very powerful multimedia to get you to behave in some fashion, whether it’s buying a product or liking a brand.”
Marc Rotenberg, the executive director of the Electronic Privacy Information Center, rents a single office to Chester’s organization and works just down the hall. He is in nearly all ways Chester’s opposite. He wears charcoal business suits and has degrees in law and computer science; no pens can be found in his shirt pockets. But he and Chester work closely together to advance privacy protection measures. Rotenberg believes the central question should not be, Is Google invading people’s privacy? Rather, it should be, Why does Google need to collect all of this information?
GOOGLE’S SERVERS NOW CONTAIN a tremendous amount of data about its users, and this database grows exponentially as search and a variety of Google services multiply. With the latest techniques to discern what really motivates consumers—often categorized as “behavioral targeting”—companies and advertisers will know even more. Some forms of such targeting are widely seen as helpful, such as when Amazon extrapolates from the browsing and purchase histories of a customer to recommend books. Other forms might be alarming to the lay consumer. New technology will allow cameras built into television set-top boxes to be armed with algorithmic models that read our facial expressions and tell advertisers what we do and don’t like; Nielsen is investing in brain reading—called NeuroFocus—which is meant to take the guessing out of why consumers react to what they see on a screen or read or listen to.
New smart phones collect enormous amounts of data. Mobile telephone companies gather and store digital data on calls made and received and how long each lasted. In addition, the chips in the phone’s GPS track a user’s location, the length of stay, and other mobile users she is in touch with. Tapping this sort of data is known as reality mining, and is a cousin to Brin’s data mining. Although telephone companies don’t share the names of customers, they have begun to sell this data to companies seeking to market products. Phorm, an American company with offices around the world, proposed to go one step further, approaching telephone and broadband Internet service providers with software that tracks each consumer’s online activities, so that a nameless portrait of each consumer can be created. In return for supplying the data, the telephone and cable companies can open a new revenue spigot. By late 2007, Phorm had done three deals in England that yielded data on two-thirds of Britain’s broadband households.
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