Google plans to corner the wind energy market in New Jersey.
It’s a first-of-its kind venture that could cost Google and its partners $1.3 billion, but one Google believes fits its core mission: You can make money without doing evil.
It’s all well and good until you look at the fine print. If the project goes as planned, Google wins a handsome profit – 12.6 percent – paid by you, the New Jersey power user. If the project falls apart after it gets approval, for reasons beyond its control, Google gets its money back – paid by you, the New Jersey power user.
That is the world, critics say, as Google sees it. All profit, no downside. There is only up for one of the world’s largest multinational corporations, with $50 billion in the bank, a business that started 15 years ago by providing consumers with a better way to search the Web.
It’s an innovation that has brought the information age to the fingertips of everyone with access to a computer, making workers and consumers so efficient that they should have time for the true joys in life – the options of which they can find through Google’s search engine.
Yet as the energy project shows, Google’s mission, even one fueled by not doing evil, doesn’t come free. The company revolutionized advertising with a search engine that allows businesses to better reach their targets, but public health advocates worry it leaves some consumers vulnerable. Its expansion has sparked innovation and added jobs, but it has aggressively used taxpayer subsidies to pay for it.
The consequences, both intended and otherwise, can be stark. The company is testing a driverless car, which would reduce the hazards of driving. Consumers no doubt would view such an advancement with great anticipation, a true marvel, the next step toward flying cars – unless they happen to drive a taxi for a living.
“Google is the master of telling one half of the story,” said Scott Cleland, president of Precursor, a Washington-based consulting firm, and a frequent Google critic. “They tell you the asset, they ignore the liability. They tell you the benefit, they ignore the cost.”
Volleyball courts and nap pods
The world through the eyes of Google is a world in which you can find the top-rated coffee, hop in your driverless car to pick it up and email your friend through your smartphone, or better yet, your eyeglasses, along the way.
Founded in 1998 by then-Stanford University computer-science students Larry Page and Sergey Brin, Google has become a cultural icon, a rare company whose very name is a verb.
In this summer’s movie “The Internship,” two middle-aged watch salesmen lose their jobs because, these days, even seniors find out the time by checking their mobile phones.
They land coveted internships at Google and step into the company’s Mountain View, Calif., headquarters. It is a far cry from the dingy offices and retail stores they are accustomed to, offering a volleyball court, space-agey nap pods and all the free coffee and food they can consume.
The movie also features hyper-competitive college students from a generation for whom working at Google represents just about their only chance to make good on the American Dream. (The movie at a recent showing at the Hazlet Multiplex was preceded by an advertisement for Google Chrome, a Web browser that competes with Safari and Firefox).
At the core of Google’s business is its ability to collect data about consumers based on their Internet searches, creating a modern-day fingerprint that they can pitch to advertisers.
Larry Bailin, the chief executive officer of Single Throw, an Internet marketing company based in Wall, understands the power of Google’s business model.
He recently searched for laptop computers for his staff, typing the item into Google and scrolling through his options. But the ads didn’t stop there. Two weeks ago, he surfed the Internet and landed on a website that displayed an ad from Staples, selling laptop computers. It was no happy coincidence.
“Google is the only search engine in the world that saves all search data, everything we search for, and never deletes it,” Bailin said. “No one is better at using search data and presenting personalized search information. Google remembers that. It remembers it’s you.”
To Bailin, who noted he is as paranoid as the next person, it makes life easier. He can find information faster. He sees ads for items he actually needs. And he doesn’t worry about sharing his data with Google; what’s the worst thing it can do to you? Try to sell you a laptop?
“Think about a world without Google,” he said. “Everybody uses it as such a huge benefit. The trade-off is, we’re going to use data about you to let advertisers sell things to you.”
You are Google’s product
Digital marketing isn’t universally embraced. It is not a stretch to imagine a day when consumers desperately trying to lose weight walk down the street, smartphone in hand, and without prompting are offered discounts from the nearest Dunkin’ Donuts.
“The marketers have become so sophisticated that they know our behavioral patterns better than we know our behavioral patterns,” said Jerome Williams, research director of the Center of Urban Entrepreneurship and Economic Development at Rutgers Business School in Newark and New Brunswick. Williams co-edited a recent book about the impact the food industry’s direct marketing has on childhood obesity.
Put another way, consumers using Google have let advertisers in on so much personal information that they may not be as empowered by the company as they think.
“We’re not really Google’s customers. We’re Google’s products,” said John M. Simpson, director of Consumer Watchdog’s privacy project in Santa Monica, Calif.
These days, Google can find you almost wherever you are.
How it shapes the world:
• Search engine. Two-thirds of all Web searches in April, 13.3 billion, were done through Google, according to comScore Inc., a research firm. Microsoft sites, by comparison, accounted for 17.3 percent of Web searches.
• Software. It developed Android, software used for smartphones.
• Smartphones. It acquired Motorola Mobility last year, giving it smartphones that use its software.
• Videos. It owns YouTube, a video library that attracts more than 1 billion visitors a month who can surf the site to find anything from President Barack Obama’s speech to Israelis (more than 53,000 views) to funny cats in water (more than 58 million views).
• Fiber. It is building fiber-optic networks in Kansas City; Austin, Texas; and Provo, Utah, offering high-speed Internet access.
• Email. It offers electronic mail service through Gmail.
• Social network. It launched Google+ as an answer to Facebook.
• Maps. It offers images, including your backyard, the Earth, the moon and the stars.
• Innovation. On the drawing board is the driverless car, wearable computer eyeglasses, and, according to Time, a space elevator to launch people and payloads into space without rockets.
“In the digital era, Google is your constant partner,” said Jeff Chester, executive director of the Center for Digital Democracy, a Washington-based consumer privacy advocate.
A lift from taxpayers
Google has been a bright spot in an otherwise lackluster economy. Last year, it generated $50.2 billion in revenue, putting it on par with the gross domestic product of Bulgaria, which had the world’s 75th biggest economy. It made a net profit of $10.7 billion. And it had $50 billion in cash, cash equivalents and marketable securities as of March 31, according to financial statements.
Not including the new employees from last year’s acquisition of Motorola Mobility, Google employed 37,544 workers in 2012, up 16 percent from 2011. It is Fortune magazine’s reigning best place to work. And it has its own innovation laboratory, offering a home for privately funded research that would resonate with New Jersey’s veterans of Bell Labs.
Yet taxpayers have aided its expansion. Google built a data center in Lenoir, N.C., in 2007 after the state provided subsidies worth tens of millions of dollars. Among them: North Carolina exempted the company from paying retail sales and use taxes to build and operate the center, according to a lawsuit filed by taxpayer advocates.
The incentives didn’t benefit the public; they only aided a private company, violating the state constitution, the plaintiffs said. Google won the lawsuit. The company spent $600 million on the data center, which now has 110 jobs.
Google faced similar complaints of favoritism in Kansas City, where it is building Google Fiber, providing Internet speeds at more than 100 times faster than what’s available today – at what it said was a competitive price.
The city agreed to provide a team of employees dedicated to the project. It allowed Google to use city-owned office space rent-free. And it agreed not to charge Google for access to its infrastructure, according to the development agreement that was provided by Netcompetition.org, whose members include Google competitors Sprint and Comcast. (Scott Cleland is chairman of Netcompetition).
Even free-market advocates, who would normally cheer the idea of business-friendly government agencies, are wary of incentives geared toward a specific company.
“It tends to undermine competition and lead to monopolistic behavior, so that means higher prices for consumers, potentially higher profits for producers,” said Matt Mitchell, senior research fellow at the Mercatus Center, a free-market-oriented research group at George Mason University in Arlington, Va.
Pursuing such deals isn’t cheap. Mitchell said it requires companies to hire lawyers and lobbyists to either obtain the incentives or to fight to keep them. And it changes the rules of the game.