The Economist on Google, Power, and Transparency

In a superb cover story this week, Who’s Afraid of Google?, The Economist argues that “Google needs a change of heart … Pretending that just because your founders are nice young men and you occasionally do things for free, society has no right to question your motives no longer seems sensible.”

The magazine notes that some of the concerns caused by the company’s astonishing ascent are paranoid, but some are quite reasonable. Because of Google’s size and power, the unbylined article notes, “Conflicts of interest will become inevitable — especially with privacy. Google in effect has a dial, which, as it sells ever more internet services, it can move in two directions. Set to one side, Google could voluntarily destroy any user data that it collects very quickly. That would assure privacy, but it would limit Google’s profits from selling information about what you are doing to advertisers, and make those services less useful to some users. If the dial is set to the other side and Google hangs on to the information, the services will be more useful, but some dreadful intrusions into privacy could occur.”

This would be true of any company at Google’s level, but it’s especially relevant since this company’s well-known corporate motto is “Don’t be evil.” (Disclosure: Back in early 2005, I got in trouble at the Googleplex for editing a magazine that ran a cover photo of Sergie and Larry with the headline “Is Your Company Evil?” hovering over. On the front cover, we defaced their photo with halos. On the back cover, we scrawled horns and tails over the same image.) The Economist does a smart job of evaluating the ramifications of having that motto and what it means for the company doing business going forward. The leader and its full-article companion, Inside the Googleplex, are must-reads this weekend.

On an unrelated note, but still in The Economist, there’s a new online-only piece about the semantic web that (a) is a good intro for people new to the concept and (b) refers to Radar notable Rael Dornfest as well as Marc Hedlund’s Wesabe (disclosure: O’Reilly Alpha Tech Ventures is an investor in Wesabe). You can read it here.

Update from Tim: I couldn’t help but adding an update to this post. The paragraph I found most interesting (and you can see why, given my interest in the intersection of Web 2.0 and financial markets) was this one:

More JP Morgan than Bill Gates

Google is often compared to Microsoft…but its evolution is actually closer to that of the banking industry. Just as financial institutions grew to become repositories of people’s money, and thus guardians of private information about their finances, Google is now turning into a custodian of a far wider and more intimate range of information about individuals. Yes, this applies also to rivals such as Yahoo! and Microsoft. But Google, through the sheer speed with which it accumulates the treasure of information, will be the one to test the limits of what society can tolerate.

Over on the if:book blog, Ben Vershbow picked up on this same key paragraph in the Economist story, but expanded on it with a powerful analogy:

In these first few generations of personal computing, we’ve operated with the “money in the mattress” model of data storage. Information assets are managed personally and locally—on your machine, disks or external drives. If the computer crashes, the drive breaks, it’s as though the mattress has burned. You’re pretty much up the creek. Today, though, we’re transitioning to a more abstracted system of remote data banking, and Google and its competitors are the new banks.

It’s also worth pointing to another article about Google in the Economist, from the end of April, about the fact that Google’s mettle has yet to be tested: “It is rare for a company to dominate its industry while claiming not to be motivated by money. Google does. But it has yet to face a crisis.” This idea that we don’t know what companies are made of until they face their first crisis (a slowdown in growth, a collapse in their market, a new competitor that threatens their business) is a really good one to keep in mind.