The digital CIO: ‘Fear of Google’ and the ethics of digital business

Could the big digital players be using their dominance by exerting unfair competition?

Mark Zawacki, founder of an organisation called 650 Labs, recently discussed an open letter to Google's chief executive, Eric Schmidt, written by Mathias Doepfner, chief executive of Axel Springer, with us. 

The letter raises some interesting arguments about the domination of some of the major players in the digital space, most notably Google.

For a while now, we have been observing and discussing the area of digital disruption to traditional and long-accepted business models. This isn’t just about new competitors joining the market – at its most extreme it’s resulting in the complete meltdown and obsolescence of established industry models.

Are digital players exerting unfair competition?

Some commentators may shrug this off as natural competition and organisational dinosaurs not keeping up with the times to their own detriment. Examples include Blockbuster and HMV. 

There is, however, a different angle being discussed now, taking on board the notion of fair play and bullying. Could the big digital players, including Google, be using their dominance to exert unfair competition?

The Google effect

Axel Springer, the largest European newspaper publishing company, is feeling the effects of disruption and digital transformation as much as any business. Its group managing director recently made some thought-provoking points about the Google effect:

Growth

Founded in 1998, Google now employs almost 50,000 people worldwide, generated revenue of $60bn in 2013 and has a market capitalisation of more than $350bn.

Google is not only the biggest search engine in the world, but it also has the largest video platform in YouTube, the biggest browser in Chrome, the most widely used email provider in Gmail and the biggest operating system for mobile devices in Android.

Google has clearly given a massive impetus to the growth of the digital economy. Organisations benefit hugely from the traffic they receive via Google. Publishing companies and others also generate revenue from Google's algorithms for marketing the remaining space in its online advertising.

Many organisations are dependent on Google. With a 70% global market share, Google is clearly a market-dominating company. The next largest search engine is Baidu in China, with 16% – since China prohibits free access to Google. 

Google's share of the online advertising market is also dominant and increasing.

Power

Google is obviously an extremely powerful business. It can create and change algorithms that can drive internet traffic in one direction or another at will with its dominance. Google can, if it wants to, favour certain organisations over others and generate or destroy businesses seemingly at will.

It has been accused of creating algorithms that favour its own products and subsidiaries, which, as a search engine in business, would be a natural thing to do. 


"We believe that modern technology platforms, such as Google, Facebook, Amazon and Apple, are even more powerful than most people realise, and what gives them power is their ability to grow"

Eric Schmidt, CEO, Google


But increasingly, Google is planning to play a leading role in many more areas of our professional and private lives – in the house, in the car, in healthcare – and is now investing heavily in artificial intelligence and robotics.

It claims to be an ethically sound company – its motto is "Don't be evil" – yet it is a commercial business and will naturally behave in a competitive way in these markets.

Internet critic Evgeny Morozov says this is not a debate about technology, but rather a political debate. Google is all-pervasive and is becoming very adept at influencing behaviour and choice.

Google says those who criticise it are “ultimately criticising the internet as such, and the opportunity for everyone to be able to access information from wherever they happen to be”. This raises an interesting debate about "ownership" of the internet itself.

Customer data

Nobody knows as much about us as Google. Even private and business emails are read by Gmail and can be evaluated. Schmidt said in 2010: “We know where you are. We know where you’ve been. We can more or less know what you're thinking about.”

Mark Zuckerberg, when asked what Facebook thinks of the storage of data and the protection of privacy, said: “I don't understand your question. If you have nothing to hide you have nothing to fear.”

We could debate whether this is a reality of modern life and the internet, or more akin to a big brother society. Officials in Brussels are now thinking about how the total transparency of users can be avoided by restricting the setting and storage of cookies on the internet.

On the web, so much seems to be free of charge – from search services to journalistic offerings. In truth, perhaps we are just paying with our data. We all know that Google deposits cookies on computers after each session, saves IP addresses and records customer behaviour.

If you have a car accident today, and mention it in an email, you may receive an offer for a new car from a manufacturer on your mobile phone tomorrow. That may be welcomed. However, someone surfing high blood-pressure websites may receive higher health insurance premiums the day after tomorrow. Not so welcome.

The future of the digital giants

What impact might this have over time? Will we see a shift and possible public backlash towards the digital giants? Will the DuckDuckGos of this world, which promise not to track it users, come to the fore?

Historically, monopolies have never survived in the long term. Either they have failed as a result of their complacency, or they have ultimately been weakened by competition. Or they have been restricted by political initiatives. IBM and Microsoft are the most recent examples. What will happen to Google, Facebook, Amazon and Apple?


Brinley Platts and Peter Thornton are founders of CIO Development Ltd, a UK-based organisation focused on developing IT executives through the delivery of open courses, bespoke in-house programmes, and individual coaching and mentoring.


Sources:

This was first published in September 2014

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