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BISE – STATE OF THE ART : The World’s First Information Utility?

The idea of information utilities came to naught in the 70s and 80s, but the , the , mobile access, and a plethora of access devices have made information utilities within reach. Google’s business model, IT infrastructure, and innovation strategies have created the capabilities needed for Google to become the world’s first global information utility. But, the difficulty of monetizing utility services and concerns about , which could bring government regulation, might stymie Google’s growth plans.

DOI 10.1007/s12599-008-0011-6

a national scale (Sackmann and Nie 1970; the number of users to the point where it The Authors Sackman and Boehm 1972). Not to be left is the dominant search player in both the out, the idea was also promoted by the U.S. and the world. This IT-based strategy Rex Chen Computer Usage Development Institute has allowed Google to reach more than Prof. Kenneth L. Kraemer, PhD in , the British Post Office in the UK, $16 billion in annual revenue, a stock price Prakul Sharma and Bell Canada and the Telecommunica- over $600 per share and a market capital- University of California, Irvine tions Board in Canada (Press 1974). ization of nearly $200 billion. Center for Research on Information The idea was so revolutionary at the Over the next decade, Google plans to Technology and Organization (CRITO) time that at least one critic called for a extend its existing services to the wire- 5251 California Ave., Ste. 250 moratorium on the development of infor- less world, to develop new services, and Irvine, CA 92697 mation utilities until the year 2000 so that to expand its computing infrastructure USA research could indicate what the social to support this growth. The new services, [email protected] impacts might be (Press 1974). The fateful combined with its own and partners’ com- year 2000 came and went without men- plementary products, have the potential Authors are listed alphabetically to tion of information utilities, but the year to make Google the world’s first informa- denote equal contribution. 2008 has raised the concept once again as tion utility and bring its ambitious goal of Google appears positioned to become the “organizing the world’s information” a lit- Received: 2008-04-02 first information utility in the world (Carr tle bit closer in time. Accepted: 2008-09-18 2008a) and concern about the potential The information utility was defined by Accepted after 2 revisions by Prof. Dr. social implications is raised once again its originators “as mass communications König. (Maurer 2007). systems in which the consumer interacts This article is also available in Ger- Today, however, Google is mainly directly with a central computer and its man in print and via http://www. known for its unparalleled associated information from a remote wirtschaftsinformatik.de: Chen R, technology, running on an efficient very terminal at his home, office, or school – Kraemer KL, Sharma P (2008) Google: large scale distributed computer system. in his natural environment – in a man- Das weltweit erste “Information Uti- It has become so successful that the verb ner such that he received the information lity”? WIRTSCHAFTSINFORMATIK. doi: “to Google” has ingrained itself in the at his terminal almost immediately after 10.1007/11576-008-0116-z. vernacular as a synonym for performing requesting it.” The information utility also a web search. The key to Google’s suc- includes contributing physical elements cess has been its strategic and innovative such as “television displays, communi- use of IT. Its search engine enables people cations lines, computers, data stores, and 1 Introduction to search the web for useful information support facilities” (Sackman and Boehm with , , Google 1972, p. 17). In the early 1970s, futurists at the Rand Earth, and other applications, but places At its heart, the concept involves an Corporation and advertising related to the user’s search analogy with public utility systems. As proposed the creation of information along side the results. By linking ads to a discussed by Nicholas Carr (2008a) in The utilities – the provision of computing and variety of search-based web applications, Big Switch, private electric systems built information service by a utility in the form and continually improving the relevance and operated by individual companies of a national network where any person of the searches and the ads, Google has were replaced by public utility networks desiring information could gain access been able to monetize its search capabil- whose economies of scale enabled them to – much like gas and electric utilities, but on ity, achieve financial success, and increase operate at a far lower cost and with greater

Business & Information Systems Engineering 1 | 2009  BISE – STATE OF THE ART

effectiveness. Similarly today, private com- ing sections describe these features, how 2.2 Core products and services puting and information services could be they contribute to Google’s capabilities provided better and cheaper over a com- for an information utility, and how its Google’s business consists of search-based mon computing network rather than future developments will further enable online advertising, which is comprised through the myriad computing shops that the vision. The paper concludes with an of three major components: AdWords, now exist in companies. Not only would analysis of the obstacles it faces in doing AdSense and a long list of complements to companies, governments, and other orga- so, and lessons for other firms. the first two services. AdWords is Google’s nizations benefit from economies of scale, advertising product and AdSense is an ad but so would individuals, as all customers serving program that delivers relevant would pay based only on the computing 2 Google’s business ads to Google’s partner . The role and information services they used from of the complements like or Google the utility. 2.1 Business strategy Earth is to draw users to Google websites The Internet is the global broadband where they can be exposed to advertis- grid network that information utilities Google’s strategy has been to capture ing. can use to deliver services to their custom- revenue from online advertising shown AdWords is the backbone of Google’s ers. Other components of an information along with web-based searches. Its advertising business. It allows advertisers utility are in operation today, although in advertising revenue accounted for 99 % of to create ads, insert them to the AdWords piecemeal fashion. Large scale comput- its total revenue of $16.59 billion in 2007. program, and choose the search keywords ing services that can be accessed over the Approximately 64 % of Google’s revenue is that determine when the ads show up next Internet are offered by IBM, HP, Micro- attributed to ads placed on its own prod- to a Google search query result. AdWords soft, Oracle, and Google. Network-based ucts and services websites (Google Search, allows the advertiser to display a variety of services are offered to SMEs GMail, ), whereas the rest is ad formats and to target the ads to specific and even some large companies by ven- derived from its partners (e. g., CNN.com, languages and geographic locations. dors such as SAP (ERP), SalesForce.com nytimes.com, techcrunch.com). AdSense is Google’s ad serving pro- (CRM), and Workday (HR and finance). In order to remain a forefront tech- gram that delivers ads on partner websites Massive storage services are offered by nology leader and innovator, Google has by automatically crawling the content of EMC while thin clients are provided by aggressively acquired start-up companies their web pages and showing ads that are companies such as HP. whose products strengthen the range of relevant to the audience and the site con- Whereas such companies might have complements offered by Google and pro- tent. “AdSense for search” allows a strong capabilities in one of these compo- vide increased distribution channels for publisher to provide website search to his nents, Google has amassed powerful capa- its advertising business. These acquisi- visitors and to earn money by displaying bilities in all of them, as required for an tions reinforce its expertise in online and on the search result pages. information utility. Google’s server farms traditional advertising. Going forward, Google’s business model involves mon- hold about one million computers. Its pro- Google’s strategy is to increase revenue by etizing the online advertising delivered prietary software coordinates all the serv- targeting additional customers in online to people who use the Internet everyday ers to form computing clusters in each of advertising. Out of the total $298 billion through Google Search or other services. the company’s data centers strategically spent on advertising in the U.S. in 2007, Revenue from AdWords and AdSense located around the world. Its software only $21.4 billion was spent online with are generated using two different pric- applications such as Google Apps, Google about $8.8 billion attributed to search ing schemes: cost-per-click (CPC) and Maps, and Google Earth provide software advertising (Capps and Ives 2007). Google cost-per-thousand impressions (CPM). as a service. Its Android is also expanding its advertising business Under CPC, the advertisers pay Google enables cell phones, PDAs, and thin clients beyond online marketing to other media, each time a user clicks on the text-based as well as pocket PCs to access services on including radio and print media (Hoover ad that appears online. If the ad appeared the Internet. 2006). This will help Google to provide on a partner website that is enrolled in the In short, Google is the one company its customers a range of options for their AdSense program, Google splits the reve- poised to realize the information util- advertising campaigns. nue with that partner. The revenue that the ity vision over the next decade. Its strat- Additionally, Google is investing in partner website owner earns depends on a egy and business model produce large large data centers that will support an number of factors like the amount that an revenues that enable it to take a long term information utility. It spent $5.48 billion advertiser bids on that website, the web- view and develop the necessary features. on infrastructure over the last two years site traffic, and the number of clicks. For Its myriad products and services, under- for data centers, servers, and networking every dollar that Google brings in through girded by a vast computing infrastruc- equipment. In 2008 it launched Google AdSense and other places that distribute ture, enable it to enlist business partners App Engine, which is a utility computing its ads, it pays roughly 78.5 cents back to and to support growth of the entire busi- platform for developers. Over the next ten sites that display the ads (Tedeschi 2006). ness ecology. These achievements stem years, Google’s strategy is to move to the Under CPM, advertisers pay Google from Google’s innovation model that provision of computing and information based on the number of times their ads emphasizes hiring highly talented peo- services for companies and consumers via appear on Google’s partner websites, as ple and giving them the freedom to excel its IT infrastructure. specified by the advertiser. The price paid while also incorporating outside inno- is the same whether users click on the vation through acquisition. The follow- ad or not. The advertisers select the sites

 Business & Information Systems Engineering 1 | 2009 BISE – STATE OF THE ART

where they would like their ad to appear Tab. 1 Key complements to Google’s core products and set a bid that applies to all these sites. Google Earth Satellite imagery of geographical locations The ads are then ranked for display based Google Map View driving maps and directions on the advertiser’s bid, competing with other CPM and CPC ads. As will be dis- Google Mobile Search for cellular devices cussed later, CPM is one of the monetizing Google /YouTube Search for video clips and TV programs schemes that might be used for Google’s Google Apps Web-based communication and collaboration tools information utility services for those users Google SketchUp 3-D model design tool who would be willing to have advertising Enterprise search engine appear along side the applications they use. File search tool in the local machine disk storage Online electronic payment system 2.3 Complements to Google’s core Specific search tool for academic research papers products GTalk Web-based instant messenger Underpinning Google’s advertising Gmail Web-based email client business is an array of complementary Photography organization and editing tool products and services, some of which are Online site to publish and share blogging information internal and others provided by business Online social network community partners. Complements are products or services that are consumed together, and OpenSocial Set of interoperable API tools for web-based social networks provide the benefit of expanding the cus- Source: Wikipedia, List of Google products, http://en.wikipedia.org/wiki/List_of_Google_products, tomer base and/or revenue. Products like accessed on 2008-09-18. Google Apps, Gmail, and Google Earth are classified as complements to Google’s Housingmaps.com, which combines data enables Google to achieve superior speed core business of advertising. Because from Craigslist (online classified housing at a fraction of the cost of using fewer, but complementary products play a critical ads) with Google Maps to create an appli- more expensive high-end servers. It also role in driving users to advertisements, cation that allows users to see houses for enables substantial scalability. If more Google has a strategic focus on expand- sale plotted on a map of the local area (Iyer processing power is required, the system ing the availability of these complements and Davenport 2008). These companies, simply increases resources from additional to multiple industry sectors and reducing which form part of Google’s ecosystem, computing machines to serve more user their cost to the users (Carr 2007). Its bring in revenue, help promote the brand, queries. This scalability is achieved by complements currently span multiple expand the customer base, and provide its proprietary operating system built on industry sectors, including advertising, services useful to customers. They help that allows new computer clusters entertainment, news, software programs, Google to create a virtuous cycle with to plug in, be recognized globally, and be and financial transactions (Tab. 1). benefits for all. Thus, as Google puts its available for use immediately (Iyer and These complements, most of which are information utility infrastructure in place, Davenport 2008). Google addresses the free, have the potential to generate reve- these companies will be key complements fault-tolerance problem in software by nue through advertising, subscriptions, or that help to achieve network effects. implementing reliability and redundancy pay-for-use. In the mid term, Google con- functionalities in its system architecture. tinues to rely on advertising as illustrated How then does this structure help tie the by its efforts to monetize YouTube. But its 3 Google’s IT infrastructure whole business ecology together? Google’s long term success as an information utility proprietary IT infrastructure enables the may require moving to additional schemes Google’s IT infrastructure is the keystone company to exert control from end to such as pay-for-use (like other utilities) of the entire business ecology, tying end and to enhance its own and its part- because some users may not want to con- everything together and making it work. ners products and services. For example, tinually be bombarded by advertising. The general IT model is to build powerful enables third party Google’s business partners are also systems that combine the use of commod- developers to deploy new applications fast important complements. Some use its ity hardware and intelligent software to and easy on the web. Just as Google engi- platform in their own businesses such as optimize speed, cost, scalability, and reli- neers can create new applications and test Amazon who uses Google’s search engine ability. A search query result using Google’s them with thousands of users, third par- or IBM who incorporates in search engine must provide a response ties can also create new applications that their offerings to business clients. Other time within one second for satisfactory incorporate part of Google’s functional- partners develop mash-ups, which are usage, so it uses parallel processing across ity, test them, launch them, host them on applications that combine Google func- multiple machines. Instead of purchasing Google’s infrastructure, and reach cus- tionality with content or capabilities of the latest computers, Google’s IT depart- tomers all over the world via the Inter- their own. An example of the latter is ment purchases commodity machines at net. As noted by Iyer and Davenport a greatly discounted price. Overall price (2008, p. 61), “This benefits both parties:  Google currently charges for premium services per performance is more important than Google gets its product widely adopted, such as Google Earth Pro and Google SketchUp Pro. individual peak performance, and this and its partners can devote their energies

Business & Information Systems Engineering 1 | 2009  BISE – STATE OF THE ART

to develop product functionality impor- petabyte storage, systems scalability, and might be hundreds of projects in develop- tant to their customers.” high-performance computing. Hence, ment at any given time. Many prototypes these software tools – MapReduce, Big- are made available on the lab’s website for 3.1 Software technology Table, and Google along with the interested public to download and try AJAX implementations – provide the in the beta stage. By launching these beta Google’s web-based search engine capabilities needed to serve as the core products and services publicly to be tried depends on a scalable IT infrastructure software infrastructure for its informa- out, Google can see which ones take off, get with complex software components and tion utility. feedback, and incrementally improve them architectural design that support web without having to scrap a product that page crawling, indexing, searching, and 3.2 Hardware technology might take off with further development. managing distributed files. The non-stop “” collects documents from Google has more than 25 data centers 4.2 Acquisition of talented people the web and then stores information in the where low cost commodity Intel x86- searchable database index. When a user based PCs function as servers. The data Google is among the most active high-tech sends a search query to the Google web centers are located around the world companies in hiring top engineering tal- server, a metric to find desirable results for risk management and to ensure that ent, including technology industry legends is computed and displayed on the web significant processing power is available and young guru programmers. During browser as output. for fast search engine access (Markoff and the technology bust, Google seized the The core search technology is PageRank, Hansell 2006). Each data center contains opportunity to hire bright technologists an algorithm that determines web page thousands of identical server farms repli- who focused on search technology (Vise relevancy by calculating the ratio num- cating the data and services to serve user and Malseed 2005). Although Google’s ber of outgoing versus ingoing links to a queries in local regions. The servers in revenue did not grow rapidly at first, its web page, and assigns numerical weights each center have identical configurations, employee brainpower did grow fast. Many for the indexed web pages (Langville and which contributes to operating efficiency. of the individuals hired by Google were Meyer 2006). Calculating outgoing and Google’s Linux operating system is the hub visionary inventors or technical leaders for ingoing links may seem trivial at first, but that supports its own and other’s comple- their former employer, and whose technol- the technique becomes computationally mentary services. This IT infrastructure is ogy was relevant to Google. Working at intensive and difficult as Google needs to a powerful platform that enables Google to Google is not only attractive to people in analyze billions of web pages on the Inter- store data, process information, and host industry, but also to university professors net, perform continuous calculations, and applications on a massive scale for utility who have opted out of academic careers assign ranking scores for all web pages col- services to consumers, SMEs, and larger to work for Google (Pittsburgh Business lected. The mathematical formula in Page- firms as well. Times 2005). Rank has been published by the Google To ensure the quality of its workers, co-founders (Brin and Page 1998; Page Google’s employment screening pro- and Brin 1998). 4 How Google innovates cess has become one of the most rigorous Along with PageRank, Google has among all technology companies. Appli- developed other important software tools Innovation at Google has been internally cants are asked complex technical ques- necessary to create efficient, fast, and scal- focused on building an IT infrastructure tions from at least half a dozen interview- able software capabilities. To speed up that is robust and enables easy creation of ers, with a recruitment committee hearing processing large data sets across multiple new products and services. Going forward, everyone’s feedback (Schmidt and Var- machines, optimizations in data extrac- the information utility will require more ian 2005). An entire interview process at tion utilities were developed (MapReduce). externally-oriented innovation focused Google can take several months. It is esti- To store files, index file meta-data infor- on supporting external developers and mated that Google still has around 100 mation, and retrieve data files quickly, a customer applications. But how does applicants for every professional job (Iyer large-scale database repository system was Google foster the innovation that leads and Davenport 2008). developed (). To address the scal- to new applications? This is an important ability issue, an efficient file system capa- question because most companies cannot 4.3 Innovation culture ble of maintaining terabytes of data across expect to imitate its IT infrastructure, but multiple storage locations was developed they can imitate its innovation strategies. Google not only hires talented people, (). To create interactive, Google uses the following four strategies. but provides them with an environment real-time web-based applications, Google that encourages risk taking, creativity, uses a software design methodology called 4.1 Explicit focus on R&D Asynchronous JavaScript (AJAX). It has  A high profile example was a former Vice President and academia professor, Kai-Fu Lee been used in products such as GMail, Google’s extraordinary revenue enables it who left Microsoft to work for Google. Lee played Google Earth, and , and is to have a luxury few firms can enjoy today a pivotal role in developing and driving Microsoft’s China strategy. Microsoft feared a leakage of instrumental in helping business partners – an R&D lab that focuses on developing critical confidential information and pursued and software developers create “mash- revolutionary hardware and software ideas a legal battle against Google for a one year ups” with Google. along with complementary services. More non-compete agreement. The case was settled between Microsoft and Google with the court Similar to its large scale search engine, than one-half of the company’s employees judge placing a temporary restraining order on Google’s information utility will require are engineers and scientists, and there the type of projects Lee could work on at Google.

 Business & Information Systems Engineering 1 | 2009 BISE – STATE OF THE ART

and team work. Unlike many corporate Tab. 2 Core and complementary services from acquisitions environments, Google’s headquarters Company Technology Acquired Google services (Comple- operates most like a graduate school ments) with daily guest speakers, mentoring by Core Infrastructure senior engineers, projects by individuals Applied Symantics Online advertising 2003 AdSense, AdWatch or teams, and encouragement of an open mind and out-of-the-box thinking. Google Sprinks Paid advertising 2003 AdSense, AdWords has also adopted a very flat organizational Akwan IT Distributed data processing 2005 Google File System structure to allow engineering ideas to be Android Inc. Mobile phone software 2005 Google Android widely circulated. Network file sharing 2007 Google File System To encourage innovation, Google imple- mented a 20 % rule wherein engineers Video game advertising 2007 (In development) must spend 80 % of their time at work on DoubleClick Online media advertising 2007 (In development) Google’s core products, but have freedom PeakStream Parallel processing 2007 MapReduce to dedicate the remaining 20 % of their Complementary services work time to “pet projects”. Such free- Deja Usenet search services 2001 dom has enabled the engineers at Google to develop products such as , Kaltix Personalized Internet search 2003 iGoogle Google Finance, Orkut, and GTalk. Sim- Where 2 Technologies Internet mapping 2004 Google Maps ilarly, Google’s cloud computing initia- Keyhole Satellite imagery 2004 Google Earth tive, which seeks to train the next gener- Zipdash Mobile GPS traffic updates 2004 Google Ride Finder ation of computer scientists to work with large scale databases, emerged from a com- Software Web analytics 2005 puter scientist’s 20 % rule project. The pilot Android Inc Mobile phone software 2005 Google Mobile/Google SMS involved developing a course supported by Mobile social networking 2005 Google Mobile a large-scale computer cluster with storage, Measure Map Blogging analytics 2006 Google Analytics an open source version of Google’s MapRe- duce software, and data to work with for Upstartle Writely online word processing 2006 Google Docs computer science graduate students at the 2Web Technologies Web spreadsheet 2006 Google Spreadsheet University of Washington. With the aid of YouTube Internet video 2006 (In development) IBM, the project is being extended to six ImageAmerica High resolution aerial cameras 2007 Google Maps elite computer science programs whose faculty will do the teaching and later to Tusli Mobile social networking 2007 Google Blogger API other universities as well (Baker 2007). Zingku Mobile social networking 2007 Google Mobile The initiative will create a new generation GrandCentral Web-based voice services and 2007 (In development) of computer scientists able to develop and mobile phone integration support the infrastructure and applica- Web-based activity stream sharing 2007 (In development) tions for information utilities. and mobile phone integration According to Iyer and Davenport (2008, Postini Communications security 2007 (In development) p. 67), an important part of Google’s inno- Source: Various news sources vation culture is rigorous data-based evaluation of project ideas, progress and results. They say that “A key ingredient of internal and external users and the data is Between 2001 and 2007, Google acquired innovation at the company is the extensive, used by management teams to determine over 40 start-up companies and leveraged aggressive use of data testing to support whether they can be improved, launched, their technology and engineering talent. ideas.” Google engineers use click stream or scraped. These acquisitions have not only created data from its own or its partner’s websites complements that might be monetized to test and support new ideas or product 4.4 Acquisition of innovative companies through the information utility, but offerings. They conduct thousands of nat- also have contributed to Google’s core ural experiments everyday on the Inter- Although much is made of Google’s infrastructure. For example, AdSense and net, such as offering multiple versions of internal innovation, the new products AdWords were both enhanced with tech- a page design, an ad, or a word choice. and services that have captured significant nologies acquired in 2003 from Sprinks They also offer tools to customers such as user market share (though not revenue as and Akwan IT (Tab. 2). Google Analytics which allows custom- yet) have been external acquisitions such To summarize the previous sections, ers to understand the value of their adver- as online video with YouTube and blog- Google’s business model has produced tising. They use email to circulate ideas ging with Blogger (Carr 2008a). Many of large revenue that has allowed the com- for new products that any employee can the purely internal innovations have not pany to generate complementary prod- comment on and rate the ideas, providing had the same traction, but part of Google’s ucts and partnerships and create a virtu- an in-house market test. Once launched genius is to know how to incorporate other ous cycle that brings benefits to all par- in beta, products are again evaluated by technologies into its core infrastructure. ticipants. Google’s business runs on a

Business & Information Systems Engineering 1 | 2009  BISE – STATE OF THE ART

robust IT infrastructure that provides the where data and applications are centrally ter of 2008 (O’Carroll 2008). This trend is speed needed for efficient search while stored on Google’s computing infrastruc- predicted to continue as Google expands enabling scalability and reliability at low ture and the user can access the informa- its AdWords and AdSense services to the cost. These achievements are the result of tion when needed (Carr 2008a). global market in order to maintain indus- an innovation model that gives highly tal- Google is also well positioned to become try dominance and enhance its opportu- ented people considerable freedom in a such a utility (Greene 2007). It has a huge nity to be a “global” information utility. culture that encourages team work, shar- computing infrastructure in place and ing of ideas and risk taking, but evaluates large advertising revenue with which to 5.3 Investment in mobile networks and their ideas with real world data and holds invest further. Google Android will inte- applications them accountable for results. These fea- grate mobile devices as well as PCs or tures constitute the basis for Google to thin clients to that infrastructure. Fur- Mobile wireless networks are expected become an information utility over the ther, a partnership with innovative com- to be the next big market for advertising. next decade. panies like Apple would enable Google to Google’s entry would not only reduce develop hardware that relies on the Inter- the cost of the mobile Internet, but also net for input, storage, and output. Google broaden the availability of the wireless 5 Future directions is also partnering with various universi- network and the applications for mobile ties and technology companies like IBM to devices. Its open source Android operating Although Google has developed some support research into cloud computing. system is a key initiative towards making capabilities for utility services, and cloud In the meantime, Google will likely mobile applications more platform inde- computing is one of its key strategic direc- continue to generate the majority of its pendent and allowing mobile phone users tions in the future, it continues to invest revenue from the advertising model that to select the type of handset and applica- in search based advertising, including is linked to its search engine. But all of the tions that they like on any cellular network. expansion to new media and mobile net- different services it is developing for con- Accordingly, Google is investing heavily to works. The goal is not only to strengthen sumers and businesses will provide new improve the technology for mobile search its core revenue stream, but to expand the opportunities to display advertising, and and targeted location-based advertising. number of users on its platform who may new opportunities to collect information CEO has predicted a wireless become customers for utility services over and personalize ads more precisely. The industry future comprised of free or very the next decade. big question for the long term is whether low-cost cellular devices, subsidized by it will have a robust subscription model advertising networks (Reuters 2006). 5.1 Investment in cloud computing that will induce users and companies to Google is also working with the hand pay Google for processing, storage, and set manufacturers to design their hard- Google has been exploring the idea of software services enabled by cloud com- ware to support Android and the wireless cloud computing, which may be the one puting. network. Android provides the software to development that most shapes Google’s support the use of its search-based adver- future. Cloud computing is a new para- 5.2 Investment in new media tising products in mobile applications and digm that is similar to the information thus contributes towards Google’s strategy utility concept. The idea is that all the Google has expanded its advertising of using mobile networks for advertising. user’s applications and data are stored on business to include mobile, radio, print, Through its $10 Million Developer Chal- servers called “clouds,” and the user can TV, and video streaming in addition to lenge, Google is encouraging third party access these independent of devices, soft- online. A look at Google’s 2007 acquisi- developers to create applications that run ware platforms, and location. Thus, there tions (Tab. 2) shows that it has focused on the Android platform. is no need for individuals to store data and recently on broadening its advertising applications on their local PCs or for cor- channels and on complementary products porations to host their own data centers that support its advertising business. To 6 Emerging challenges (Greenberg 2008). As put by Nicholas Carr enhance its advertising expertise, Google (2008a), what Google “...wants to eventu- has acquired companies like Adscape Google is a young company that has yet to ally become is the computer that people (video game advertising) and Double- be tested by serious adversity. Whether it use instead of their PC or their company’s Click (online advertising). Google has is able to achieve the vision of becoming data center – the world’s computer.” also acquired some companies that will an information utility is still unclear, as Carr also argues that Google already strengthen its expertise in mobile appli- it faces problems of how to monetize its is a lead example of the information util- cations (e. g. DodgeBall, Zingku, Grand services beyond advertising, a growing ity. Google is a central computing util- Central). These acquisitions are intended concern about privacy and other social ity that supplies search-based computing to make Google a one-stop-shop for all issues, and calls for government regula- services. The online web applications like kinds of advertising campaigns. tion. Gmail and Google Docs are a further step In addition to bringing new advertis- towards centrally provided computing ser- ing services to the market, Google is also 6.1 Monetizing services beyond vices. Many people already use these appli- expanding its existing operations to a advertising cations online. This is significant because global scale. The contribution of interna- it involves a shift from the desktop PC par- tional sources to Google’s revenue repre- The advertising model has worked well adigm to the cloud computing paradigm sented 52 % of sales in the second quar- for Google and it might use the model

 Business & Information Systems Engineering 1 | 2009 BISE – STATE OF THE ART

for utility services as well. It would tage would be the payment of fixed rates tics are only used by their search engines allow users to access a wide range of independent of usage. to better gauge user preferences, hence utility applications online and stream It is likely that Google will use a combi- providing better search results. How- advertising alongside the main nation of these models for its utility ser- ever, this is a significant invasion of user application content much as it does now. vices. The pay per usage model could be privacy as it allows Google to gain deep The biggest advantage of this model is the the initial choice for cost conscious users. knowledge on its users, with insights on free services for users. This might be the The subscription model might be the topic interests, intents, and lifestyles. And ideal solution for private users. However, choice of heavy users as they would pay there are privacy issues with respect to businesses will have reservations because a fixed fee for only the services they need. and Google’s work with of the privacy and security concerns and The advertising model can be integrated hospitals to make medical information the distractions that the advertisements with both of the above models depending more searchable across platforms for doc- might cause. Indeed, the biggest problem on user willingness to view ads. This would tors, hospitals, and patients. that Google may face is getting the big make the revenue from subscriptions and Google claims in its privacy policy that corporations, which form a major part advertising a bonus, not a necessity. But it has no intention to release user search of the potential market, to adopt these none of this will be easy. Google bought patterns or commercialize the data to services. Since these corporations have YouTube for $1.65 billion in 2006, and has third party companies. However, Google already invested millions of dollars in yet to find the monetization breakthrough is a publicly traded company that needs to customized solutions, convincing them that will enable it to roll out a widespread serve the interests of its shareholders with to switch would be a hard task. Therefore, advertising platform without annoying the goal of generating revenue and achiev- two other methods of monetizing utility users of the site (Richards 2008). ing profitability. Due to intense regulatory services have been proposed: charging scrutiny and privacy advocacy, Google based on usage and providing hardware 6.2 Privacy and other social issues changed its search privacy policy in 2007 appliances that run these services (Rappa to only collect and keep log files of search 2004; Diana 2008). The “ of everything” is raising queries and cookies on its servers for up to The first method is that of utilities social concerns in the U.S. (Carr 2008b) two years, after which the information is like electricity or gas – charging based and elsewhere. Maurer’s (Maurer 2007) deleted from Google’s IT infrastructure. on usage (storage, processing or volume report for the Austrian government on In an effort to create a geographical web of transactions). It is the simplest way to the Danger of Large Search Engines enabling users to browse points of inter- monetize these services. Amazon already describes a number of concerns includ- est around the world, Google Earth has offers remote computing services over the ing: the copy-and-paste syndrome of made satellite imagery and aerial pho- Internet to software developers who want extracting online text and transforming tography available to view online. How- to create applications on a robust technol- it to other forms; plagiarism; intellectual ever, this has triggered privacy concerns ogy platform with multiple high end serv- property violations; and the stultifying among governments because the images ers, but cannot afford that infrastructure. presumption that “if Google doesn’t find show military bases and specific landmark Another version of this model could be it, it doesn’t exist” with the consequence building locations which can be used by similar to the pre-paid cell phone services that Google defines knowledge in a way terrorists or other enemies. Although the offered by most mobile carriers. Custom- no single source of information has been images are available through various pri- ers would not be bound by a fixed price or able to do in the past. Some of these issues vate companies, the governments of the long term contracts, and would pay only are slowly being resolved by new services U.S., UK, South Korea, India, and Rus- for what they use. This flexibility has spe- such as Plagiarism.com, which provides sia view their global availability through cial value for SMEs. The advantage of this the capability to have a student paper Google as a threat to national security and model, which offers some appeal to larger reviewed for possible plagiarism. Intellec- Google has therefore blurred the images companies, is the personalized envi- tual property violations are increasingly or blocked them entirely. ronment much like the normal desktop being worked out in precedent-setting Google’s expansion of the Google Maps environment with few distractions from court cases. Others may be cultural issues service to include Street View, raises other external sources like unwanted advertise- requiring the development of social rules privacy issues. The Street View project ments. and norms. Nonetheless, all are serious was launched in 2007 as an experimental Another method is providing hard- issues requiring attention as the Internet project that mounted cameras on taxi cab ware appliances that will run these ser- amasses more information and search rooftops to take panoramic street views of vices with monthly or yearly subscriptions engines greatly increase the visibility of several U.S. metropolitan cities. This has much like the cable television model being information for billions of users. brought outcries from consumers about used today. Instead of different channels We focus here on privacy threats, many personal privacy as Google Maps Street offered by the cable provider, the service of which are endemic to the Internet but View shows pictures of people, homes, and provider will offer a menu of applica- exacerbated by Google’s growing search the nearby surroundings without permis- tions that the users can choose from. The capabilities and global scope. When one sion. Several lawsuits on trespassing are advantage of this model for the consum- enters a search query on the Google site, in court. ers would be the availability of different information such as search keyword, As Google continues to make more service plans that they can use depending IP address location, and user cookie types of information (text, pictures, vid- upon their needs. However, the disadvan- details are collected by the Google server eos) universally accessible for search, it machines. Google claims that these statis- will need to address how and why Google

Business & Information Systems Engineering 1 | 2009  BISE – STATE OF THE ART

can and should be the trusted authority. is not the only search engine or the only Abstract While Google’s motto “don’t be evil” may information utility. work well within the company, not every- Rex Chen, Kenneth L. Kraemer, one else in the world subscribes to that Prakul Sharma motto and Google may need to be more 7 Conclusion proactive where privacy is concerned. Util- Google: The World’s First ity services will only add to these issues as 7.1 Lessons for other firms Information Utility? they will not only increase the amount of personal information available, but if suc- Google is unique in ways that limit the les- In only ten years, Google has achieved cessful with larger companies, they will sons for other firms. For example, Google remarkable success from online search- greatly increase the amount of internal faces far less risk in new product develop- based advertising. Its search engine is corporate information in Google’s net- ment than the usual firm because it can dominant, and its IT infrastructure is the work. Until it finds ways to demonstrate introduce half-finished products online, most powerful computing system in the that its systems are not only fault tolerant, and it knows that even if they fail to gain world running on over one million com- but are secure and non-competitive, it will a big market share, they will still produce puters and serving more than one billion have difficulty attracting large companies returns from advertising revenue and pro- users globally. Google makes money by and government agencies to the utility ser- vide valuable data on customer behavior. using its search engine to deliver online vices. Nevertheless, Google’s innovation model advertising alongside responses to user can be imitated. In simple terms, the model searches for information, goods, maps, 6.3 Calls for regulation involves hiring highly talented people for directions, and a host of other services. new product development, focusing R&D Its capabilities make it likely to become The early advocates recognized that infor- on products while explicitly allowing time the world’s first information utility – a mation utilities would have significant for independent research, creating many concept similar to electric utilities that economic and social ramifications and small teams with considerable freedom, provide services to many corporations therefore should have explicit social objec- and using a data-analytic approach to and individuals alike. Constant innova- tives (equal access and privacy protection) evaluating ideas, progress and results. tion is the key to Google’s success and and be regulated by governments to ensure While most companies are limited in offers lessons for other companies: hire competition (Sackman and Boehm 1972). the resources they can devote to innova- talented people, have them work in small Maurer’s study (Maurer 2007) and claims tion, they can take the same approach, teams, and give them freedom to excel, of unfair competition by rivals such as especially the use of data and testing, to but use a rigorous data-based approach Microsoft are resulting in calls for govern- evaluate innovative ideas. to evaluating results and making course ment regulation of Google. So far, the U.S. The coming information utility means adjustments. has resisted being drawn into regulation that many companies will likely shift Keywords: Google, Information utility, based on “potential” social harms. And in more of their information services from Business model, Search engine, Web- regulatory court, Google has been on the in-house data centers to the web over the based advertising, IT infrastructure, winning side of competition challenges. next decade because it will be convenient Scalability For example, regarding the Google- and less costly. This is already happening DoubleClick merger, both the European with individuals and SMEs. Even individ- Commission and the U.S. Trade Com- uals in large enterprises are using GMail mission said the merger would not hurt for business purposes because it enables competition because the two firms occupy them to access their email, data, and appli- different parts of the market, and advertis- cations anytime, anywhere without being ers would be able to opt for alternatives, tied to corporate systems. Large compa- including services from Microsoft, Yahoo, nies, which have big investments in com- and AOL (Story and Shannon 2007; Castle plex in-house systems, will probably be and Helft 2008). However, the growing the last to switch, but many are very likely chorus of people critiquing the social to do so when the economic benefits are ramifications of Google is likely to bring compelling. As companies make the shift, action around privacy concerns in the there will be more time for staff to mine U.S. Congress and the European Union. the massive amounts of data within the Although Google has generally responded company and outside in order to better to specific, actionable concerns by change understand its customers and markets, to its practices, some critics feel it should thereby discovering new business oppor- be more proactive. Still, having the goal tunities. of “organizing the world’s information” Although Google is not making money is not the same as the claim that Google from web applications outside of its search- is “dominating the world.” Microsoft, based engine, other companies are doing Yahoo, IBM, Baidu, Amazon and others so. Salesforce.com supplies CRM applica- are working hard to ensure that Google tions and ADP provides payroll process- ing; both are successful, growing busi-

 Business & Information Systems Engineering 1 | 2009 BISE – STATE OF THE ART

Rank and beyond: the science of search engine nesses and point to the viability of offering Acknowledgements rankings. Princeton University Press, New services via the Internet. More importantly, Jersey they show that there are opportunities for This research has been supported by grants Maurer H (2007) Report on dangers and opportu- other companies who can become part of to The Personal Computing Industry nities posed by large search engines, particu- the utility’s business ecology as suppliers Center (online at http://pcic.merage.uci. larly Google. Institute for Information Systems of additional services through the util- edu) from the P. Sloan Foundation and Computer Media, Graz University of Tech- ity (e. g., Housingmaps.com) or as a sup- and the U.S. National Science Foundation. nology, Graz Markoff J, Hansell S (2006) Hiding in plain sight, plier of hardware such as mass storage and Any opinions, findings, and conclusions Google seeks more power. The New York “thin clients” for users. Although a com- or recommendations expressed in this Times. http://www.nytimes.com/2006/06/14/ puting utility might be the major hub in material are those of the author(s) and technology/14search.html?pagewanted=1. Ac- the network, other firms will find oppor- do not necessarily reflect the views of the cessed 2007-07-28 tunities for new business as suppliers to, sponsors. O’Carroll T (2008) Google’s international revenue or partners with, the information utility. outstrips US for first time. Media Week. http:// Finally, Google will not be the only utility. www.brandrepublic.com/MediaWeek/ Although Google might be the first to be References News/832812/-international-revenue- outstrips-US-first-time/. Accessed 2008-07-28 global in scope, there will be other utilities, Baker S (2007) Google and the wisdom of clouds. 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