CHAPTER
SEVEN
The New Evil
Empire?
(2004-2005)
In Edgar Allan Poe’s story The
Purloined Letter, an incriminating letter disappears from
the private residence of the French queen. The Parisian police
prefect takes on the case, but even after an extensive search, he
cannot find the letter. And though he manages to narrow the search
to a chief suspect, a government minister, he lacks evidence to
arrest him. The prefect decides to consult the noted amateur
detective C. Auguste Dupin. He explains that each night for three
months, he has slipped into the minister’s home to assiduously
search for the letter, removing cushions, the bottoms and tops of
bedposts, the floorboards, the bindings of books—without success.
The prefect is agitated; the suspect is a mere poet, he says, and
he cannot believe such a “fool” could outwit him. Dupin, however,
disagrees; he thinks the prefect and his detectives are the foolish
ones, limited by their experiences, their routines, and “their own
ideas of ingenuity.” They could not comprehend the acumen and
cunning of a mind schooled not just as a poet but as a
mathematician who follows his own “mathematical
reasoning.”
Months go by, and the
prefect returns, still unable to prove the minister’s guilt and
ready to sign over the reward. Dupin, after persuading the prefect
to sign a check, pulls the letter from his desk drawer. He explains
that he cracked the case by climbing inside the supple mind of the
suspect and imagining what he would do to conceal the letter. He
imagined that the minister tricked the police by not attempting to
conceal the letter. Rather, to avoid detection the letter was
soiled, slightly torn, and crumpled in a card rack lying in plain
sight in the middle of the minister’s room. Dupin found the letter
where it had always been: under the nose of the prefect and his
detectives.
Until 2004, most
traditional media executives treated Google the way the prefect
treated evidence: they failed to see the digital threat right under
their noses. But soon after the IPO, their heightened awareness was
captured in an eight-minute Flash-based movie that virally spread
across the Internet. Called Epic 2014,
it was a faux documentary by two young journalists, Matt Thompson
and Robin Sloan. With a voice-of-God narrator, it recounted how
year by year a new media giant, Googlezon (the merged Google and
Amazon), acquires or murders media companies, including the New
York Times Company. By 2014, this Orwellian colossus employs its
algorithms and computers to snare advertising and customize
packages of news for individuals, whose wants are revealed by the
cookies Googlezon gathers to track the behavior of its
users.
Not surprisingly,
this depiction jarred Googlers. When Sheryl Sandberg joined the
company in late 2001, she believed she had a public mission, a
mission parallel to the one she felt as a ranking member of the
Clinton administration. Yet to her shock, not long after the IPO,
she first heard Google referred to as the “evil empire.” She was
attending a Google conference—“I was standing there with our
partners and they said, ‘How do we sustain ourselves against the
power of—’ I thought they were going to say Microsoft. Instead they
said, ‘Google.’”
The hostility, said
Eric Schmidt, “did not begin until Google went public and people
realized how much money we were making.” The reaction had more to
do with fear than envy. It took Microsoft fifteen years to exceed
one billion dollars in revenues; it took Google just six years. The
evidence was now visible that Google was attracting more Internet
advertising than anyone else, and these dollars were being siphoned
from traditional media. This was perceived as a threat to most
traditional media companies, and perhaps none more so than the
advertising industry. Google was able to sell advertising with just
a few search words, and without charging the same 2 to 5 percent
fee extracted by the media buying agencies. The buy was better
targeted. And for advertisers it was more efficient, for Google
only charged the advertiser when the consumer actually clicked on
an ad. “There’s that same ‘think big’ attitude about markets and
opportunities,” Steven I. Lurie, a former Microsoft executive who
had friends at Google, told the New York
Times at the time of the IPO. “Maybe you can call it
arrogance, but there’s that same sense that they can do anything
and get into any area and dominate.”
IT WAS IN THE CONTEXT
of this growing backlash that the fight with book publishers, begun
a few years earlier, started to come to a head. Like the Googlezon
film, the uproar over digitizing books seemed to surprise Googlers.
In their assessment, by scanning books and making them part of
search, they were performing an ambitious and noble public
service—they thought of the effort as their “moon shot”—and they
assumed that they could do this without seeking permission of the
copyright holders. Google knew that only about a third of the more
than twenty million books ever published were no longer protected
by copyright. But the mission was to scan all books. With books under copyright, Google said
it would merely show “snippets,” which it claimed was permissible
under the fair use clause of copyright law. Google did not
precisely define the maximum number of words in a “snippet.” Nor
does the law, but the rule of thumb is that fair use involves only
enough text to briefly explain a book or briefly quote from an
article or song.
Google believed it
had provided protection to authors and publishers. In its contracts
with libraries, Google said that if, within three years of the
digital transfer of material, “Google decides not to use that
content” (a particular book) because of a copyright dispute, the
library would destroy the digital copy. They believed authors and
publishers would see Google Books as a wonderful way to promote
authors and their works, and to bring back books no longer in
print. Google had earlier launched a Partners Program, signing up
publishers who agreed to allow snippets to be shown for certain
books, along with a link to an online bookseller. But publishers
did not agree to allow all books to become part of search. The gulf
between Google and the publishers and authors was vast. Google
wanted to push the envelope of copyright, expanding the definition
of fair use to allow more extensive quotations from books. It
stressed the rights of search users, echoing the views of Web
pioneers like Kevin Kelly, the “senior maverick” at Wired magazine, who said that in return for
government copyright protection, authors and publishers had a
“copyduty” to “allow that work to be searched.” Google was offering
to pay the cost of moving and scanning the books; what publisher—or
library or university or author—could refuse that
offer?
One clue of Google’s
fundamental attitude toward books—and fundamental innocence of the
publishing process—is a conversation I had with Brin while
reporting this book. It was the second of our three interviews and
upon entering the small conference room down the hall from the
second floor glassed office he shares with Page, Brin playfully
ribbed me for writing this book. “People don’t buy books,” he said.
“You might as well put it online.” He meant: You might as well
publish it for free.
“You might make more
money if you put it online,” he said. “More people will read it and
get excited about it.”
There’s little
evidence that such a free book succeeds, I said. Stephen King tried
it, and gave up the effort because he thought it was
doomed.
“I guess that’s
true,” he acknowledged a little sheepishly.
Following Google’s
business model, would he expect authors to generate their income by
selling advertising in their books? If there was no advance from a
publisher, who would pay to cover the writer’s travel expenses? (I
made thirteen week-long roundtrips to Google from New York, rented
a car, stayed at hotels, and paid for dinner interviews most
nights.) With no publisher, who would edit and then copyedit the
book, and how would they get paid for their work? Who would pay
lawyers to vet it? Who would hire people to market the book so that
all those potential online readers could discover it? The usually
voluble Brin grew quiet, ready to change the subject.
But our rhetorical
go-round hinted at something fundamentally true about Brin and Page
and the dynamic company they have forged. Their starting predicate
is that the old ways of traditional media are usually inefficient,
and scream to be changed. This is a reason Google fundamentally
misread the reaction of publishers and authors. While Google did
reach various agreements with a variety of libraries, including
Harvard, Stanford, the University of Michigan, Oxford University,
the Library of Congress, and the New York Public Library,
publishers did not like the idea of not getting paid for the use of
their books. The Association of American Publishers denounced
Google’s plan as an invitation to piracy, for the books stored on
servers would be vulnerable to hackers. Publishers claimed they
could be hit by the same thunderbolt that struck the music
industry: free downloads.
Richard Sarnoff, the
chairman of the Association of American Publishers and the
executive vice president of Random House, said, “Google went to
libraries and said we will digitize all your books and just use
snippets of copyrighted books. They said it would be good for
libraries and for users. This is true. But we have laws in this
country which govern what we can do and not do. Like copyright,
which prevents people from copying things for their own commercial
use. And this is for Google’s commercial use, for search.” The
publishers demanded that Google seek their permission before
digitizing any book that was still protected by copyright. “The
Internet is a grazing medium,” Sarnoff said. “Books tend to be a
longer term experience.” Grazing can be a great way to promote a
book, he said. “But we want to be extremely careful to make sure
discovery does not become consumption.” To illustrate his fear of
piracy, he pulled out his iPhone and said that the small device can
hold fifty thousand books, all easily down-loadable. This, he
noted, is the approximate capacity of a midsize bookstore. In
October 2005, the publishers announced that they had filed a
lawsuit.
Paul Aiken, the
executive director of the Authors Guild, wanted authors to share in
any profits from their books, but said his primary concern was
piracy. He mentioned “the huge risk” posed by backup copies in
Google’s possession and the libraries. “Google is giving back to
the University of Michigan a digital copy of each book for their
own use. What happens to the University of Michigan copy?” What
happens, he said, when they share the copy with other Michigan
libraries? What happens “if they lose the backup?” Or it’s hacked
into? Sarnoff was also concerned that Google’s definition of “a
snippet” was vague. A longer snippet from a novel is likely too
brief to rob the book of value, he said. But a snippet of a
reference book may be “taking real value” from the author. In a
fundamental sense, the differences between Google and its Silicon
Valley allies, who want to share information, and publishers and
authors, who want to be compensated for it, boil down to a
definition of property rights. On the Internet, it is common to
make copies of pages and share the information of those who produce
content. In traditional media, such “sharing” is often considered
theft. The Authors Guild also filed a lawsuit against
Google.
To David Drummond,
Google’s senior vice president of corporate development and chief
legal officer, the difference came down to this: “Fair use is as
important a right as copyright infringement. It is a balance that
is struck between encouraging people to innovate, and a public
sphere.” He defined a snippet as similar “to a Google search. You
see just two or three lines.” He rejected the idea of sharing
revenues with publishers and authors for the snippets that would
appear in a book search, likening a Google search to a book review,
which no one claims as a violation of copyright law. As for pirated
copies from the libraries, he said, “We’ve got provisions in the
library agreements that they agree not to abuse. We would hope that
these are major institutions that take their copyright
responsibilities very seriously. These are also research
organizations that have not insignificant expertise in data
security.” The president of Stanford, John L. Hennessy, who is on
the Google board, agreed that university libraries have to
“guarantee” the security of digital books. But he wants to keep the
focus on “finding a way to move forward,” to bring the information
in books to people. “We need to rethink our copyright framework
that is still a remnant of the past. In the digital age, for
example, why should the library buy a physical copy of a book? Why
can’t the library just buy a digital copy?” Physical books, he
adds, are “too big. They cost too much to store. They’re too hard
to deal with, and they’re too hard to search.”
Columbia University
law professor Tim Wu supports Google’s efforts to digitize books,
which he also sees as essential for comprehensive search. But he
thought Google was being evasive. “If they had a copyright lawyer
among their founders,” he said, “they never would have started the
company. The basic business of a search engine is to copy
everything. To make your copy, and then search it. The first thing
that happens, arguably, is infringement of copyright law. I say
‘arguably’ because there’s never been a case on it. From day one,
Google went out and copied the whole Internet. Can you imagine a
company starting in the film world and the first thing they did was
make a copy of every film in existence? That company couldn’t have
gotten started. The Web is always about copying, but copyright law
is all about making copying illegal.” There is an unavoidable
disconnect between the two.
Over the next several
years, the Association of American Publishers and the Authors Guild
lawsuits wended their way through the legal system. While they did,
another disconnect surfaced: a contradiction between Google’s push
to liberalize the intellectual property rights of others while
protecting its own. Buried in Google’s 260-page 2004 IPO prospectus
is this admission: “Our patents, trademarks, trade secrets,
copyrights and all of our other intellectual property rights are
important assets for us. There are events outside of our control
that pose a threat to our intellectual property rights.” They cited
the politics of other nations, the various legal interpretations.
Then they provide a sentence that could have been uttered by a
publisher: “Any significant impairment to our intellectual property
rights could harm our business or our ability to
compete.”
Looking back, many of
Google’s nonengineers admit, when asked, that Google made a mistake
by not more closely consulting and coordinating their efforts with
publishers and authors. “I think that’s true,” said Megan Smith,
Google’s vice president of business development, who explained that
“we moved too fast” and “involved the Authors Guild much later”
than we should have. “We’re a technology company,” chimed David
Eun, vice president of strategic partnerships. “We thought people
would understand that we had good intentions.” Asked if Google was
guilty of innocence or arrogance, Paul Aiken of the Authors Guild
said, “It’s probably both.”
MEL KARMAZIN THOUGHT
it was arrogance. Having left Viacom earlier in 2004 after an
unhappy half decade with Sumner Redstone (and before it was split
into two companies, Viacom and CBS), he was now the CEO of Sirius
satellite radio, which blankets the United States with a cornucopia
of radio options. He described an early meeting he had with Tim
Armstrong, Google’s sales chief. “The first thing he said was, ‘We
have so many advertisers that we don’t have enough content in which
to put all of this advertising, so we would like to get into
selling radio advertising.’” Armstrong proposed to sell national
satellite radio spots the way Google sold search words, in an
auction.
“How much money will
you guarantee me?” Karmazin asked. Armstrong made an offer that
Karmazin considered way too low. “I believe the system would have
been successful,” Karmazin now said, “but it would have had the
effect of lowering prices.” Again, he was struck, as he had been on
his 2003 visit to its campus, by Google’s boundless ambitions.
Again, he believed that its mathematical approach was all wrong.
Google didn’t understand that you were “selling the sizzle, not
selling a cost per point”—each rating point signifying the size of
the audience is sold at a set rate. “You’re selling a spot in
Desperate Housewives.” To those at
Google, Karmazin was slavishly following a formula that digital
technology had proved wasteful.
It wasn’t just Google
that loomed as a threat to traditional media. Yahoo was pushing
into content—hiring a former Hollywood executive, Lloyd Braun, to
produce and package shows for the Web, in addition to such popular
features as Yahoo Finance—and in 2005 had more than four hundred
million worldwide users. That year, Yahoo generated profits of $1.1
billion, and was valued by Wall Street at a whopping $50 billion,
equal to the combined value of Viacom and CBS or to the Walt Disney
Company. Jaws dropped when media executives read in 2005 that Yahoo
CEO Terry Semel cashed in $230 million in stock options, and had
another $396 million yet to exercise.
Google believed, with
merit, that traditional media too often blamed digital companies
for events they did not cause—for the disruptive impact of the
Internet, for slowed or declining profits, for their shrinking
stock price or budget cutbacks, for their rampant insecurities. It
was inevitable that the Internet would alter the way consumers
received and used content. But Google became a convenient
piñata.
The company gave its
critics a big target to swing at: in 2005 alone, Google acquired
fifteen smaller digital companies and partnered with various
others, including a smaller search engine, Barry Diller’s Ask.com, to which Google
directed advertising as it now did for hundreds of thousands of Web
sites. Google had 7,000 employees working out of 62 offices, 30 of
them outside the United States, which produced nearly 40 percent of
its revenues. By the end of 2005, the company had indexed 8 billion
Web pages in 116 languages; its revenues soared to $6.1 billion and
its net income to $1.5 billion.
Meanwhile, the tide
was running against traditional media. In December of 2005, 77
percent of Americans had Internet access at work and 37 percent of
all adults had high-speed access to the Internet. The slight but
steady decline in newspaper circulation suddenly steepened in 2004
and 2005. The circulation of daily newspapers would plunge 6.3
percent between 2003 and 2006, with Sunday circulation falling 8
percent. Newspaper advertising revenues, which had grown on average
in the high single digits since 1950, beginning in 2001 fell in
four of the next seven years, and in 2006 began to fall more
steeply. With investors convinced that companies like Google would
grow while newspapers would not, the stock price of newspaper
companies also plunged—falling 20 percent on average in
2005—leaving them less capital to diversify by acquiring growth
businesses. With search and Google News and other news aggregators
culling reports from all over the world, readers could easily fetch
their news for free online. Newspapers cried that Google and other
Web sites that aggregated news lacked what elite newspapers
offered: bureaus in Baghdad and state capitals, investigative
reporting, professional editors, and familiar brand names that
often stood for quality. But readers could effortlessly view their
stories through Google News or Google search. By the end of 2005,
40 percent of American broadband users said they got their news
online.
Much of the rest of
old media was also challenged. Book sales were steady, but not
robust, and the industry was anxious about the decline of
independent bookstores and the new leverage exerted by giants like
Barnes & Noble and Amazon.com. This anxiety was only inflamed by
Google’s thrust into digitizing books. The movie and television and
music industries were fretting about piracy. U.S. content and
software companies lost an estimated $6.9 billion in revenues to
piracy in 2005, and in China about 90 percent of all content and
software was pirated. About one billion songs per month were
swapped on illegal file-sharing networks. Although digital
companies claimed piracy was hard to control, media executives
rarely believed this. They believed digital companies were building
their own audiences by stealing their content, particularly that of
music companies. The lubricant of trust was missing. “I don’t
believe they have any incentive to solve it,” said Sony CEO Sir
Howard Stringer. With the rise of high-speed Internet connections,
Hollywood knew its movies and TV programs were becoming more
vulnerable to hackers and illegal downloads.
Television
broadcasters were antsy about new user-generated online video
companies like YouTube, a site that threatened to steal not just
eyeballs from TV but perhaps its content as well. And YouTube was
not their foremost threat. New consumer choices drained audiences
from traditional media. Three years earlier, in 2002, there was a
total of 308 cable and video networks, a number that had tripled
from just eight years earlier, and would double over the next four.
The radio industry was also squeezed by newer technologies that
allowed the iPod and Internet and satellite radio to subvert their
traditional ad-supported broadcast model. The phone companies
nervously watched their traditional landline business erode, and
with the 2005 acquisition by eBay of Skype, a largely free Internet
phone/voice service, and Google’s voice-chat software also released
that year, the erosion would accelerate. The cable companies were
unsettled—as were all existing media—by how new media, from sharing
networks like MySpace.com or Meetup.com to video games, captured the attention of
their customers. MySpace was only three years old in 2006 but
already had seventy million members.
And, of course, there
was the advent of online advertising, which alarmed the traditional
advertising industry. Google was able to sell advertising with just
a few search words. The buy was more efficient because it was
cheaper, better targeted, and Google only charged when the consumer
actually clicked on an ad. Google could render traditional ad
agencies extraneous middlemen to their clients. Irwin Gotlieb, the
global CEO of GroupM, the world’s largest media buying and planning
agency with a pool of sixty billion in advertising dollars, said
that the bigger problem for his business was not Google supplanting
his services, but its market power. With the IPO placing a value on
Google greater than GroupM’s parent, the WPP group—plus the world’s
four other advertising/marketing giants combined—Google had very
deep pockets.
The CEO of one media
conglomerate describes the media paranoia Google provoked as
intense, adding, “It’s where Microsoft was. That paranoia is even
greater about Google. The service is free. It’s hard to see how
anybody knocks them out when it’s free. The brilliance of its
business is that consumers love them. Consumers never loved
Microsoft. They never loved the phone company. They don’t love the
cable company. Because we have to get money! Advertisers get a
better deal than they’ve ever gotten. Consumers get a better
search. And it’s all free.” What terrifies media companies, he
added, is Google’s ability and appetite to reach into other
businesses, from mobile phones to computer operating systems to
video and advertising and even banking. “Name a business that
they’re not going to disrupt.”
In Google’s 2004
annual report, published in the spring of 2005, the founders gave
old media executives more cause for concern. In the report was a
letter to their shareholders announcing what they called their 70-
20-10 strategy. “Seventy percent of our effort goes to our core;
our web search engine and our advertising network,” Brin wrote on
behalf of himself and Page. He went on to say that it was desirable
for Google to diversify and that is “why we allocate 20 percent for
adjacent areas such as Gmail and Google Desktop Search. The
remaining 10 percent is saved for anything else, giving us freedom
to innovate.” The letter cited some new products Google invented or
acquired: Google Maps, which allowed users to map directions;
Google Earth, which provided satellite images of the earth’s nearly
sixty million square miles, allowing users to zoom in to search
teeming Calcutta streets or war-torn Baghdad; Google Scholar, which
allowed researchers to access academic papers and research; Google
Video, which allowed users to search television programs; and
Gmail. Any media company paying attention saw that Google was not
just a search engine.
Even new media was
put on notice when, in 2004 and 2005, Google swooped in at the last
minute to beat both Microsoft and Yahoo in auctions. The first came
in October 2004. Brin and Page were on an overnight flight, heading
to a Madrid sales conference on a chartered Boeing 737, when they
learned from Omid Kordestani that AOL Europe was close to renewing
its European contract with Yahoo. (Although AOL was losing
subscribers, it still had more than twenty million worldwide in
2005, making it a valuable platform to generate more searches.) “We
told the pilots to head to London,” where AOL’s European
headquarters were located, recalled Brin. The founders’ families
were aboard to accompany them from Madrid to Rome, where they were
to receive an award from the prestigious Marconi Society for their
scientific contributions. When they awoke, they were astonished to
find that they were not in sunny Madrid but instead at Stansted
Airport outside gray London.
Brin and Page drove
to AOL’s European offices. Jonathan Miller, the chairman and CEO of
AOL at the time, recalled the jolt he felt Monday morning when the
head of AOL Europe phoned. Miller thought they had a deal with
Yahoo, but now his European executive described the proposal made
by Brin, who takes the lead in business negotiations: “He offered a
number that was 40 percent higher than Yahoo’s. And he told us we
had two weeks to get back to them.” There were, added a still
stunned Miller, “no lawyers, no nothing.”
Google won the
prize.
The second victory
came a year later, in the fall of 2005. Tim Armstrong was attending
meetings in Mountain View when Eric Schmidt entered and whispered,
“We’re about to lose AOL to Microsoft.” The merger between AOL and
Time Warner was not working; the touted synergies had not
materialized. Into this chaos stepped Microsoft, determined to
catch up in search. Back when Google was still headquartered in a
garage, Gates and Microsoft had had it within their grasp to build
a powerful search engine when it purchased an online advertising
company, LinkExchange. Although the creator of LinkExchange, Ali
Partovi, then twenty-six, told Microsoft that his partner, college
dropout Scott Banister, had come up with a way to include ads in
with search using keywords and that a search auction system would
be “the next big thing,” Microsoft spurned the advice and declined
to start a search engine. As first reported by Robert A. Guth in
the Wall Street Journal, Microsoft
believed the pot of gold lay not in tiny search text ads but in
portals like their own MSN. But now Microsoft had launched its own
search engine, Live Search, and with its deep pockets was seeking
to replace Google as AOL’s domestic search engine.
Armstrong and others
hammered out a counterproposal and showed it to Schmidt, before
Armstrong flew back to New York to meet with Time Warner
executives. Microsoft executives were on one floor, Google
executives were on another, and Time Warner shuttled between them.
At one point, Armstrong said, Microsoft left, “thinking they had
the deal done. We stayed.” Schmidt flew to New York, as did Brin.
In the end, Google and AOL reached agreement to become worldwide
partners, with Google pledging to make more AOL content available
to Google users, guarantee minimum annual advertising revenues to
AOL, and invest one billion dollars to acquire a 5 percent stake in
AOL.
Silicon Valley
companies, accustomed to thinking of Microsoft as a foe, were now
becoming uneasy about Google. When Yahoo executives read Google’s
financial reports, they were punched in the nose with the
realization of how much more successful and efficient Google was in
selling search advertising. Google’s search business was growing
twice as fast as Yahoo‘s, and was attracting more text ads. Yahoo
poured engineering resources into a new automated ad-sales system,
code-named “Panama,” vowing that it would help them catch up.
Microsoft and Yahoo conducted talks to see if there was a way to
slow the Google juggernaut. And eBay, which had long sold
advertising on Google, grew alarmed that Google had started a
classified-advertising service that competed with its listings, and
had inaugurated Google Checkout, which competed with its PayPal
online payment service. So fearful of Google was eBay that the
Wall Street Journal reported on its
front page in 2006 that eBay was holding secret talks with
Microsoft and Yahoo about allying against Google. Bill Gates
further stoked the fever of fear when he told Fortune magazine that Google was “more like us than
anyone else we have ever competed with.”
GOOGLE’S MANEUVERINGS
AND DEALS may have made it unpopular with various media companies,
but these did not tarnish Google’s image with the public. What
happened in China did. In 2002, a Chinese-language version of
Google search was launched, and then Google News in 2004. As user
traffic mushroomed, the Chinese government found some of the news
politically objectionable. China didn’t want users to be able to
search for news about “free Tibet” or for photos of Tiananmen
Square protests. At first, Google refused to engage in any
self-censorship. Often, the Chinese government banned Google
searches. Senior Google executives believed they had to make a
choice between denying Chinese citizens some political searches and denying them
all searches. Google decided to comply
with Chinese laws, stripped its news results of offending material
and eventually, in 2006, created a separate search Web site,
Google.cn, on which
it would offer politically sanitized searches in China. If a user
searched for a picture of Tiananmen Square on Google in London,
The Guardian reported, the iconic
picture of one man blocking a tank’s path appeared; if the same
search was conducted on Google.cn, a picture “of happy smiley tourists”
appeared.
Having escaped as a
child from an oppressive government, Brin was anguished by the
decision. Four years later, at Google’s annual shareholder meeting,
two resolutions were introduced calling on Google to support human
rights and oppose all forms of censorship in China; the resolutions
implicitly rebuked Google. Page and Schmidt and Google management
had the votes and defeated the resolution. Instead of vigorously
opposing Google’s decision, Brin meekly abstained. When a
shareholder rose to ask for an explanation, Brin gave a long
tortured reply that vacillated between “I agreed with the spirit of
the resolutions,” and “I am pretty proud of what we’ve been able to
accomplish in China.”
Google rationalized
its decision. Executives said they were complying with Chinese law,
as they complied with German law to screen Nazi materials or would
later comply with the government of Thailand by blocking YouTube
videos that “defamed” the king. It said it was serving Chinese
users, who still received more information from even a bowdlerized
Google search than from any available alternative. It said that the
Internet would, over time, help democratize China. And it said it
would be transparent and notify users when search requests were
blocked.
Google could also
justifiably claim that it did not cross the line Yahoo had when,
perhaps inadvertently, it shared with the Chinese government the
e-mail accounts of prodemocracy journalists, resulting in long jail
sentences for two journalists. But there was another reality Google
confronted, and it was acknowledged in testimony made to Congress
in February 2006 by Elliot Schrage, Google’s vice president, global
communications and public affairs. Baidu, a Chinese search engine,
had seen its market share jump from just below 3 percent in 2003 to
46 percent in 2005, he testified, while Google’s plunged to below
30 percent, and was falling. China was steering its citizens away
from Google. “There is no question that, as a matter of business,
we want to be active in China,” Schrage said, adding, “It would be
disingenuous to say that we don’t care about that because, of
course, we do.” What Schrage and Google were less transparent about
was that Google had invested in Baidu, and presumably had to win
the concurrence of the Chinese government in order to do so. The
next year Google sold its 3 percent stake.
Perhaps for the first
time, Google executives were feeling defensive, troubled that folks
thought they had violated their “Don’t be evil” pledge. In the wake
of China and the Google IPO, Eric Schmidt said he expanded his own
job description. “It took me a while to figure out that we had to
reach out to traditional media,” he said. “It’s part of
acknowledging they are incumbents.” But he, like Google, was just
making nice. “I’m happy to be diplomatic,” he added. “But I’m about
winning!” What wasn’t clear was: Winning what? And at whose
expense?
Schmidt was not
diplomatic with Elinor Mills, a reporter for CNET News, a Web site
that contains various online networks, including business news,
technology, video games, and television programs. Mills in 2005 was
working on a story about how much private information Google
collected. As part of her research, she used Google search and
Google Maps to run a quick search on Eric Schmidt. She located his
Atherton home and address on Google Maps, his approximate net
worth, political contributions, and a fair amount of other personal
information. Then she published what she found, writing, “That such
detailed personal information is so readily available on public Web
sites makes most people uncomfortable.” It certainly made Schmidt
uncomfortable.
“CNET was informed,”
wrote Randall Stross, “that Google was unhappy with the use of
Schmidt’s ‘private information’ in its story, and as punishment,
Google as a matter of company policy would not respond to any
questions or requests submitted by CNET reporters for one year.”
Schmidt’s and Google’s reactions invited derision; Schmidt was
accused of a “hissy fit.” Google executives tried to reason with
Schmidt, to coax him to apologize, to end the ban. Months later,
without offering an apology, Stross wrote that Google “quietly
restored a normal working relationship with CNET.”
Google was becoming
more defensive but also began to slowly worry about a potential
threat far more powerful than any competitor: government. Google
was alienating media companies, and when these companies speak,
Washington listens. These companies are a major source of campaign
funds and jobs; they provide the stage and microphone for elected
officials. By 2005, broadcasters and telephone companies and others
were raising questions about Google. Google may have been a
multibillion dollar company, but it was unprepared to fight back.
It had no political action committee; for a long time its only
Washington presence was a one-man office located in suburban
Maryland. This office reported to both David Drummond and Elliot
Schrage in Mountain View. Drummond was supposed to oversee policy,
and Schrage communications, which led to some confusion as the two
often go hand in hand.
Although Google was
not yet alarmed, it was on notice. At the weekly executive
committee meetings, they talked about beefing up their presence in
the nation’s capital. Brin volunteered to stop off in Washington to
say hello to various government officials the next time he was back
east visiting his parents in Maryland. But the the trip was hastily
planned, as Brin admits: “Because it was the last minute, we didn’t
schedule everything we wanted to.” Among the key people he didn’t
get to see was Senator Ted Stevens of Alaska, then the chairman of
the commerce committee, with jurisdiction over the Internet.
(Senator Stevens’s knowledge of the Web appeared limited. He once
referred to an e-mail by saying that “an Internet was sent by my
staff.”) The Washington Post depicted
the poor reception as a snub of Google; it probably didn’t help
matters that Brin’s outfit that day included a dark T-shirt, jeans,
and silver mesh sneakers.
Brin did manage to
meet with senators John McCain and Barack Obama, and the topic was
“network neutrality,” an effort by Google and others to ensure that
the telephone and cable companies who provide high-speed access to
the Internet didn’t charge higher fees to Web sites with heavy
traffic. Around the time of Brin’s visit, an organization called
Hands Off the Internet, financed by telecommunications companies,
ran full-page newspaper advertisements accusing Google of wanting
to create a monopoly and block “new innovation”; one ad featured a
grainy photograph of a Google facility housing a sinister-looking
“massive server farm.” Brin saw it for the warning it was. “I
certainly realized we had to think about these things, and that
people were going to misrepresent us,” he said. “We should be
entitled to our representation in government.”
Like Microsoft in the
late nineties, the Google leadership, “composed of ideological
technologists,” as Schrage put it in 2007, was slow to appreciate
the political and the human dimensions of the technical decisions
it made. Schrage’s resume spans a law degree, years of teaching, a
senior executive position at The Gap, and work as an international
consultant on corporate social responsibility. He acknowledged that
Google engineers were new to the ways of Washington. “Some call
that naivete. Some might criticize this; others might applaud it.
No question that people here regularly discuss Microsoft’s
experience and use that as a cautionary tale.”
Later, meaning to
explain rather than criticize, Schrage told me, “One can make the
argument that the genes of technological innovation are frequently
in conflict with emotional intelligence. Successful technological
innovation is all about disruption. Effective emotional
intelligence is all about collaboration, how you get talented
people to work together and enjoy it.”
Collaboration was
central to the thinking of Lawrence Lessig, who was widely hailed
as an Internet oracle and was then teaching at Stanford Law School.
Lessig had just been treated as such at Facebook, where he’d been
invited to speak to its employees and expounded on the virtues of
an open Web. Afterward, we had dinner at Il Fornaio in Palo Alto,
which is a favorite Valley canteen, and there he asked, and
answered, a central question people increasingly posed about
Google: Is Google becoming what Microsoft was in 1998?
“The argument is that
in an important way, they are the same,” he said. “In fact, whether
now or soon, Google will have more power than Microsoft did at the
time. Google’s power will extend to more than one layer of the
network.” Microsoft’s power was its ability to leverage its potent
operating system to control the various applications that use the
operating system. So Microsoft offered a free browser to knock out
the Netscape browser and attacked Java software that might
“facilitate competition with the underlying operating
system.”
Google’s power flows
from a different source, he said. “They have produced this amazing
machine for building data, and that data has its own ‘network
effect’”—the more people who use it, the more data generated, the
more advertisers flock to it. “Everything sits on top of that
layer, starting with search. Every time you search, you give Google
some value because you pick a certain result. And every time you
pick a result, Google learns something from that. So each time you
do a search, you’re adding value to Google’s data base. The data
base becomes so rich that the advertising model that sits on top of
it can out-compete other advertising models because it has better
data.... The potential here is actually that the data layer is more
dangerous from a policy perspective because it cuts across layers
of human life. So privacy and competition and access to commerce,
and access to content—everything is driven by this underlying
layer. Unlike the operating system, which couldn’t necessarily
control the content that you got.
“The way they are
different is that I don’t think there is any evidence that Google
has misbehaved in the way Microsoft misbehaved when they tried to
leverage the operating system to protect themselves against
competition. So far, they’ve been good guys. But that leads to a
question: Why do we expect them to be good guys from now till the
end of time?”
Lessig, who benefits
from the broad education and reading many Googlers lack, was
nevertheless alert to how Google, like Microsoft, might become
intoxicated by power and succumb to the same human failures. Of
Google, he said, “I fear theirs is an old story about how good
people deceive themselves. As Microsoft did in the nineties, you
become so convinced that you are good that you become oblivious. I
sense that is true at Google today. They’ve drunk the
Kool-Aid.”