CHAPTER
NINE
War on Multiple
Fronts
(2007)
Once you get to a certain size, you have to figure
out new ways of growing,“ said Ivan Seidenberg, CEO of Verizon.
”And then you start leaking on everyone else’s industry. And when
you do that, you sort of wake up the bears, and the bears come out
of the woods and start beating the shit out of you.“ Seidenberg was
speaking of Google, with whom he started jostling in 2007 to
prevent Google from entering his mobile phone business. The Verizon
bear was now awake to the perceived Google menace, as was
Viacom.
Of the two, Sumner
Redstone was the more openly belligerent. In late 2006 and early
2007, he demanded that YouTube immediately remove one hundred
thousand clips of Viacom’s copyrighted content. Viacom CEO Philippe
Daumann became convinced that Google was “very lackadaisical” about
the content that appeared on YouTube. He cited Al Gore’s movie,
An Inconvenient Truth, which Paramount
released and which appeared on YouTube in its entirety. “We got
frustrated. We told them to take our content down.” How come, he
asked, YouTube could successfully block spam and pornography and
hate speech from appearing, yet said it couldn’t block copyrighted
Viacom content from being displayed? Redstone, who had long
championed the idea that content was king, was furious. He and
Daumann resented having to pay what they claimed to be one hundred
thousand dollars a month to monitor what appeared on
YouTube.
Google countered that
only the copyright holder knows what content is under copyright,
said Eric Schmidt, citing the Digital Millennium Copyright Act,
which makes monitoring a shared responsibility. “The law basically
said that the copyright owner monitors, and then we expeditiously
remove, and we’ve done that,” he told Wired magazine. “And it’s well documented, because
Viacom told everybody that they gave us one hundred thousand video
takedowns, which we did very, very quickly. And what was
interesting was that our traffic to YouTube has grown very strongly
since then. So one of the arguments that they made was that somehow
YouTube was built on stolen content, which is clearly false.” He
said Google was testing various technologies but had yet to solve
the piracy puzzle. Viacom did not believe a technology company
could fail to find a remedy—unless it lacked the will.
In March, Viacom
filed a lawsuit in federal court charging Google and YouTube with
“massive intentional copyright infringement” and asking for $1
billion in damages. Viacom said YouTube effectively stole almost
160,000 clips of its programming and allowed these to be shown more
than 1.5 billion times. YouTube’s Chad Hurley doesn’t deny there
were copyright infringements, but he insisted they were not
deliberate. His argument was twofold: First, YouTube is just “a
clip site. We don’t want full programs.” And second, Web videos are
so new that “everybody’s still trying to figure it out.” Viacom, he
believed, sought clear answers when there were none. Hurley, like
top executives at Google, believed the litigious Redstone was using
the lawsuit as leverage to negotiate a better deal. Schmidt grows
uncharacteristically agitated when Viacom’s suit is mentioned. At a
2008 conference at which Philippe Daumann spoke and castigated
Google for stealing copyrighted materials, Schmidt sought me out
and growled, “Everything Philippe said was a lie. And you can quote
me!”
There were those who
recognized Viacom’s concerns yet thought Redstone was wrong. Esther
Dyson, an early and prominent investor in digital media, said, “As
a business, I think they are behaving foolishly—like the music
companies. They are fighting their customers. What they should do
is use YouTube as a platform and share in all the revenues.” Those
who agree that YouTube is a platform, not a content
competitor—including some who work for Redstone but dare not be
quoted—think the lawsuit is a declaration of war when what is
needed is an agreement that encourages more trial and
error.
Many media bears
sympathized with Viacom even if they didn’t join the lawsuit. “If
we’re putting up programming for free, why should cable or DirecTV
pay us for content?” asked Mel Karmazin. And if consumers can get
the content online or on iTunes, he said, unless the digital
company pays a substantial licensing fee “you’re trading analog
dollars for digital dimes.” Moreover, once a copy is made, it is
easily duplicated and shared.
Anxiety about piracy
was not peculiar to television. On the eve of Viacom’s lawsuit, all
the major Hollywood film studios jointly protested that Google was
selling keywords such as bootleg movie
download or pirated for two Web
sites it knew to be illegally downloading their movies. Google
assured the studios it would prevent a recurrence. But although
those keywords can be blocked, there will be others. Even the
company that a decade earlier aroused the same fears Google now
did, Microsoft, publicly accused Google of a “cavalier” approach to
copyright, charging that Google was making “money solely on the
backs of other people’s content.”
Undeterred, Google
vowed to take the case all the way to the Supreme Court. Because
Google was already warring in the courts with publishers and the
Authors Guild, this battle with Viacom opened a second front in the
war with old media. And soon there would be other skirmishes,
including those with new media companies like Facebook, the fastest
growing social network. With more than forty million active users
in the summer of 2007, Facebook “doubles in size every six months,”
said founder Mark Zuckerberg. Then twenty-two, Zuckerberg is a
Harvard dropout who in the early days of his company’s life slept
on a mattress on the floor of a Palo Alto apartment he rented near
his office, allowing him to move effortlessly between work and
sleep. His baby face is framed with curly hair, and because he is
thin, with a relatively long torso, one is surprised that he stands
only five feet eight inches tall.
He arrived for dinner
at an outdoor Thai restaurant in Palo Alto sock-less, wearing
Adidas sandals and a green T-shirt, and ordered lemonade that he
sipped through a straw. He was on guard to avoid saying anything
boastful about Facebook, or intemperate about rivals. He said he
did not feel competent to discuss almost anything but Facebook. He
lacked Brin’s unguarded zest or Page’s quiet confidence. But his
long pauses when asked about Google, and the way he shifted
uncomfortably in his chair, suggest the tension between the two
companies. He was somewhat less circumspect about MySpace, his main
competitor among social networking sites: “What they’re doing is
very much different from us. On a fundamental level, what they’re
doing is not mapping out real connections. They’re helping people
meet new people. Rather than using the social graph and the
connections people have in order to facilitate decentralized
communication, they’re using it as a platform to pump and push
media out to people. They call themselves a next-generation media
company. We don’t even think we’re a media company. We’re a
technology company.”
Facebook is not a
content company, he said, just as a telephone company is not. In
fact, in some ways Facebook is like a telephone conversation, with
all your friends on the same call. But on this call, your friends
can share photographs, text, political summons to action, video,
and music, or can click to make purchases. “There is a big
misconception around what social networks are,” Zuckerberg said.
“People think there are communities, or media sites, where people
are going to meet new people or make new connections or consume a
lot of media. But what they really are is a completely different
paradigm for people sharing information. The traditional media
models are all centralized. What we’re enabling here is
decentralized individual communication. When that happens with a
certain level of efficiency, it starts to become easier for people
to communicate and get a lot more of their information through this
network than through a lot of the centralized approaches they used
before.”
This is precisely why
Google, starting in 2007, began to worry about Facebook. If
Facebook’s community of users got more of their information through
this network, their Internet search engine and navigator might
become Facebook, not Google. As media companies agonized that
Google and YouTube were capturing more eyeball time, Google began
to have the same concerns about Facebook. What if Facebook became
the equivalent of AOL’s former walled garden, the home page, the
place its users went not to roam but to comfortably nest? Google
depends on more and more people surfing the Web. Relations were
further strained when Microsoft outbid Google in October of 2007,
laying claim to 1.6 percent ownership of Facebook and establishing
Microsoft as Facebook’s advertising sales agent.
There was another
reason Google fretted about Facebook. The social networking site
operated on a different business model than Google’s. Like Flickr
(Yahoo’s photo-sharing site), Twitter, or Linux, they are part of
what Lawrence Lessig, in his book Remix: Making Art and Commerce
Thrive in the Hybrid Economy, refers to as hybrids—companies
that take the shared efforts of many and build communities that
help create commercial value. They are not strictly part of a
“commercial economy,” as Google, Amazon, and Netflix are, according
to Lessig, nor are they strictly part of the not-for-profit
“sharing economy,” as Wikipedia and the open-source Linux operating
system are. The hybrids, wrote Lessig, are those that combine
making money with sharing—as Red Hat did by offering Linux for free
but selling consultant services to corporations; as Craigslist does
by offering 99 percent of its listings for free; as YouTube does by
allowing users to freely share videos; and as community-building
sites like Facebook do. Google was free, but it was not building a
community.
While Google warily
watched Facebook, a real skirmish broke out between Google and the
bear that is the advertising industry. Ad executives had been
uneasy for some time that Google would displace media-buying
agencies. But there were additional concerns. How many more ad
dollars would Google siphon from traditional media companies? Would
Google disintermediate the sales forces of these companies? Might
Google bypass advertising agencies and develop a direct
relationship with advertisers? If Google’s automated auction system
brought the cost efficiencies Larry Page touted, would it not
inevitably lower old media’s advertising rates as well as the fees
ad agencies charged clients? Perhaps the overriding concern was the
one identified by Herbert Allen III, who said of Google: “They want
to be the digital advertising network for all forms of advertising.
They want to be the advertising operating system, sitting in the
middle of all advertising.” Google was indeed “fucking with the
magic.”
Concern turned to
fright in April 2007 when Google paid $3.1 billion to purchase
DoubleClick, outbidding Microsoft and Yahoo. “There’s no way Google
would have acquired DoubleClick if not for their fear of
Microsoft,” said a DoubleClick executive close to the negotiations.
The executive said that because Microsoft and Google were bidding
against each other, DoubleClick was able to inflate its sales price
by about $1 billion.
In the world of
online advertising and marketing, DoubleClick was as dominant in
its arena—placing display advertising—as Google was in placing text
ads. DoubleClick provides the digital platform that allows sites
like MySpace to sell online ads and advertisers and ad agencies to
buy them, with DoubleClick culling from its database the
information that targets the ads. The acquisition gave Google “an
opportunity to be the infrastructure backbone for all ad-serving on
the Internet,” said a worried Wenda Harris Millard, then Yahoo’s
chief sales officer. In addition to potentially controlling the
plumbing, DoubleClick offered rich new data-mining possibilities.
By combining DoubleClick’s data with its own, Google would house an
unrivaled trove of data. As Randall Rothenberg, the CEO of the
Interactive Advertising Bureau, said the day the deal was
announced, “You can dive deep into that data and say, who were
those people, where do they live, what were they doing when they
looked at those ads?”
DoubleClick’s
promotional materials boast that they “track more than 100
metrics,” including which ads users download, how long they view
them, where they scroll, what links they click on, if they view an
ad and later visit the site, what products interest them, what ads
“resonate the most,” what they buy and choose not to buy, and how
much they spend. According to then CEO David Rosenblatt, the
company delivered as many as twenty billion online ads each day.
For the “sell side” (the content providers, who in the online world
are called publishers), DoubleClick provides tools that help them
evaluate the inventory they have to sell and where to target it,
delivers the ads, and reports the results. For “the buy side”
(advertisers), it provides the same service.
Google’s purchase of
DoubleClick triggered a flurry of digital advertising acquisitions.
Within months, Yahoo, AOL, Microsoft, and the WPP
advertising/marketing colossus each swallowed online marketing
agencies that compete with DoubleClick, with Microsoft spending six
billion dollars, twice what Google had paid, to buy aQuantive. Why
the rush to acquire digital ad agencies? And why was DoubleClick
sold?
Since DoubleClick and
Google share the same one-square-block building on West Fifteenth
Street in Manhattan, CEO Rosenblatt joked that the free food was an
enticement. But the main reason was that he saw the sell side
changing. DoubleClick had promised to transform the business of
selling remnant ads, the roughly 30 percent of an ad seller’s
inventory that is hardest to sell: the least read part of the
magazine, the least watched TV shows, the least listened to radio
programs. Selling these remnant ads was becoming more expensive for
DoubleClick, and Rosenblatt feared that a Google or a Yahoo would
come along and offer to sell these for free in exchange for an
opportunity to sell more of a client’s premium advertising, luring
away his customers. DoubleClick needed to widen its scope. “We were
selling transmissions. We were not in a position to sell cars,” he
said. In Google, Rosenblatt saw not just “the single best
monetization engine on the Web,” and a company with a base of over
one million advertisers, but more vitally, a fellow and necessary
“middleman” who did not compete with clients by entering the
content business.
DoubleClick offered
Google a way to pool the two databases and their networks of
advertisers. But DoubleClick also brought something Google lacked:
a dominant online position in display advertising (banner and video
ads), which meshed nicely with YouTube’s video offerings and
Google’s narrower text-based expertise. Tim Armstrong, Google’s
president, advertising and commerce, North America, envisioned
three advantages for Google: better measurement of all online
advertising, from text ads on search results to display ads on
YouTube; better targeting of ads, which pleases both consumers and
advertisers; and finally, higher fees for these better targeted,
better measured, ads. Google’s game plan, said Richard Holden, its
product management director, is simple: “We’d like to create
one-stop shopping for advertisers.”
With reason, the
advertising bears translated “one-stop shopping” to only-stop
shopping, provoking dread about market domination. Rosenblatt, a
bald, cheerful man of forty-one with a bright smile that provides
cover for the technologist within, rises and goes to the whiteboard
in his office to draw what he envisions as the future of
advertising. Between “buyer” and “seller” he elongates an “ad
exchange,” a clearinghouse for all online inventory to be sold.
There could be many of these, but Rosenblatt, who would become
Google’s president, display advertising, makes clear he hopes the
Google/DoubleClick exchange will be dominant. This new approach can
be much more efficient, he thinks, likening it to how online
trading siphoned business from brokerage houses. Imagine, he said,
that “instead of just selling remnant advertising to the exchange,
the seller said, ‘We’ll expose all of our inventory onto this ad
exchange. Maybe we’ll carve out a small percent—maybe ten
percent—of the really premium stuff and our sales force will sell
that directly. But this other stuff”—he acknowledged that the
distinction between remnant and premium ads can be arbitrary—“’I
don’t know where the line goes. I don’t want to figure out where it
goes. Instead, I want the ad network to bid.”‘
Why shouldn’t a media
buying agency, such as Irwin Gotlieb’s GroupM, conclude that
DoubleClick/Google might gobble his piece of the advertising pie by
offering to charge, say, 2 percent rather than his 4 or 5 percent?
And by promising better data about what ads worked? Irwin Gotlieb
did see DoubleClick and its ad exchange as a potential disrupter.
He was uncomfortable with the wealth of data that Google would now
possess, and could one day refuse to share with advertisers. He was
uncomfortable with Google’s dominant market share. He was wary of
its deals with EchoStar satellite television and Clear Channel
radio and some newspapers, allowing Google to serve as the
media-buying middleman for their online ads. He was rightly
concerned that Google could be trying to usurp his
role.
If that was Google’s
intention, Gotlieb did not believe they would succeed. He welcomed
Google reaching into the long tail to match advertisers with
smaller Web sites. But he did not think Google/DoubleClick could
make inroads with brand advertisers, in part because these clients
want to be serviced, to have relationships with media agencies they
can consult. And he also expressed skepticism that Google would
loom as large in the future as it now does. “If you and I were
talking about this in 1998, we would have been talking about AOL,”
he said. “Two years later we would have been talking about Ask
Jeeves.”
IN THE ADVERTISING
WORLD, if you say “Irwin,” insiders instantly know whom you mean,
just as people in Hollywood know who Warren and Bar bra are without
hearing their surnames. In four decades in the advertising
business, Irwin Gotlieb has seen fads come and go, though he hasn’t
changed his hairstyle (his bouffant, graying mane sits flat atop
his head, like the deck of an aircraft carrier) or his attire (dark
suits and ties). He is confident that with the largest worldwide
market share of media buying—estimated to be 19 percent—GroupM is
secure. He disputes the notion that there is a sharp definitional
difference between new and old media. “As all media moves to
digital delivery,” he said, “the distinction between media types is
going to become less relevant, or perhaps irrelevant.
Hypothetically, if I’m reading my newspaper on an electronic
display and I see a photograph of a touchdown in the Super Bowl and
I click on it and get to see a sixty-second video of that touchdown
play, am I now reading a newspaper or watching television? Or does
the distinction cease to be relevant?” And whether the consumer is
leaning forward over a PC, or leaning back to watch TV, or a
combination of the two with a mobile device, he believes each
medium will be “addressable,” which means his agency will know a
lot about that consumer, and each medium will allow the user to
click a button for additional information or to make
purchases.
Irwin Gotlieb
approaches life with the air of a knowing skeptic, one who is
conversant in nine languages, including Japanese, Russian, Polish,
and Hebrew, and has lived all over the world. He believes Google,
like most businesses he has observed in his sixty-one years, is a
great company that does one thing brilliantly, but “will probably
be leapfrogged by something that two Ph.D.’s in China are working
on.”
Irwin Gotlieb knows
China, and much of the rest of the world. He was born in Shanghai
in 1949 to Jacob Gotlieb and Genya Diatlovitzky, who were second
cousins and Belarusian émigrés; when he was a year old, the family
left for the newly forming Israel. His father, Irwin said, bribed
an official to allow them to exit with valuables, including small
antiques and precious metals. Because Jews could not pass through
the Suez Canal, the refugee boat took six months to arrive. A year
later his father flew alone to Japan—Irwin does not know why—and
several weeks later the family flew to join him. In Japan, his
father suddenly had a new career as an exporter of pearls and an
importer of diamonds. Irwin knew his father wasn’t a trained
jeweler, and he knew Asian currencies “were not worth the paper
they were printed on,” but he did not know how his father came to
that business, or who funded it.
Irwin lived in Japan
until he was fifteen and was a precocious student. His parents
encouraged him to attend college in the United States and he was
accepted by New York University, arriving alone at fifteen with a
stipend of cash from his parents. He rented an apartment, learned
to speak English, and served as his father’s U.S. representative,
working with Japanese and Chinese diamond dealers. In keeping with
the many secrets held by the Gotlieb family, he never told his
parents that he dropped out of college ten days after entering.
“They were teaching me stuff I already knew,” he said.
He met Elizabeth
Billick, a paralegal, in 1968, when he was nineteen. They eloped
the following year, fearful that his father, who at the time was
not speaking to Irwin, might try to block their marriage. Irwin
displayed the stealth of his father. “My mom and dad went to their
graves,” he said, “not knowing that I didn’t go to school and that
I eloped.”
He had a friend in
advertising and it sounded like “a fun business,” so Irwin, at age
twenty, sent a resume to various agencies. Over the next five years
he worked for two of them, amassing a quiverful of skills: cash and
barter syndication, spot buying, research, planning, network TV
negotiations. He was recruited by Benton & Bowles in 1977 to
run their national broadcast group; over the next twenty-two years
he helped build their overseas business and also supervised the
production of prime-time shows and made-for-TV movies. Throughout,
he dabbled in computer software, creating the first application to
measure the audience that ads attracted, and building software to
manage ad inventory. “I wrote my first full-blown software system
in 1973,” he said. In 1979, he built “the first Monster
system—eventually two million lines of code,” he said, which became
the standard yield management software that determined prices,
modeled the national marketplace, and allocated ads. His last job
at Benton & Bowles was CEO of MediaVest, their media buying and
planning agency. In 1999, Sir Martin Sorrell, the CEO of the WPP
Group, who was knighted in 2000, recruited him to become global
chairman and CEO of Mindshare, a MediaVest competitor. Sorrell
acquired other media-buying and planning agencies, and in 2003
Gotlieb was elevated to run them all under the rubric of GroupM.
Today, 73 percent of his company’s revenues come from outside North
America.
Gotlieb’s background
well served GroupM’s global expansion. “The fact that I didn’t grow
up in the United States was incredibly helpful as the business
began to morph globally,” he said. His techie background better
prepared him to understand and compete against the Googles and
Double-Clicks. His friend Michael Kassan, who had a successful
advertising career and founded and is the CEO of Media Link LLC,
which serves as a consultant to Microsoft and AT&T, among
others, remembers the time he and his wife visited the Gotliebs’
Westchester home and watched a movie in his screening room. “In
Hollywood, a screening room is a show-off room,” he said. “At
Irwin‘s, he takes you behind the wall and shows you the wiring and
how he does it himself.”
Gotlieb tries to stay
a step ahead. When digital recorders allowed viewers to dodge TV
ads, he pushed to place his clients’ products in programs,
establishing a production arm of the agency to do it. He grew his
digital staff, which now numbers more than two thousand employees.
He invested in various companies with technologies that gather
consumer data. Invidi, one of those investments, is a software
system that resides in a cable box and monitors viewer behavior. It
collects data on what we watch, what we like, and how much time we
spend watching ads, and can correlate reams of television-watching
data with other data collected from motor vehicle records, credit
cards, purchase cards, and other credit-rating services and
databases. The technology allows the advertiser to show different
ads to different potential customers watching the same
program.
Gotlieb doesn’t think
Google, outside of its search advertising, can rival GroupM because
most advertising was “not in the sweet spot of their capabilities.”
Like Mel Karmazin, he believes that engineers cannot replicate what
his sales force can do. They can’t do product placement, an
increasingly popular form of advertising requiring subtle judgment
to avoid offending viewers. They miss the “art” part of selling
ads, the judgment required to build a brand, the relationships that
seller and client forge and that spark ideas. “As complex as the
Google processes are, as robust as they are,” Gotlieb said, “there
is an inherent oversimplification because it is purely
quantitative.”
ASSUMING THAT GOTLIEB
is truly undaunted by Google as a competitor, his would have been a
lonely voice in the advertising community. Sorrell, the CEO of the
WPP Group, worried that DoubleClick would allow Google to “take our
client data.” He began to refer to Google as a “frenemy,” not quite
a friend or enemy but a rival power to guard against. With mounting
anxiety, executives noted that Google TV Ads was selling
advertising for EchoStar’s fourteen million set-top boxes and for
Astound Cable, a small cable company. Google’s sales pitch was that
it could find new local advertisers and help advertisers better
locate their targeted audiences. The way it works, according to
Keval Desai, the product manager and director for the project, is
that Google finds the advertisers through ad agencies or by dealing
directly with companies that advertise and brings them to one of
one hundred satellite channels. Once the ad airs, Google has
software in the set-top box that collects data and analyzes the
results. Among the things they learned, he said, turning to a
series of slides to make his point, is that when grouped together
the shows that have “less than a half of one percent audience share
can have a share equal to ESPN.” Unlike the Nielsen ratings, which
make an estimate of the audience’s size by extrapolating from a
relatively small sample, Google takes a digital measurement of
actual homes. Desai said they learned that advertisers were
spending half their dollars on the twelve largest cable networks
when they could be reaching audiences of comparable size by
grouping smaller networks together. Because the ESPN and other
large cable network spots are much more expensive, Google is saving
advertisers money, removing the “inefficiencies,” as Google had
told Mel Karmazin they would. Or as Desai now said, “This slide
fucks with the magic!” Through a digital box “we can measure second
by second” what ads and programs viewers are watching or turning
off, and share this information with advertisers within a
day.
As Google’s director
of media platforms, Eileen Naughton, said, “It is absolutely our
intention to be in every cable box.” To accomplish this, she knew,
would require the cooperation of the cable companies that own the
box. And that cooperation depended on trust. Naughton said, “Google
aims to improve the advertising quality in traditional media.” If
traditional media trusts her word, then Google is servicing them,
not supplanting them. If they mistrust Google, they will never
allow its software to invade the cable box. A decade ago, when Bill
Gates tried to persuade the cable companies to trust Microsoft to
be the operating system for digital cable boxes, he didn’t get past
first base.
Television executives
had reason to be paranoid about the seventy billion dollars spent
each year on TV advertising, as did advertising agencies. Not only
was Google telling its customers they could do a better job of
targeting ads and telling them which spots worked, but it was also
extolling its array of other products. Among them were Google Print
Ads, which by early 2008 was selling ads for seven hundred
newspapers and allowing them to use an “ad creation tool” to craft
inexpensive advertisements; Google Audio Ads, which was hoping to
build on the deal it had made with Clear Channel Communications,
the largest radio station owner in the United States, to sell 5
percent of ad inventory; and Google TV Ads, which on the Google Web
site is described as “a searchable directory of specialists” to
create television commercials. Was Sorrell right? Was Google intent
on taking over the media buying function? “Yes, he’s right,” said
Terry Semel, the former Yahoo CEO. “Google and Yahoo are always
working on platforms to sell ads. All [of the new Google programs]
at the end of the day will have the capability to sell ads in any
medium.”
So why would a
company like Procter & Gamble need a middleman media buyer like
Irwin Gotlieb’s GroupM? Smita Hashim, the group product manager for
Google Print Ads, said “that’s a good question,” and conceded that,
“the roles will start shifting.” But Hashim, like Desai and others
at the company, quickly assert that Google requires the “expertise”
of ad agencies. With passion, Desai insisted that Google is engaged
in a “win-win” game. If these programs succeed, the advertising
revenues of traditional media as well as Google’s will rise. This
is a familiar Google refrain, one that relies on what might be
called Google “magic”: everyone wins. If old media gets with the
program, makes a push to be more Internet-centric and share with
Google, there will be no losers, no zero-sum games in this brave
new digital world.
But these claims did
not allay the anxiety of Sorrell, who feared Google would vie to
obviate his creative teams as well as his sales and media-planning
teams. The wellspring of this concern was not the Google TV Ads
program, which does not generate the kind of slickly produced
commercials his agencies create. He was troubled by Google’s hiring
of Andy Berndt, who was copresident of one of Sorrell’s ad
agencies, Ogilvy & Mather. Berndt was recruited in 2007 to run
a new Google unit, the Creative Lab. Google denied that this was an
attempt to enter the advertising business, and Berndt said his job
is to focus on the Google brand, “to remind people why they love
Google,” and to create ads only for his new employer. His staff
consisted of just twenty people, he said, and would expand to only
thirty-five. He said “the short version” of why he joined Google is
simple: “When the spaceship lands in your backyard and the door
opens, you just get in the spaceship.”
To most consumers,
Google remained an iconic brand, a force for good, a company that
made search easy and fast and free; a company that retained its
bold, entrepreneurial spirit and was both a beneficent employer and
a benefactor to shareholders.
To most media
industries, Google was becoming a dreaded disrupter. The
engineering efficiencies touted by Google were also perceived as
threats to the sales forces of the television and radio and print
industies. Weeks after the DoubleClick purchase, Beth Comstock,
then the president, integrated media, for NBC Universal, and now
the chief marketing officer for its parent, General Electric, said,
“If Google could introduce us to tens of thousands or even a
thousand advertisers we currently can’t have, that would be a great
thing. But when they start moving up the pyramid and they think you
can put a self-serve model to what we know of as a very highly
customized, high touch, more intuitive kind of business—it’s a
content co-creation in some cases—you can’t do that with
self-service and algorithms.” In her dealings with Google, she
said, “There is this undertone of: Is that all they’re looking for?
Why are they into television advertising?” Are they intent on
replacing NBC’s sales force? She would have gladly outsourced the
selling of remnant advertising to Google; what she wanted to retain
control of was the selling of premium advertising. Like Karmazin,
she wanted her salesperson in on the process, persuading clients to
spend more.
Days after the
DoubleClick transaction, Microsoft and AT&T publicly called on
federal regulators to block the deal, saying it would reduce
competition and give Google access to too much private data.
Sorrell called on regulators to review the acquisition, declaring,
“It raises issues as to whether we are happy to let Google have our
clients’ data and our own data, which Google could use for its own
purposes.” A senior executive at Time Warner, who did not want to
be identified because its AOL division is a Google partner, told me
at the time, “You always have to worry when someone gets so much
more powerful than all the competition out there. This is why I
come down to this: I hope the government starts understanding this
power sooner rather than later.”
Tim Wu, a professor
of law at Columbia University and a former Supreme Court clerk,
looks at the issue from a different angle. He said he’s not
“worried about Google becoming large.” One can make the argument,
for example, that size brings standardization, he said. “I’m less
concerned how they’re behaving in their own market than what a
company does to other markets.” Will Google use its power to
unfairly dominate other markets, as Microsoft used its operating
system dominance to cripple the Netscape browser? “If Google
remains true to its mission of being an ‘honest broker,’ I’m
pleased. If they have an agenda, that’s when I become fearful.” He
wasn’t sure Google had an agenda, but was plainly worried: “If
they’re willing to block sites to placate China, are they willing
to block sites to placate powerful advertisers?”
Here the issue of
privacy becomes entwined with the issue of power. Together, Google
and DoubleClick amass a mountain of consumer data. The more
“personalized” this data, as Eric Schmidt said, the better the
search answers. “When I decide to go to the movies,” said Schmidt,
“I’d like to rely on the recommendations of friends. How do we
capture that? The more we know who you are, the more we can tailor
the search results.”
Of course, when a
company retains as much data as Google does and also proclaims, “We
are in the advertising business,” as Eric Schmidt does, this
arouses more privacy concerns. And since Google believes
advertising is information users want if it is“relevant,” it
follows that sharing data serves users, which exacerbates these
fears. Or as Sergey Brin told Wall Street analysts during Google’s
third-quarter conference call in October 2007, “I am really excited
to tell you today what we have done over the past quarter in ads
and apps. As you all know, for advertising our real philosophy is
to create a win-win between advertisers and customers by presenting
users with really relevant information which is interesting to
them, but is likely to cause a transaction to commence.” With
technology making inroads toward improving how users’ real desires
are gauged and finding patterns of behavior, the data-mining
discipline Sergey Brin studied at Stanford enters a new age. The
pressures on Google—and all sellers of advertising—to share more
data will intensify.
Privacy fears
escalate when Google executives express peculiar ideas about
privacy—ideas that suggest they don’t grasp the reasons people are
fearful. Each fall, Google hosts a two-day Zeitgeist Conference on
its Mountain View campus, inviting a cross section of people from
various fields. Much of the conference is moderated by journalist
James Fallows, and a cavalcade of prominent scientists, musicians,
artists, public officials, and others make presentations or appear
on panels. The last event of Google’s Zeitgeist is when Brin and
Page come on stage—in jeans, of course—to answer Fallows’s and the
audience’s questions. At the 2007 conference, Randall Rothenberg of
the Interactive Advertising Bureau rose to ask Brin to access the
importance of privacy.
Brin declared that
“the number one” privacy issue was “stuff that is untrue about
people on the Web.” Because information “travels so fast” online,
and because “anyone can publish anything,” these untruths gain
currency. The number two privacy issue, he said, was the “hijacking
of credit cards.” He dismissed concern about the information
collected on cookies “as more of the Big Brother type”—in other
words, fantasies. “Do they [users] trust what you’re doing? That’s
not so much a privacy issue.” By this logic, if we trust Google,
there is little reason to fear they will misuse our data.
Afterward, at a small press lunch with the founders and Schmidt,
Page signaled his agreement with Brin. “Sergey is just saying there
are practical privacy issues that are different than the ones
debated.” As was true when the founders pushed to add a delete
button and allow Google’s Gmail scanning technology to more
aggressively deliver ads when users typed certain keywords and to
forgo a delete button—a mistake Brin told me showed “we just
weren’t good” at anticipating fears, but “I think we’ve now
learned”—once again, Brin and Page displayed an inability to
imagine why anyone would question their motives and a deafness to
fears that can’t easily be quantified.