Ken Auletta
Googled: The End of the World as We Know It
For Kate and Mike
PREFACE
The world has been Googled. We don’t search for information, we “Google” it. Type a question in the Google search box, as do more than 70 percent of all searchers worldwide, and in about a half second answers appear. Want to find an episode of Charlie Rose you missed, or a funny video made by some guy of his three-year-old daughter’s brilliant ninety-second synopsis of Star Wars: Episode IV? Google’s YouTube, with ninety million unique visitors in March 2009-two-thirds of all Web video traffic-has it. Want to place an online ad? Google’s DoubleClick is the foremost digital advertising services company. Google’s advertising revenues-more than twenty billion dollars a year-account for 40 percent of all the advertising dollars spent online. In turn, Google pumps ad dollars into tens of thousands of Web sites, bringing both traffic and commerce to them. Want to read a newspaper or magazine story from anywhere in the world? Google News aggregates twenty-five thousand news sites daily. Looking for an out-of-print book or a scholarly journal? Google is seeking to make almost every book ever published available in digitized form. Schools in impoverished nations that are without textbooks can now retrieve knowledge for free. “The Internet,” said Google’s chief economist, Hal Varian, “makes information available. Google makes information accessible.”
Google’s uncorporate slogan-“Don’t be evil”-appeals to Americans who embrace underdogs like Apple that stand up to giants like Microsoft. Google’s is one of the world’s most trusted corporate brands. Among traditional media companies-from newspapers and magazines to book publishers, television, Hollywood studios, advertising agencies, telephone companies, and Microsoft-no company inspires more awe, or more fear.
There are sound reasons for traditional media to fear Google. Today, Google’s software initiatives encroach on every media industry, from telephone to television to advertising to newspapers to magazines to book publishers to Hollywood studios to digital companies like Microsoft, Amazon, Apple, or eBay. For companies built on owning and selling or distributing that information, Google can be perceived as the new “Evil Empire.”
Google is run by engineers, and engineers are people who ask why: Why must we do things the way they’ve always been done? Why shouldn’t all the books ever published be digitized? Why shouldn’t we be able to read any newspaper or magazine online? Why can’t we watch television for free on our computers? Why can’t we make copies of our music or DVDs and share them with friends? Why can’t advertising be targeted and sold without paying fat fees to the media middleman? Why can’t we make phone calls more cheaply? Google’s leaders are not cold businessmen; they are cold engineers. They are scientists, always seeking new answers. They seek a construct, a formula, an algorithm that both graphs and predicts behavior. They naively believe that most mysteries, including the mysteries of human behavior, are unlocked with data. Of course, Wall Street’s faith in such mathematical models for derivatives helped cripple the American economy.
Naivete and passion make a potent mix; combine the two with power and you have an extraordinary force, one that can effect great change for good or for ill. Google fervently believes it has a mission. “Our goal is to change the world,” Google’s CEO, Eric Schmidt, told me. Making money, he continued, “is a technology to pay for it.”
I came away from two and a half years of reporting on Google believing that its leaders genuinely want to make the world a better place. But they are in business to make money. Making money is not a dirty goal; nor is it a philanthropic activity. Any company with Google’s power needs to be scrutinized. I also came away impatient with companies that spend too much time whining about Google and too little time devising an offense. Most old media companies were inexcusably slow to wake to the digital disruption.
In 2007, Eric Schmidt told me that one day Google could become a hundred-billion-dollar media company-more than twice the size of Time Warner, the Walt Disney Company, or News Corporation, the world’s three largest media conglomerates. That Google might achieve this goal in less than a generation, in a time when copyright and privacy practices are being upended, when newspapers are declaring bankruptcy and in-depth journalism is endangered, when the profit margins of book publishers are squeezed along with their commitment to serious authors, when broadcast television networks dilute their programming with less expensive reality shows and unscripted fare, when cable news networks talk more than they listen, when the definitions of community and privacy are being redefined, and the way citizens read and process information is being altered, and when most traditional media models are being reconfigured by digital companies like Google-all this means that it’s important to put Google under the microscope.
Brilliant engineers are at the core of the success of a company like Google. Drill down, as this book attempts to, and you’ll see that engineering is a potent tool to deliver worthwhile efficiencies, and disruption as well. Google takes seriously its motto, “Don’t be evil.” But because we’re dealing with humans not algorithms, intent sometimes matters less than effect. A company that questions everything and believes in acting without asking for permission has succeeded like few companies before. Unlike most technologies that disrupted existing business-the printed book that replaced scrolls, the telephone that replaced the telegraph, the automobile that replaced the horse and buggy, the airplane that supplanted cruise ships, the computer that supplanted typewriters-Google search produces not a tangible product but something abstract: knowledge. This makes Google both less and more vulnerable to challenge. Less because Google’s prodigious Mount Everest of data is unrivaled. More because Google depends for its continued success on users and governments that trust it will not abuse this knowledge. Whether one applauds or fears this eleven-year-old company, there is no question that Google demands our attention.
PART ONE. Different Planets
CHAPTER ONE. Messing with the Magic
With his suit and tie and closely cropped gray hair, Mel Karmazin stood out as he crossed the Google campus in Mountain View, California, passing people in baggy T-shirts holding their laptops before them like waiters’ trays. On this sunny June day in 2003, Google was nearly five years old, and Karmazin was among the first major executives from the old media to visit its headquarters. As the CEO of Viacom, he represented the world’s then fourth-largest media company-the owner of the CBS network, of TV and radio stations, Paramount Studios, MTV and its sister cable networks, Simon amp; Schuster publishers, Blockbuster video, and an outdoor advertising concern, among other holdings. Short and pugnacious, Karmazin was by his own admission “always paranoid” about competitors. Two of Viacom’s biggest competitors, AOL and Time Warner, had merged to forge the world’s largest media conglomerate, and Karmazin was on the prowl for new business partners.
The son of a Queens cab driver, Karmazin, then fifty-nine, had begun his career at age seventeen selling radio advertising. He was said to be so pushy that advertisers capitulated just so he would leave their offices. He became a master salesman who did not play golf or tennis or tolerate long books, and whose idea of fun was pitching advertisers and Wall Street. He was an old-fashioned, show-me-the-money guy, and he was skeptical of Silicon Valley companies that boasted of their traffic and page views, but were mum about their balance sheets. At the time of his visit, Google was a private company, and he had no way of knowing whether it was making or losing money, or even how many employees it had. The actual financial figures-the January before Karmazin’s visit Google’s private books revealed 2002 revenues of $439.5 million and a profit of $99.6 million-would be unimposing figures to a man accustomed to dealing in billions. Nevertheless, a trusted associate, an Allen amp; Company investment banker, Nancy B. Peretsman, had convinced Karmazin that Google was a wave maker. She joined him and Viacom’s then chief financial officer, Richard J. Bressler, on the trip.