Somebody needs to say it: Google is getting too big. When one organization controls so much of the infrastructure of the digital economy, it’s not good for consumers. And when it has such an outsized influence on the resources flowing to inventors, programmers, and entrepreneurs, it’s not good for innovation.
Like almost everyone else I know, I’m a heavy user of Google services and technology. Unlike most other people I know, I report on Google as part of my job. So I think about the company a lot. And I worry that the future in store for us—if Google gets a pass from regulators and consumers and continues on its path of insatiable growth—will be a lot more monochromatic than the company’s colorful logo.
The news this week that Google has acquired Nest Labs for north of $3 billion in cash was my personal tipping point. I’m looking at Google and starting to feel that this Silicon Valley success story—and the resulting concentration of wealth, brainpower, and ambition, not to mention data—has gone too far. It’s time for consumers, politicians, regulators, journalists like myself, and members of the innovation community to start pushing back on the company.
Google has many vocal critics, and in a way I’m late to the party. For years, I dismissed the concerns of groups like FairSearch, a coalition of Google competitors alleging that Google’s behavior in the search marketplace is anticompetitive. Because FairSearch’s membership includes companies like Microsoft and Expedia that have their own search businesses, the message always sounded to me like sour grapes.
But now my worries go beyond Google’s 67 percent U.S. market share in search (compared to Bing’s 18 percent and Yahoo’s 11 percent—November 2013 figures). The number that really bothers me is $56.5 billion. That’s the amount of cash Google had on hand at the end of the third quarter of 2013. It’s the fuel for a series of acquisitions that threaten to undermine market-driven innovation and consolidate a huge chunk of Silicon Valley’s engineering talent under a single corporate roof.
Google isn’t any more acquisitive now than it always has been—in fact, the pace has slowed a little since the peak year of 2010, when it bought 26 companies. (There were 25 acquisitions in 2011; 11 in 2012; 17 in 2013; and two so far this year that we know about.) No, the notable change is that Google seems to be thinking more imperially about the sectors it wants to explore.
When the company was younger, most of its acquisitions related to its core businesses of search, advertising, network infrastructure, and communications. More recently, it’s been colonizing areas with a less obvious connection to search—such as travel, social networking, productivity, logistics, energy, and robotics. On top of the M&A activity, Google is investing in areas like wearable computing, self-driving cars, and global wireless Internet connectivity via balloons through its Google X skunkworks division, and in longevity-enhancing technologies through its new life sciences subsidiary Calico.
Think about it. Some morning in the not-too-distant future, you could be awakened by the alarm on your Google-designed phone (Motorola’s Moto X) running a Google operating system (Android). You could ride to work in a Google-powered robot car guided by Google-owned GPS maps (Waze). At your office you’ll log onto your Google (Chrome OS) laptop running a Google (Chrome) browser. You’ll spend your day analyzing documents and spreadsheets saved on Google’s cloud service (Drive) and stay in touch with your co-workers and friends using Google’s e-mail system (Gmail) and social network (Google+).
The virtual personal assistant on your phone will stand ready to help you with any question instantaneously (Google Now), and if you miss a call from somebody while it’s doing that, they can leave a message on your Google answering service (Voice). At lunch you’ll choose a place to eat using Google’s restaurant guide (Zagat), make a reservation and get directions by talking to your wearable display (Glass), and pay using your smartphone (Wallet).
When you get home at night, your house’s HVAC system will adjust itself to your presence using its Google-powered thermostat (Nest) and you’ll cook dinner under the watchful eye of your Google-powered smoke alarm (also Nest). You’ll eat in front of your Google-powered television (Chromecast) watching shows hosted or licensed by Google (YouTube, Google Play). Before dozing off you’ll pop a Google-funded pill to optimize your metabolism (Calico) and use your tablet (Android) to read a few pages of the latest mystery novel (Google Play again).
And throughout the day, of course, everything you read, watch, search for, and talk about will be tracked by Google’s algorithms—the better to show you the targeted ads that generate the high click-through rates that bring in the advertising dollars that subsidize everything else about Google’s business.
That’s only the beginning. Who knows what master plan for our future is behind Google’s recent string of acquisitions in robotics—namely Schaft, Industrial Perception, Redwood Robotics, Meka Robotics, Holomni, Bot & Dolly, Boston Dynamics, and Nest (which is a robotics company at its core, and has a famed academic roboticist, Yoky Matsuoka, as its vice president of technology). John Markoff at the New York Times quotes experts who think the big vision behind Google’s robotics rollup is about supply-chain automation and robotic delivery men.
To be honest, I don’t see any coherent plan. I just see Google waking up to the fact that robots—the hardware that lets software extend its reach in the real world—are the next big technology frontier after the Internet, and deciding to plant its flag.
So, why should it pain me to see so many cool companies, in robotics and other fields, being annexed by Google?
After all, when Google buys a startup, there’s usually a nice financial outcome for the founders and the shareholders. (A very nice outcome, in Nest’s case; venture backer Kleiner Perkins Caufield & Byers will reportedly see a 20x return on its investment.) Some of that money might eventually get reinvested in new startups. And you could argue that joining Google extends an acquired startup’s product-development runway, while freeing its employees from practical business concerns. As long as the AdWords engine keeps pumping out cash—the way a quasar at the center of a distant galaxy spews radio energy—no one else at Google need worry about money.
The problem, as I see it, is twofold.
1. Giant Companies Are Where Innovation Goes to Die
There’s just no way around this truth. For reasons that Clayton Christensen and others have documented, it’s extremely difficult for a company that has hatched one world-changing product to keep innovating into its second, third, or fourth decade—Apple being one of the few big counterexamples. After an initial era of exponential innovation and growth (which, for Google, ended about 10 years ago), successful companies get addicted to their cash source, become fearful of internal disruption, and switch to innovation-by-accretion.
And while Google has a better track record than most companies when it comes to integrating newly acqui-hired employees into its corporate culture, it’s not so great at making use of the technologies it buys. Out of the 140-some companies Google has acquired since 2001, only a handful have … Next Page »