It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Friday, March 03, 2006
Google Greed
To think Google is just a giant collection of classified ads on line. Worth billions on speculation and gouging. Until entropy sets in, or it becomes too big for its britches. That is a virtual as well as real monopoly. Thousands of us are still waiting for our checks from Google for posting their classifieds on our pages. While their clients who pay to post here watch as their costs for doing business with Google increase. For no other good reason than greed and the bottom line. Wired, Virtual, Online Capitalism is still Capitalism.
Google has famously turned itself into a $US111.5 billion company, from humble beginnings as a Stanford University project, on the back of online classified advertising.
Forget fancy innovations such as Google Earth or the recently announced blogging software. About 97 per cent of the company's revenues come from the four-line text ads that appear with Google search results.
Last year, that spelled $6 billion for the company's revenues, a figure that has impressively doubled for each of the past two years, as Google made investments that brought in new browsers and allowed it to explore ad formats other than its core click-on mode.
But in the startling words of its own chief financial officer George Reyes on Tuesday: "We are getting to the point where the law of large numbers starts to take root."
Mr Reyes' observation that it was inevitable that growth would slow caused pandemonium on the market as investors dumped the stock, fearing the company had reached the limits of its potential.
The possibility of slowing growth had already prompted several major investment banks to begin selling Google shares in the month before Mr Reyes' statement. The influential Barrons newspaper went as far as to suggest Google shares were worth as little as $188.
These bearish predictions are based on fears over how much Google will be able to ask from advertisers in the future, a key issue in the overall struggle by investors to properly price Internet stock following the dot.com bust.
Last year, retailers reported that the cost of advertising certain items, such as jewellery, on Google's keyword searches had jumped as much as 80 per cent as larger companies were willing to sacrifice some of their traditional advertising budgets to try the online format.
Higher prices, industry watchers reported, had prompted some of Google's traditional bread-and-butter clients - small companies - to be priced out of the search engine, leading some to speculate that pricing had begun to hit its limit.
PALO ALTO, Calif. (MarketWatch) -- Google Inc. (GOOG) Chief Executive Eric Schmidt described his company's decision to enter the Chinese market by agreeing to censor certain Internet sites as an extremely difficult one.
The Silicon Valley search giant wanted to be part of the growth that will make China a dominant force in the world for the next 100 years, he said. But "we had to abide by the laws" that make certain topics off limits in the emerging Asian country, Schmidt said during a wide-ranging discussion at the Siepr Economic Summit here. "It was a very difficult decision."
The breakthrough came when co-founder Sergey Brin spoke to friends of his in Russia, Schmidt said. The company decided it couldn't stand by its mission to bring information to people if it didn't serve all people everywhere, he said.
Still, it is difficult to legislate morality, he said referring to the Sarbanes-Oxley Act that he noted cost companies like Google $2 million to comply with.
Schmidt, during a question-and-answer session, defended the concept of Net neutrality, a regulation keeping Internet service providers from favoring their own content over the content of others by charging companies like Google an access fee. Google, and other major Internet companies, have the money to pay, but what about the next new startups conceived by two graduate students from Stanford University, he asked.
Abandoning Net neutrality would slow down the adoption of new technologies, Schmidt said.
Schmidt added that he felt confident about his company's legal stand against book publishers who hope to stop Google from putting copies of their books online. "We're in the process of testing" the Fair Use Doctrine, he said. "We think this is pretty high ground we are standing on."
He also defended the company's use of pro forma earnings in its quarterly reports. The company backs out charges for stock compensation. Analysts who cover the company do the same thing. "They delete that charge," Schmidt said. "I can think of no better explanation" for the use of pro forma.
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