Analysis, Business, Essays

Google: Sacrificing Traditional Business for a New Movement in Good Business and Transparency

Google (GOOG) CEO Eric Schmidt said yesterday on CNN an interesting view on their business:

“Hopefully we won’t repeat the mistakes that Microsoft made 10 years ago that ultimately led to all these things that happened to them.”

Some of these mistakes include a lot of anti-trust and monopolic actions, profit ploys gone awry ending in lawsuits, privacy failures, and refusal to cooperate with competitors. These, along with some instances of not-so-great software (looking in your direction, Vista), have tarnished Microsoft’s (MSFT) business.

Eric Schmidt is trying to portray Google as a Good Business. They’re not going to make the same mistakes as Microsoft: they’re going to be truthful and follow Don’t be Evil. They’re going to aim for transparency. Are they truthful about that, though?

Many businesses in the world, without lies and fraud, would be well out of business. This includes companies like Cash4Gold and MLM scams. So would a lot of financial institutions, if it weren’t for the bailout. I have a personal gripe on the bailout. Why? NASA 2009 budget is 17.2 billion. National Institutes of Health 2010 budget is $6 billion for cancer research. TARP: $700+ billion.

Good Business and Google

Good Business entails transparency. Mad, mad profits more likely than not entails some kind of fraud going on. Google says they’re going to forgo these mad profits—and fraud, for that matter—and focus on the customer. Making the customer the top priority is something that is—surprisingly, as well as irrationally—lost in some modern businesses.

And we’re seeing a lot of great strides from Google to this effect: Google Dashboard, a tool that allows Google Account users to see what kind of information is associated with their Google Account, was introduced on the Google Blog in an article called Transparency, choice and control — now complete with a Dashboard!

“Over the past 11 years, Google has focused on building innovative products for our users. Today, with hundreds of millions of people using those products around the world, we are very aware of the trust that you have placed in us, and our responsibility to protect your privacy and data.”

Or—Google’s Data Liberation Front: their homepage states their mission: “Users should be able to control the data they store in any of Google’s products. Our team’s goal is to make it easier to move data in and out.”

The risk is huge, too. It’s not just that Google participates in far fewer fraud than most businesses of similar influence. They take the risk of losing customers that realize how wide the gamut of knowledge Google knows about them. One notable example is Google Dashboard: many users responded with “wow—Google knows a lot about me. Should I be concerned?” And if they are—Google is making it that easy to check out of itself.

Others said that among the privacy issues and information issues Google has, the Google Dashboard is like British Prime Minister Neville Chamberlain’s 1937 appeasement towards Nazi Germany: Google gives us a bit of what we want to see to make us think that they’re serious about their responsibility of protecting privacy and transparency, but in the long run they really, really want the data.

The great part about Google and Good Business? Customers get it. Customers appreciate the transparency, which makes it hurt just a bit less for Google on their balance sheet. In the long run, hopefully Good Business drives the following profit inequality: Bad Business < Business < Good Business.

Fantastic. One of the most important technology businesses is promoting Good Business through transparency and not being Evil. Google has its problems, and many, many instances that they have acted in an evil way. And whether this will hold for the next ten years is still up in the air. However, they’re taking a positive direction, and for a 10-year-old technology company with massive market share and massive influence, and massive profits and market capitalization, it’s pretty damn impressive.