29 May 2009 8:24 am   //   Filed under: Media, Technology

The gatekeepers (part II)

This is the second part of a two-part blog post. Read Part I.

Google killed the gatekeepers, now it is the gatekeeper. Its influence on culture and business is downright scary. Online, its supremacy is unquestioned. Publishers kiss its feet and digital developers torture their creations to accommodate the whims of the Google search algorithm.

But empires fall, and the forces that gave Google its power could also destroy it. Google is a great business and no serious person expects it to fail any time soon. But conceptually, Google is a contradiction.

Most people think of Google as a search engine and a set of free Internet services, but it’s actually an advertising business. Google is a public company with essentially one way to make money: text-based search ads. (Last year 97 percent of the company’s $21.7 billion in revenue was from advertising, and most of that came from AdWords.)

Google can make so much money in advertising because it sits at the biggest point of friction in the Internet. Google is the middleman between billions of people and the information they want to find.

In some respects, we’re lucky this is so. Google’s services are good and free.

But the more trust society places in Google, the greater the risk that something could go wrong. An unlikely scenario would be Google turning to the dark side: Levying some kind of Internet tax, using its gate-keeping powers to shut down smaller voices that can’t pay. A more likely scenario would be the collapse of the AdWords business. If AdWords fails, Google will have to find some other way to underwrite its search engine, G-Mail, YouTube, Google Maps, and so on. Any distruption could have serious consequences for commerce, free expression, and even wayfinding. (How many people do you know who would be lost without the map on their iPhones?)

Is AdWords in any real danger? I think so. The problem is AdWords depends on friction (advertisers lack a good way to identify potential customers), secrecy (ads are sold in a blind auction) and the authority of a single entity (Google’s search engine). Conceptually, these are obstacles that the Internet has proven adept at getting around. It’s inevitable that some replacement for Google AdWords will appear. And based on the history of the Internet, it will be cheaper, better and not controlled by Google.

For now, Google is thriving on the money that used to go to telephone directories and classified ads. Creative destruction took care of those businesses. How long until it dispatches Google too? And when it does, who will be the next gatekeeper?