Facing the frenemy

SOMETIMES it seems as if Google has never come across an industry it doesn’t want to disrupt. Best known for its hugely popular search engine, the internet giant has spread its tentacles into an ever-growing array of businesses, including advertising, telecoms and, most recently, digital-navigation software. The company’s habit of selling services cheaply or giving them away for free has endeared it to consumers. But its tactics have enraged competitors, who complain their new rival is out to destroy the economics of entire industries.

Such griping has been loudest in the worlds of publishing and entertainment. Although media companies are hooked on the money they mint via adverts that run on Google and its YouTube video-streaming business, many of them also accuse the search firm of commoditising their content and of undermining their profits by making it easy for marketers to track the effectiveness of online ad spend. “You’re fucking with the magic,” says the boss of one big media company to Google’s founders in a memorable scene recounted at the start of Ken Auletta’s new book.

Mr Auletta, an American journalist and long-time commentator on the media industry, dismisses claims that Google’s programming wizards are to blame for putting a jinx on the media world. Instead, he places the blame squarely, and correctly, on the publishing and movie executives who failed to appreciate the speed with which the internet would sap their companies’ fortunes. They were also slow to spot that, although Google presented itself as a friend, it had all the hallmarks of a powerful enemy too. Now the frenemy has become a scapegoat for many of the industry’s self-inflicted wounds.

Mr Auletta does a respectable job of reviewing the media companies’ predicaments. He also rehearses some of the well-known elements of Google’s culture that have helped transform it from a start-up launched in a garage 11 years ago to a colossus with ambitions to become the world’s first media company with revenues of $100 billion. Among other things, these include lavish stock options, perks such as free meals and massages, and a rigorous and sometimes quirky recruitment process. (In one passage in the book, Sergey Brin, one of Google’s co-founders, asks a candidate for a senior legal position to draw up a contract for the sale of Mr Brin’s soul to the devil.)

More compelling are the book’s insights into the relationship between the members of the triumvirate that runs Google—Mr Brin, Larry Page, his co-founder, and Eric Schmidt, the chief executive, who arrived at Google several years after its launch. Brought in at the behest of venture capitalists that have backed the firm, Mr Schmidt found himself treading a delicate path between the sensibilities of the brilliant but socially awkward founders and the demands of the impatient financiers. With the help of a veteran Silicon Valley executive who acts as a coach, the three men ultimately developed an effective working relationship.

Which is just as well, for Google now faces some formidable challenges. Fast-growing social networks such as Facebook are after a much bigger chunk of online ad dollars. And Google’s size has begun to attract the attention of anti-trust watchdogs in areas such as digital book scanning, where it has ambitious plans. This hardly amounts to the end of Google’s dominance as we know it. But if the company misplays its hand, it could turn out to be the beginning of the end.

Nov 12th 2009
From The Economist print edition