The Googlization of Everything. Siva Vaidhyanathan

many popular search terms. Although Google’s contextual advertising and instant auctions often serve the interests of small firms, its freedom to set such rates at any level it desires allows it to crowd out some of the small firms that have grown to depend on Google for their most valuable advertising outlets—including small firms that are Google’s potential competitors. That’s mean, but it’s not illegal. If Google’s advertising dominance and revenues are a legal problem at all, it’s because of a touchy issue called cross-subsidization.

      Google can use its prominence in people’s lives—the network effect—and its surplus revenues to support its other ventures—its online document business, for example, which is likely to lose trivial money for the company. This process is not yet a direct threat to Microsoft, which can withstand a few thousand customers sneaking off to the “cloud” instead of using Word on their own laptops. But it poses a serious threat to small, creative companies that offer Web-based word processors, such as Zoho, Thinkfree, Writely, and Ajaxwrite.

      When I asked the New Yorker writer Susan Orlean why she uses Google Docs to compose her work, she replied that she found the cloud comforting. “I was starting a new book, working on two or three different computers, and finding it maddening to have different versions of work on each one, trying to remember which was the latest, etc.,” Orlean wrote to me. “I happened to look at Google Docs and realized it would keep the work synced on all computers, so I thought I would give it a try. I also liked that it was so simple and clean—more like a piece of typing paper than a fancy program.” When I asked her if she considered using Zoho, which is a superior service, she responded, “No, I haven’t, and I trusted Google Docs because I figured it would be around for a long time, where smaller services might disappear (along with my documents).”²⁹

      If Google uses its profitable ventures to subsidize those activities destined to lose money, and if that practice kills off innovative potential competitors like Zoho, Google has crossed the line into shaky legal territory. This is essentially what Microsoft did in the 1990s when it used its dominance in desktop software to subsidize and promote its Internet Explorer Web browser. Microsoft managed to kill off several innovative competitors, including Netscape, the original commercial browser. The only remaining major competitors for Explorer were Apple’s Safari (also subsidized by Apple’s profitable ventures) and Firefox, an open-source product released by the Mozilla Foundation. Explorer was for a long time the default browser on more than 70 percent of the computers in the world.³⁰ Although it has been displaced by Firefox in recent years, Explorer is still installed along with Microsoft Windows, the operating system of choice for more than 90 percent of the world’s personal computers.

      Competition, both fair and unfair, is but one point of friction between Google and other powerful interests. Increasingly, Google is the target of attacks from firms that provide content to the Web, largely because they are failing to make much money from the Web and Google makes so much.

      THE FREE RIDE

      Whenever we write blog entries, post reviews of products, upload photos, or make short videos for viewing by anyone who is using the Web, Google finds them. And it copies whatever it finds. All search engines must make a “cache” copy of material they find so that their computers can conduct a search. Then, when others search for content relating to their search queries, Google places revenue-generating advertisements on the margins of the search results through its Ad Words auction program, described above. In a sense, we could say Google is taking a free ride on the creative content of billions of content creators. But the ride is not free at all. Even though we don’t ever negotiate terms of a contract, we essentially agree (by not opting out or actively disagreeing) that search engines may copy our content and make money from the process of judging, ranking, and connecting people to it in exchange for the privilege of our content being found. After all, why would we put content up on the Web if we did not want people to find it? And clearly, opting out of all search engines (there is no simple way to opt out of one or two search engines but not others) is infeasible. So although we get a pretty good deal out of the relationship, it is hardly a fairly negotiated arrangement. But we have little to complain about. Google invests billions in its techniques and technologies to make the Web a reasonable and navigable place. So if we are in the business of trying to get people to notice our work on the Web, we should probably be grateful that Google treats us as well as it does.

      Besides, what is so free about a free ride anyway? In basic economic terms, a free rider consumes more than a fair share of limited resources or shoulders too little of the cost of a product or service.³¹ Economists consider free riders a problem because their presence can lead to underproduction or excessive use of a public resource. If most people in the United Kingdom pay their television tax for over-the-air broadcasting, but a few watch without paying the tax, then the norm of paying for the tax could break down, and more people might be encouraged to be scofflaws. If too many people jump the turnstiles on the Lisbon underground, then too few fare payers will bear the burden of supporting the service. If free riding becomes the norm, the entire system could break down. If a labor union succeeds in securing a wage hike or benefit for all the employees of a firm, but some employees refuse to join the union and pay dues, they are riding for free on the efforts of the union.³²

      Another way of looking at a free rider problem, dealing with private firm behavior rather than unions, public goods, or public resources, is the argument that when firms provide services to the public that add to costs (such as a telephone help line), yet retailers sell the item below the suggested retail price, the manufacturer fails to benefit from providing the service while incurring the entire cost. This argument led to the legalization of the practice of letting manufacturers establish minimum prices for their products, even if such restrictions kept prices artificially high and limited competition. We see these arguments employed today in efforts by manufacturers such as book publishers trying to keep Amazon from offering or advertising extremely low prices for their goods.³³

      So what does Google have to do with any of this? Not as much as some would assume. Our lives are full of goods and services that are built to enhance the value of other goods and services. Other goods we buy are generic replacements for parts of other goods, such as lightbulbs, universal remote controls for televisions, or replacement batteries for automobiles. In many of the cases in which Google has been accused of riding for free on the investment of others, Google is in fact just offering a cheaper and more effective replacement for part of the original service. But because of the state-granted monopoly that we call copyright, the role Google plays in the information world is nowhere as simple as the role that cheap lightbulbs play in the electric appliance economy.

      Although no court has taken the argument seriously enough to endanger Google’s core business, a growing number of firms have started voicing complaints that Google rides for free on the creative work and investment of others. This argument seems futile for a number of reasons, not least of which is the fact that Google has strong legal grounds (at least within the United States) to do just about everything it does with online content (but not, as I show later, with stuff that resides in the real world). One landmark U.S. case in search-engine law in 2003 set a good precedent that search engines could—in fact must—make copies of others’ work to ensure that the Web functions well for everyone.³⁴ And the American copyright concept of fair use generally protects anyone who wishes to copy and distribute small portions of copyrighted works as long as the purpose of the distribution fulfills some role that enhances the public good, such as education, informing the public about current events or debates, or creating highly transformative work out of the raw materials of existing expressions. So when Google scans someone else’s site, it can feel confident in its practice of excerpting a small slice of descriptive text from the site to help users decide whether it is relevant to their search.³⁵

      The story is quite different in much of Europe. In 2007 a Belgian newspaper trade organization won a suit against Google for incorporating its clients’ content in searches on Google News. Because Europe does not have a flexible fair-use provision in its copyright laws, European courts consider different and much more clearly defined factors when determining whether a party has infringed on the rights of another. Since that time, Google has entered into partnerships with some European news organizations, essentially giving them preferential treatment