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business newsThe New 'Too Big to Fail': How Google, Tech Companies Are Transforming the Economy
By
Professor Pinch
Feb 10, 2012 10:00 am
Google and others will present a new set of challenges to the government.
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Well, let's start by understanding what Google's raison d'etre is. Simply put, it's data and the categorization of that data. The essence of search. At first, Google (GOOG) was simply out-Yahooing Yahoo (YHOO). Better search results, faster responses, and cleaner Web pages. In a straight-up fist fight to look at who did a better job of searching Web pages, Google beat all comers.
But now, the Web isn't just Web pages. It's social and it's networked. And, it's data rich. While everyone has talked about the growth of networks like Facebook and Twitter, Google has launched Google+ as a counter to their growth and changed their search algorithm to be more social (aka Search, plus Your World, or SPYW). Whether SPYW is a good thing or not remains to be seen. I'm going to come back to the social aspects of the Web later on, but from a different vantage point.
But then I read about Google's decision to furnish Kansas City (both Kansas City, KS, and Kansas City, MO) with new high-speed Internet. The speeds will be blistering. From ReadWriteWeb:
Google breaks ground today on the super-fast fiber optic network it plans to build for the lucky residents of Kansas City, Kan. They'll get a 1 gigabit-per-second Internet connection, which will offer downloads 100 times faster than what most Americans get. Uploads will be a thousand times faster than average.
No, it's not as fast the Large Hadron Collider's data transfer rate, but I'm sure it would be faster than the Millennium Falcon's Kessel Run.
Frankly, I'm jealous of the folks in Kansas City, but I'm also pleased to see Google make this sort of investment. Indeed, one of the things we've heard about the economy the past few years was that our infrastructure was outmoded. Outdated. And while many folks thought we needed a new WPA, the automobile has been around for a century and practically any home in America can access electricity relatively cheaply. The physical divide between rich and poor is, in many ways, much smaller.
But the digital divide -- access to the digitized products and services in our current economy -- is a huge gulf between rich and poor, indeed. Investment in high-speed Internet backbones will do more to raise living standards and close the gulf between rich and poor than almost any physical infrastructure project could achieve. And as more and more economic activity takes place online, physical measures of output and income are going to become less and less meaningful. Forget about forests, falling trees, and whether or not folks can hear them. People locked out of the digital world won't even know the forest exists. Because you're going to have to use Google Maps to find that forest in the future.
But make no mistake: Google will benefit from giving folks faster Internet throughput. Again, from ReadWriteWeb:
Google's not just doing this to collect Internet bills from homes. When the Internet gets faster, Google's whole business benefits. Google wants to test new, bandwidth-intensive "killer apps" to see what kinds of future services it can provide. But even for normal Web services, speed benefits Google. Put bluntly, the faster your Internet, the more Google ads you can see. That's why Google search and the Chrome browser are so dang fast.
But I suspect there's more to it than just that. First, if you're an Internet service provider (or ISP), you're the gatekeeper to the Web. Traffic, i.e. data, travels over your network and plumbing. Could Google essentially gain a back door to get data it currently doesn't have, like data on Facebook? I'm not savvy enough to know that answer, just silly enough to ask the question.
Second, there's a new paradigm taking shape. Economics, and markets specifically, have been about using levers or mechanisms to balance out outsized wants and needs with limited resources and abilities. One person's consumption was another person's production. Whether the product was a good or a service didn't matter.
No positions in stocks mentioned.
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