Google recently held its annual partner event, Zeitgeist. During the event, I was moved by speakers who focused on hope, opportunity, and personal and professional passion. This is the epitome of what Google is, at its core, when you strip away its sales persona. That said, professionally, I was struck by the simplicity of a quote from Google’s Chief Scientist Peter Norvig that I believe captures the essence of why Google wins – “We don’t have better algorithms. We just have more data.”
Think about that for a second. Google, the company that built a better algorithm, suggests that it was not really about the algorithm, but all about the data. Not just data as an abstract singular item, but a scale of data that has been unmatched in the space. When Bing and Yahoo formed their alliance, it was heralded by the companies as a crucial step in being able to combine data for greater intelligence. A few weeks ago, I sat with a leading local deal company and they shared statistics on the scale at which they were operating. The scale described alone is reason enough for the company to be a credible player. The size of user base and the subsequent data flow being produced will enable serious innovation opportunities.
In this business, you quickly learn that scale opens doors and, without it, you are just posturing and faking it until you either acquire scale or fade away. It is the difference between what Facebook is and what MySpace became. At some point, you either have it or you do not. And, without a doubt, Google has it.
Google has had it for a decade in search. It gained it in display with the acquisition of DoubleClick. It built it post acquisition with Android in the mobile space, and is now going after it in social with Google+. The single greatest difference between Google and every other contender at present is that its scale crosses human behaviors. Apple has access to enormous insight via its devices. Facebook and Twitter have it through the social sharing they enable, while Microsoft has it in the console market via Xbox. But none of those companies have woven the thread across consumer behaviors like Google.
Apple does not have enough market in the PC marketplace to match the iPhone and iPad markets. Facebook has curiously opted out of search. And, while display plus social will be important, it may not be enough without device presence. Microsoft bought its way into search, did something similar with Kinect along with Xbox, and has a poor mobile track record going at present. By contrast, Google’s track record with creating the kind of scale needed to turn data into revenue is largely positive.
When Justin Timberlake portrayed Sean Parker in “The Social Network” and famously suggested that $1 million was not enough and that $1 billion was cool, it was simply another way to precisely say what Peter Norvig said. Google wins and controls the ecosystem because it has the largest repository of data. Google+ is a genuine attempt at a social network. But, make no mistake, the data generated from not only your personal Google+ data, but also the shared social graphing of the +1 buttons on sites is what will ring the register for Google revenues.
When congressional leaders examine the monopolistic tendencies of Google, the question they ultimately examine is whether the scale of Google’s presence eliminates the opportunity for entry into the market. If they are to find against Google, it may very well be because the scale of data is what they deem to be unattainable by others.
There has never been a company that monetized insights better than Google. Every action has a value proposition to multiply brands. But, more importantly, it produces data points for Google itself. And that’s why the company that built the better algorithm can now trade on the data machine it spawned.
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