Google’s roots

Recently Google published its quarterly reports, showing 26% growth in profit, which is particularly impressive in light of the escalating economic crisis (more here).  The primary reason for such growth is attributed to strengthening of Google’s brand among advertisers and its growing (advertising) market share.  For example, AdSense alone generated revenue of US $1.68 billion.  Very impressive!

Ironically, Veronica was reading the very first (and I don’t know if the only) article Brin and Page have published about Google.  It is available here and you are welcome to read it.

Why is it ironic you ask?  Well, if you go to Appendix A in the article, they write:

“advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers”

and they continue:

“Since it is very difficult even for experts to evaluate search engines, search engine bias is particularly insidious. A good example was OpenText, which was reported to be selling companies the right to be listed at the top of the search results for particular queries [Marchiori 97]. This type of bias is much more insidious than advertising, because it is not clear who “deserves” to be there, and who is willing to pay money to be listed. This business model resulted in an uproar, and OpenText has ceased to be a viable search engine. But less blatant bias are likely to be tolerated by the market. For example, a search engine could add a small factor to search results from “friendly” companies, and subtract a factor from results from competitors. This type of bias is very difficult to detect but could still have a significant effect on the market. Furthermore, advertising income often provides an incentive to provide poor quality search results. For example, we noticed a major search engine would not return a large airline’s homepage when the airline’s name was given as a query. It so happened that the airline had placed an expensive ad, linked to the query that was its name. A better search engine would not have required this ad, and possibly resulted in the loss of the revenue from the airline to the search engine. In general, it could be argued from the consumer point of view that the better the search engine is, the fewer advertisements will be needed for the consumer to find what they want. This of course erodes the advertising supported business model of the existing search engines. However, there will always be money from advertisers who want a customer to switch products, or have something that is genuinely new. But we believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm.”

So yes… very critical take on online advertising in 1998 (including siting Bagdikian!) and $5.54 billion revenue primarily from online advertising in 2008.  Ironic, isn’t it?  I am of course not suggesting that Google is taking money for promotion of companies to higher search results, but at the same time, I don’t think we can deny Google’s proactive role in shaping our current advertisement industry and commercialization of the internet.  In fact, this is a great example of the Structuration Theory, but that is for a different post.

P.S. Today in Google if you are based in the US and you search for cellular phone, the first thing you get are Google.news results, followed by a Wikipedia article, followed by T-Mobile website…