Gunning For Google

Forbes

On My Mind
Gunning For Google
Dennis Kneale, 02.03.06, 11:00 AM ET


LONDON - The Google guys must be wondering what the hell hit them. For a year or two now, Sergey Brin and Larry Page have been hailed by Wall Street and the press, adored by fiendishly avid users and devoted investors, and all but worshipped by Silicon Valley colleagues and advertisers.

Now comes the backlash: Google (nasdaq: GOOG - news - people ) as spineless hypocrite willing to sell out a billion users yearning to breathe free behind the Great Firewall of China; Google as violator of copyrights, reviled by book publishers and newspapers that accuse it of pirating their precious prose; Google as flawed financial manipulator, unable to manage its tax rates to avoid a mild earnings disappointment and a jarring market reaction.

Newsflash: Google is on the side of right in most of this Sturm und Drang. This onslaught isn’t really about the issues at hand. It is driven by fear, envy and greed, and it is an inevitable part of the life cycle in Silicon Valley. Upstarts climb up from nothing to the applause of all, and then--just when you start believing your own planted PR--the best ones must be taken down. Admiration turns into wariness and jealousy, and what first struck everyone as perky and plucky now seems potent and threatening. High-tech heroes, once renowned for their boldness, suddenly are resented as arrogant and imperious (by perception or reality; in the Valley they are one and same).

Bill Gates and Steve Ballmer of Microsoft (nasdaq: MSFT - news - people ) endured this in the late 1990s. Tom Siebel and Siebel Systems went through it in the aftermath of the tech crash of 2000; so did Larry Ellison of Oracle (nasdaq: ORCL - news - people ). See also Carly Fiorina of Hewlett-Packard (nyse: HPQ - news - people ).

And now it is Google’s turn.

The gloating is palpable, some of it from people who had celebrated Google’s startling rise. When the China flap broke last week at the World Economic Forum in Davos, Switzerland--the company will follow Chinese law and restrict search phrases that could yield entries on dissent and suppression--it got more play than the news that the Palestinians had elected Hamas militants intent on destroying Israel (business trumps geopolitics, even at WEF). Bill Gates was ready for comment, reportedly teasing Google Chief Executive Eric Schmidt about the company motto (“Don’t be evil”) and later holding forth sagely on the matter.

Now the bloggers are on the company’s case. “I wonder if they’ve banned ‘spineless,’ hypocritical’ and ‘cowards,’ ” said one wag quoted in the Financial Times. Another diatribe, posted on the blogspot.com site that Google itself owns, lamented “that giant sucking sound” of “Google’s soul getting sucked out to make room for cash.”

Please stop the madness. Users will find a way dodge the search restrictions. No company is above the laws of the country where it wants to compete, and shareholders will fare better by having Google stay in the booming market and wait for it to loosen up. Eventually China will.

The World Association of Newspapers, meanwhile, accuses the Google guys of building their business “on the back of kleptomania,” demanding recompense. (Even though many publications throw up their content online free of charge anyway.) Book publishers have questioned Google’s plan to put online 15 million titles in ten years, including the entire contents of the libraries at Stanford University and the University of Michigan.

And the stock market went haywire when Google’s per-share net came in 22 cents below the $1.76 that analysts had expected. For want of two dimes, each share lost up to $56 in trading that day. Never mind that sales rose 86% and earnings, even better, doubled. On Thursday, The Independent in London had Google’s one-day loss in market value on page one in a headline six inches high: $13,000,000,000, puckishly putting the digits in blue, red, yellow, then green to mock the Google logo.

Google was headed for a fall, if only because, damn it, we’re all so jealous. It went public at $85 in August 2004. At over $400 lately, it has created four billionaires, and according to the company, one in five of its employees are now multimillionaires. (The investor relations chief, who has got to be younger than I am, is said to have recently retired.) Sergey Brin and Larry Page, each now barely into their 30s, founded Google in 1999 after landing a $100,000 check at lunch from Sun Microsystems (nasdaq: SUNW - news - people ) co-founder Andrew Bechtolsheim. Now Brin and Page are worth $16 billion apiece. Isn’t that reason enough to hate them?

Worse: In sharp contrast to the storied nerdiness of Bill Gates 20 years ago, these guys are close to cool. They wear black, travel in attractive company and work the room. They were on prominent display at myriad Davos parties. “Ooh, he just took off his sweater!” an admiring young woman at the Forbes party said when Sergey shucked his jumper to reveal sculpted biceps framed by a tight, black T-shirt. (Sorry, Sergey; too rich a moment to go unmentioned.)

But Google aggravates the matter with its own pretensions. It wraps itself in the pious pursuit of truth and access and free-flowing information. It applies a famously difficult intelligence test that requires recruits to know arcane things they will never use on the job. At the Google party in Davos, the flow of expensive vintage wines stopped at 11:15 P.M. so a few hundred people could sit in a sweltering museum room to hear Brin and a venture capitalist do an onstage interview with Shimon Peres, the former Israeli prime minister--all of it off the record, of course. As they chatted, an Israeli cartoonist in a corduroy suit entertained the audience by using squeaky, fat felt-tip markers to draw cruel caricatures of the men onstage. Even a couple of Googlers cringed.

A bigger driver of this backlash, though, may be fear. Google now poses a direct threat to Microsoft--and to Yahoo! (nasdaq: YHOO - news - people ), and eBay (nasdaq: EBAY - news - people ), and cable channels and broadcast networks, and radio, and telecom carriers and still more. “Each company is focused solely on Google as the main threat, but Google has to fight off all of them at once. How are they supposed to do that?” asks Richard Stromback, chief of nanotech shop Ecology Coatings in Akron, Ohio, who watched the Google drama play out in Davos.

Google execs, sharpie sandbaggers that they are, insist the search engine threatens few of these outlets. Yet the company imperils Microsoft because, while the latter sells software, Google essentially gives it away free to get you to look at ads on its site, notes John Sviokla, vice chairman at consulting firm DiamondCluster International (nasdaq: DTPI - news - people ). Google threatens travel sites, too: Some 30% of the private-jet bookings at easyJet last summer came not through Travelocity and other sites but through Google.

Ever insatiable, Google now offers satellite-mapping and news searches and price-discount shopping and local pizza referrals and Internet phone service; it just bought a radio ad delivery firm and touts plans to distribute TV shows and movies over the Internet. Yet at bottom, Google really is little more than an advertising medium, albeit one of the most powerful ad machines ever invented. Sviokla says more than a trillion dollars, 10% of U.S. gross domestic product, is spent on advertising and marketing, and most of this is utterly inefficient, pitching the wrong product to people who aren’t even shopping--they are planted on the sofa at home.

What was it the old retailer John Wanamaker said? He knew that half of his ad budget was wasted; he just didn’t know which half. At long last, Google offers a way to pitch just the right product to a consumer who is shopping for it at just that moment and can buy it on the spot. Google doesn’t have to save the world or free China or stamp out evil, its own earnest inclinations aside. It just has to provide a venue for ads that truly work, and huge riches will follow.