Search for TomorrowThere are more than 170 million Web sites today, but in 1994 there were fewer than 4,000. Thus mere human beings could power the first generation of Internet search engines: Enter the query "hotdog" and the results spit back at you were those compiled by an editor who had at some point assembled a list of hotdog-possible sites.
By 1998, the Web was getting big enough that it was hard for human editors to keep up. That's when Larry Page and Sergey Brin founded Google and built a search engine that, by using a computer algorithm, could in theory scale to include an infinite number of Web sites. Google sent a spider into the Web that would index every page it crawled past. The massive index was then ranked and stored on Google's servers. When a user submitted a query, the algorithm generated results from ranked and indexed pages.
It proved to be an elegant and efficient system. But Messrs. Page and Brin, when they launched Google, had no idea how to make money from it. Two years into their venture, they developed a service that delivered small text ads based on the search terms that a user submitted. As Randall Stross notes in "Planet Google," his even-handed and highly readable history of the company, the service proved to be a turning point in the history of advertising, offering ads tailored for "an audience of one at the one best moment, when a relevant topic was on the user's mind." It also proved to be a goldmine for Google. The company started serving up ads in 2000. In 2002, it had revenues of $400 million; in 2005, $6.1 billion; in 2007, $16.5 billion. Roughly 99% of its income stills springs from those modest text ads that appear at the top of Google's results page.
Google may have built a better mousetrap, but it was also lucky. At the time of Google's birth, Mr. Stross reminds us, Yahoo was the Web's pre- eminent search engine. It relied primarily on human editors, but in 2000 Yahoo hired Google to provide search results for queries that its human editors hadn't tackled. When users went to Yahoo, they were often given Google results. This arrangement provided Google with cash and, more important, gave the company brand recognition and time to refine its page index and algorithm. Yahoo nurtured Google instead of recognizing it as an existential threat.
Since then, Yahoo has declined while Google has become a leviathan, using its deep reserves of cash to enter an increasing number of arenas. The Google Books project is attempting to digitize all of the world's books, for instance. YouTube, which Google acquired in 2006 for $1.65 billion, is the Web's leading repository for video. GMail is Google's foray into the email business.
Is Google an unstoppable juggernaut fated not only to "organize all information" -- as the company has itself put its goal -- but to control it as well? Mr. Stross poses the question but does not answer it. He notes that one of Google's ambitions is to usher in an age of "cloud computing," in which all the work we do on our personal computers would actually take place on servers that Google owns. The servers would hold the programs we use and store our data. That image -- Google as Skynet from the "Terminator" movies -- is a mite unsettling.
Yet the evidence in "Planet Google" suggests that this eventuality is less likely than Googlers might hope. Outside its core search and advertising business, Google has had few successes. Its home-grown products, such as Orkut, Knols and Google Checkout (knockoffs of Facebook, Wikipedia and PayPal, respectively), have largely been failures. Google's biggest successes have come from acquisitions. Google bought YouTube only after its own attempt at video on the Web, Google Video, crashed and burned. And even the "successful" acquisitions that Google has made -- Google Earth, Google Maps, Google Docs and Blogger were all purchases, too -- have taken up resources without creating significant revenue.
To make matters worse, two strategic challenges to Google's core business have already emerged. Wikipedia, a community-created knowledge base, threatens the algorithm with an army of unpaid editors -- offering a new version of the original search-engine process, the one run by human editors, only this time using volunteers. And since Wikipedia is a nonprofit, it can't be bought. Facebook presents a different problem -- the creation of a closed Web ecosystem that excludes Google's spiders. The more Internet life moves into social networking's gated communities, the less relevant Google's search will be.
Remember, people thought that Microsoft was fated to rule the world, too. Today, the once-feared operating-system giant is fighting to stay relevant. And the evolutionary parallels between Google and Microsoft are strikingly similar: Both hit upon a Big Idea at the perfect moment; both parlayed it into a mountain of cash; and both used the money to embark on a string of expansions that paid few dividends. The years have brought Microsoft back to Earth. They'll probably do the same to Planet Google.
By: Randall Stross: staff writer at the Weekly Standard and columnist for the Philadelphia Inquirer
Wall Street Journal; September 17, 2008
