Free online services have a hidden cost

25 Jun

June 25, 2007

By Geoff Meeker

When you open your desktop computer, chances are you use Microsoft applications.

And when you want to do an Internet search, you go to google.com, the site that made a noun a verb.

Each has found its niche in our daily lives, as we click away in our dens and offices.

But neither of them is content. Both companies are caught up in a high stakes battle for world domination of the Internet.

We already know that Microsoft is a cash cow, with projected revenues of $50 billion for 2007. Based on first quarter earnings of $3.6 billion, Google will likely take in about $12 billion this year. However, Microsoft is a lumbering beast that is slow to change, whereas google is fleet-footed, innovative and growing at a dizzying rate.

The core business models upon which these companies were founded are quite different. Microsoft sells software applications to consumers and computer manufacturers, whereas google sells advertising on its wildly popular search engine. In recent months, however, both have been attempting to expand share by encroaching into each other’s market.

All easy to grasp so far. But this battle to ‘own’ the Internet is a bit trickier to comprehend. What both companies want to control is not the physical network itself but, rather, the reams of information that flow within its veins and capillaries. And according to the articles I’ve been reading, the plan is to digitize all information on the planet, catalog it for search purposes, store it and retrieve it.

This would include all movies, TV shows, books, research documents, newsreels, photos… pretty much anything you can imagine. This is a major piece of work, but a lot of material is already available (everywhere from YouTube to various online libraries) and the technology exists to digitize everything else. I could write a lengthy essay on this subject alone, but suffice to say the process is already underway (you’ve probably heard complaints about copyright violations as google scans various books to make them available online).

But the quest for information doesn’t stop there. Google also wants to host your email, through its hugely popular gmail application, which sucker-punched hotmail and other free web-hosted email services by offering unlimited storage space. And it doesn’t stop there. Actually, google would like to host ALL of your personal information, including your daily planner, text documents, photos, videos and whatever else you want to store with them.

To store all this information, google is building massive server farms at two locations in the U.S. (in Oregon and South Carolina) and one in the Netherlands. Each will be as large as a WalMart with enormous data storage capacity.

Google’s free online software could make the Microsoft business model obsolete, which is why Microsoft is reacting so aggressively to this new threat. It has also launched its own high-end search engine, in a frontal attack on google, is looking to acquire companies (like Yahoo) that will allow it to adapt more quickly, and is investing in six massive data barns in Washington state and elsewhere to shore up its entry into the information management war.

The purpose of this battle to control information is not nearly as esoteric as you might think. It’s all about advertising, the same thing that drives that free newspaper at the local coffee shop. Advertisers pay for eyeballs or ‘impressions’. The more people who eyeball your ad, the more they can charge for advertising. Consider the $10 billion that google made in 2006 by selling ads on its search engine and you get an idea of what’s at stake.

On the surface, it looks like consumers have everything to gain from web-based email, reliable software applications and unlimited storage, all free of charge. But there is a far greater cost than the mildly annoying little ads that accompany your search results.

Google computers scan all of your personal information – including email messages – looking for keywords that are a good match for their advertisers. They can search your daily calendar and other personal documents – if stored online – for clues to your tastes and buying habits. Advertisers are willing to pay good money for access to this information.

Does this idea cause you some unease? Then I encourage you to read the privacy statements at google and all other web sites – including facebook – before entrusting them with your personal information.

For more on this subject, simply go to, um, google.com or msn.com and search for ‘google vs. microsoft’.

Geoff Meeker is public relations consultant who has always had a soft spot for technology. He also writes a blog about local media, which is hosted at http://www.thetelegram.com.

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