More social, more evil? Larry Page’s first year back in the driver seat at Google

googles war against patents 2 larry page google patentsjpg

One year ago today, Larry Page took over for Eric Schmidt as CEO of Google. Page co-founded Google along with Sergey Brin back in 1998 and served as CEO through 2001. While Page has always been in the thick of Google’s product development and strategic direction, much of Google’s next decade was characterized by an odd triumvirate: Seasoned exec Eric Schmidt (formerly of Novell and Sun) acted as the titular CEO and the “adult” in the room, while Brin and Page had more-or-less equal weight in corporate decisions. With Page’s re-ascension to the CEO chair and Schmidt’s transition to a more nebulous executive chairman role, Google has attempted to pare itself down, sacrificing projects, bolstering its core businesses, and above all trying to reorient the entire company behind a comprehensive social strategy. Page has proven himself to be one of those “vision” execs, who focuses on long-term success rather than the next quarterly statement.

What is Page’s vision for Google, and how have his moves over the last year helped — and hindered —that strategy?

Social, social, social

Eric Schmidt hadn’t even had time to get new business cards printed before Larry Page launched a crusade to re-orient Google’s business around social networking. Google had been dipping its toes in social media for years, but even Schmidt admitted the strategy hadn’t worked — and he took responsibility for it.

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In part, Page’s immediate focus on social media is a response to the seemingly unstoppable popularity of Facebook: With nearly a billion members (and an astonishing amount of personal information about each of them), Facebook is turning into an advertiser’s dream, since it can target promotions, ads, and offers very closely to its users interests, friends, and lifestyles.

Facebook’s deep knowledge of its users is a problem for Google, since Google derives the vast majority of its revenue from advertising. Last year, Google sold some $36.5 billion worth of advertisements — that’s more than ten times the revenue Facebook generated from advertising in the same period. But Page sees the writing on the wall: Facebook represents a major threat to Google’s core advertising business.

Google had played at social networking before — and stumbled badly. Anyone remember the location-aware social service Dodgeball Google bought in 2005? (The founders left Google in frustration a few years later; one went to co-found Foursquare. Bits of Dodgeball live on in Google Latitude.) What about Google Wave, which was intended to be a socially-enabled collaboration system? And of course there was Google Buzz, the quickly-killed social service Google tried to build on top of Gmail — and which earned Google google adjusts buzz after gmail users complain of privacy issues buzz1

So, Page’s first move as CEO was to focus the company on social networking. To maintain its leadership in online advertising — and all the tasty, tasty revenue that comes with it — Google needs to know as much or more about Internet users as Facebook. Page packed up Google’s executive offices and moved them close to the group working on Google+ — no pressure there, right? He also laid down another dictum: A portion of all employee bonuses would be tied to the success of Google+. In other words, the success of Google’s social efforts was suddenly everyone’s job. To be sure, Google+ was in development long before Page took the CEO chair, but the platform only took center stage under Page’s leadership.

But his strategy doesn’t stop at just launching a Facebook competitor that he hopes, one day, will at least be a significant force in the social networking world. Page moved to bring social media into all of Google’s major product offerings — including the crown jewel, Web search. When users are logged in to Google, Google brings search results and related hits from Google+ circles and contacts and puts them right at the top of search results. Google says the move makes Web search more relevant and customized to users’ lives and interests; critics immediately called foul, saying Google was abusing its dominance of Web search to promote Google+ at the expense of more-popular services like Twitter and Facebook. Google’s response has been to shrug and say it doesn’t really have access to that data.

Sacrifices

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Page also moved to focus Google, trimming nearly two dozen of company’s projects to, in his words, put “more wood behind fewer arrows.” Perhaps the highest profile victim of Page’s streamlining was Google Labs, the company’s freeform testbed where it tried out new product ideas and experimented. Google Labs may be best known to everyday Google users for the Gmail add-ons it produced, but Google Labs also gave rise to Google Reader, Google Docs, and Google Maps — all of which have become major Google properties in their own rights. The move was greeted with skepticism, since companies that cut their R&D spending historically see similar reductions in their innovation.

Other Google services that got the axe: the little-loved Google Buzz, social gaming group Slide (which Google paid almost $200 million for back in 2010), Google PowerMeter, and Google Health, Google’s high-stakes effort at portable, privacy-protected digital health records. (Microsoft killed its own HealthVault, too — it seems consumers and the health care industry just aren’t ready for digital medical records and all the privacy and discrimination nightmares they could involve.) [Correction: Microsoft announced in 2010 that it was dropping efforts to generate revenue from HealthVault; the service remains operational. Microsoft is focusing its commercial healthcare efforts on Amalga, which is intended to help hospitals move health data across different systems.-gd]

For folks who have been keeping count, reducing Google’s project count by 20 or so barely reduces the number of arrows the company has in its quiver. Google still operates more than 100 other projects, from Gmail to iGoogle to Orkut (yup, it’s still going!), Picasa, Sketchup, Google Earth, Google Calendar, Google Docs, Panoramio, Picnik, Google Sites, Blogger, innumerable aspects of its ad business (AdWords, AdSense, AdMob, DoubleClick), the entire Google Play empire (including music, books, movies, and the former Android Market), Google Checkout, Google News, Google Scholar, Google TV, and this little thing called YouTube. And that’s leaving aside Google’s many developer initiatives, publishing tools, analytical tools (like Trendalyzer and Google Analytics), and let’s not forget Google makes two operating systems Chrome and Android.

google nascar

And Google keeps adding more projects: Google is rolling out an experimental fiber network in Kansas City (which might be a precursor to a pay TV service), and we’d be remiss not to mention Google’s dalliance with self-driving cars.

It’s understandable that a company the size of Google has many irons in the fire. But it does seem a bit odd to trim off expensive buys like Glide and shut down Google Labs (which, despite many duds, has historically been critical to the company) while continuing to pursue some pie-in-the-sky projects. Vision, optimism, and a willingness to experiment have long been hallmarks of Google, but it’s not clear how those can easily be reconciled with a need to focus a maturing company.

Scrutiny

Defend Google’s online advertising business from Facebook means compiling detailed dossiers on Google users — and using that information to offer highly relevant and personalized services, as well as targeted advertising. For Google, that strategy has become more important as consumers have shifted to mobile technology. Users are willing to sift through plenty of results on a 24-inch monitor, but people trying to type with one thumb without spilling their coffee while waiting for a train don’t have that kind of patience. Being able to surface personally-tailored results on the first try in a tiny amount of screen space becomes critical to Google’s business.

As a result, Google unified its privacy policies across all its services — anything a Google service used to know about you in one place is now known to all Google services everywhere. If you blog about fashion, guess what? That’s going to inform Google’s assessment of search results you want to see. A Google+ friend is really into death metal? Guess what? That’ll inform what Google serves up when you search for concert listings, or Google thinks you might need some music recommendations.

Google defends the move, saying it’s not collecting any new information, just using it differently to do a better job for its users. The more information it has, the more likely it can make that first, tiny screen of information immediately useful. However, Google is also drawing strong scrutiny from U.S. and European regulators, who argue users didn’t opt in to having their information shared across previously disparate services. EU regulators are looking into whether the changes are illegal. And Google’s move to aggressively move social media technologies into every aspect of its business has resulted in some blunders, including bypassing Safari security settings in an apparent effort to get its “+1” buttons working in as many places as possible.

Google has made another potentially game-changing move under Larry Page’s leadership: It’s in the final stages of acquiring Motorola Mobility for some $12.5 billion. The deal has been approved by EU and U.S. regulators; Google is essentially waiting on Chinese approval now.

Google insists that buying a handset maker won’t put it in the phone business, but it’s hard to see Google, as the developer of the world’s top-selling mobile platform, buying a mobile hardware maker and just letting it operate on its own, pretending everything is business as usual. Google’s interest in Motorola is partly related to patents — Google is facing high-stakes battles with Oracle and Apple over Android — but Google will almost certainly leverage Motorola Mobility’s massive employee base and expertise. Right now, Google employes about 32,000 people. Buying Motorola Mobility will add about 20,000 more to that total. One way or another, the acquisition is going to have a major impact on Google’s culture, and — despite rumors Google will launch its own tablet products — the company has been extremely tight-lipped about its plans.

What the future may hold

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Google faces a major challenge with its social initiative: Facebook already dominates the business. Although Google has been able to get an estimated 100 million people to create accounts on Google+ (bolstered in part by the broadening success of Android), so far Google+ doesn’t seem to be getting much traction. To be sure, the service has enthusiastic adopters, but market research is showing that, on average, users are spend just minutes a month on Google+ compared to several hours a month on Facebook. Even the 144-character-limited Twitter saw users spending more minutes per month.

Google is certainly playing a long-term game with Google+, but if users don’t become engaged with the service, Google is going to have a hard time collecting information for the detailed user dossiers it needs to drive targeted advertising sales. Google can learn a great deal about people from their searches, email, and locations, so it’s not like the company’s ad business is dead in the water without Google+. But expect Google to push Google+ signups and engagements in every way it can: During the next year, Google+ may become essentially unavoidable to users of any Google services.

Google ID

However, Google’s most important future moves will center around identity. Google wants your online identity to start at Google, and doesn’t want Facebook to assume that role. Identity is an extremely important concept to Google’s overall business strategy. That’s why, at launch, Google+ disallowed anonymous accounts and pseudonyms. (Google says it will eventually support “other forms of identity,” but so far there’s been zero public motion on that front.) For Google, identity is absolutely critical to not only customizing services for users, but for creating a trustworthy platform. Both consumers and businesses want to know that the people they’re talking to are really who they say they are. That kind of trust is critical not only to personal relationships, but to business’s and developer’s willingness to build on Google’s platforms and infrastructure. Google faces a number of challenges on that front — including figuring out how to weed charlatans out of its freewheeling Android app marketplace. Expect Google to make more of its services identity-centric, and even identity-mandatory. Google’s business is reaching a point where, if they don’t know who you are, you won’t be worth their time.

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