GoogleNet: A classic case of over-reaching

A few weeks back, Rob Greenlee, Dana Greenlee and I were talking about the rumors of a Google WiFi network. This was based on Om Malik’s posting and Business 2.0 article, suggesting that Google wants to give free WiFi to everyone in America.

Now comes the news that Google WiFi is right around the corner. But I think the network services bids Google has asked for, which would support a massive media play, is not part of the WiFi play—at least, not the main part. As I explained on Webtalk, I think the company will help organize access to free-access WiFi nodes while maintaining some key free nodes of its own. The Google WiFi Secure Access client, a VPN client that allows users to drill through the wild Internet to secure services from Google and facilitated by Google, suggests I am right—it is not simply a matter of offering lots of wireless connectivity, but creating portals into a GoogleSpace full of content it intends to monetize.

Google’s business depends on collecting and indexing as much information as possible, but it has increasingly found paths that require it controls information, which has brought the company into conflict with potential partners. The switched terabit network Google is seeking to assemble is the cure for that conflict, because it can offer not just indexing, but storage and delivery of, content for libraries, publishers, television networks, movie studios, and anyone else, effectively lowering the cost of taking content digital (“We’ll host everything for you, place ads using our auction system, and you get the incremental revenue. It’s all upside if you partner with Google!”)

Danny Sullivan raises a question about the “Why?” behind the network investment that I think casts the issue as too one-sided:

Perhaps, but as I’ve said before, Google doesn’t need either Web Accelerator or Google Secure Access for this. It already has millions of installed copies of the Google Toolbar that, when advanced features are switched on, gives it plenty of data about browsing habits of surfers — and data is has had access to for years.

Both Web Accelerator and Google Secure Access could add to that data, but they are giant, bandwidth intensive ways to get what can be gained more easily through other methods.

Google will never be satisfied with the amount of data it collects about users, because it is the key to raising CPC revenues. Better targeting of ads increases click-through rates and, consequently, Google’s revenues. When a Gigabyte of throughput is selling for pennies, “bandwidth-intensive” becomes a non-problem and the challenge falls squarely into Google’s core competence: Managing large volumes of data.

So, why do I say this is over-reaching? Google has run into customer concerns about privacy in the past, and the WiFi application comes with a grant of access to log some personal data, a clear privacy issue. Likewise, there is a point at which simply being found will not be good enough for content owners, they’ll want more of the revenue generated and will seek to fracture the Google-powered channel. There is a point where one company simply cannot play fair broker for a vast number of partners and Google will find itself being played against other channels by content creators who want a larger piece of the pie.

Technorati Tags: , ,

Author: Mitch Ratcliffe

Mitch Ratcliffe is a veteran entrepreneur, journalist and business model hacker. He operates this site, which is a collection of the blogs he's published over the years, as well as an archive of his professional publishing record. As always, this is a work in progress. Such is life.