By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

Summary: A Washington Post column that takes on Google for acquiring new companies is off the mark and Google - and I - are throwing red flags over the hold-us-back thinking in Washington that's left this country struggling to compete in business.

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Apologies for a rant that's a bit off-topic - but I'm going to use this sounding board to applaud Google for firing back this morning at Washington Post columnist Steven Pearlstein.

Don't get me wrong. I have nothing but respect for Pearlstein and my former colleagues at The Washington Post. But I also recognize that many established folks in that newsroom - those who've been inside the Beltway for possibly a bit too long - have lost sight of what's really holding back this country from being a 21st Century world power (in terms of advanced technology, that is.) Washington's 15th Street certainly doesn't have the same vibe as Silicon Valley's Sand Hill Road.

Previous: Obama: "It is unacceptable that the United States ranks 15th in the world in broadband adoption"

Here's what really throws me: Every quarter, right around earnings season, we - pundits, analysts and the like - judge and ridicule companies that aren't growing fast enough to meet Wall Street's hunger for more more more. We mock companies that are losing races because of their own missteps or lack of foresight. (Microsoft, most recently.) We chastise and leave out to dry those companies who didn't innovate fast enough to keep up with the changing competitive landscape (RIM, most recently). And we love to hate those that seem to have a Midas Touch and create high-demand, quality products - Apple, every quarter.

And yet, we cry and moan constantly that other countries are kicking our butts in the area of broadband, mobile and other technologies. It's no wonder. We want companies to grow - but not too much, too fast. We want companies to expand - but only into some areas and not into others. We want companies to use their profits to build overnight growth - but lose patience when they invest in the slow churn of R&D and cry foul when they buy other companies that are already innovating.

What the hell? Can Washington and Wall Street make up their freakin' minds already? Out here in Silicon Valley, we're trying to push this country forward and 3,000 miles east of us, they're trying to push us back. Granted. maybe I'm just some out-of-touch youngster (by Washington's definition) or old geezer (by Silicon Valley's definition) but I've been given this forum to sound off. So here goes:

Pearlstein writes:

Google portrays each new line of business as a logical extension of its core mission to expand digital horizons in ways that allow people to use the Internet to improve their lives. It's a noble goal, and Google does it very well - so well, in fact, that it boasts a market value of $190.2 billion, a profit margin of 30 percent, and cash and marketable securities on its balance sheet worth $33 billion

He says that like it's a bad thing. I thought the whole point of being in business is to make money and to keep making more money for the shareholders who funded the business and for the innovation channels that keeps the company growing. He continues:

The question now is how much bigger and more dominant we want this innovative and ambitious company to become.

Notice the word "want" in that sentence? Why should anyone "want" to hold back a company? Is there an element of fear here? Is there a concern about the unknown, about what Google - or any large company for that matter - might become, as opposed to what it already is? Pearlstein continues:

There is nothing improper or illegal about Google's monopoly

Then why pick on Google? It hasn't done anything improper or illegal when it comes to growth. Sure, people may question its dominance and they certainly cry foul over perceived breaches of privacy that Google might or might not be invading. (And for the record, that whole Street View WiFi thing occurred because people didn't secure their networks, not because Google drove by and picked the locks on them.) Pearlstein continues:

Where I have a problem, however, is in allowing Google to buy its way into new markets and new technologies...

Again, why? Companies buy other companies all the time. And in the fast-paced culture that is Silicon Valley, sometimes it makes more sense to buy a company that's developing a core technology than to throw those same investment dollars into R&D for the sake of creating something that's already being created, just for the sake of competing with that same startup down the road. Google's doing plenty of innovation behind the scenes - and sometimes that involves taking a company's technology and investing money into it to make it better and bring it to market faster. Again, why is that a bad thing? Pearlstein continues:

Moreover, by swooping in and buying these promising firms, Google forecloses on the possibility that they might be purchased by companies such as Microsoft or Facebook, which could use them to mount a serious challenge to Google's dominant position.

Google, in its own blog post, responds better than I could:

...those companies not only have substantial cash or equity that they use to make acquisitions, they also regularly compete against us and other companies to acquire leading startups. In 2007, Google bought DoubleClick, but then Microsoft spent twice as much for its display ad company aQuantive and Yahoo bought ad exchange Right Media. All mature companies regularly acquire companies to make big bets on new spaces.

From Pearlstein's column:

The ease with which Google has been able to extend its dominance reflects, in large part, the inability to adapt century-old antitrust laws to the quite-different economics of a high-tech economy that is susceptible to winner-take-all competition.

A-ha! Now we're getting somewhere: "the inability to adapt." Sounds like Washington is the one with the problem, not Silicon Valley.

Again, I have nothing for respect for Mr. Pearlstein. He knows his stuff and is a well-respected voice inside the Beltway and inside that newsroom. But, he's off the mark here. Instead of closing this post with some witty final thought from me, I'll give Google the final rebuttal:

Antitrust law is designed to protect consumers, not competitors, and our acquisitions have created great things for consumers. Our 2004 acquisition of Keyhole led to Google Earth, which for the first time provided free satellite imagery for consumers. Our 2005 acquisition of a small company called Android -- and our investment in the technology that Andy Rubin was developing -- later led to the creation of the Android mobile operating system, which has injected more competition and openness into the smartphone space. For startups, getting acquired is often the path to success (especially given the difficult IPO market), so stopping large companies from making acquisitions would only deprive startups of another potential bidder and investors of a potential return on their invested capital. You can’t be both pro-economic growth and anti-acquisitions.

Bravo!

Also see: Google gets touchy on antitrust

Topics: Banking, Enterprise Software, Google, Security

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17 comments
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  • No one is picking on Google

    they're just drawing attention to Google's crimes.
    iPad-awan
    • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

      @iPad-awan
      Crimes? I thought Pearlstein wrote that there was nothing "improper or illegal" about it...
      sldiaz
  • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

    If no one has realized yet, the current Administration is all for pushing socialism; that has been the goal of the DNC for a very long time. Pearlstein is just showing his true colors. It just so happen that Google is the biggest company in the pile, so they're the one that got targeted. I wouldn't have been surprised of Pearstein went along the lines of "Google should have bought companies that are struggling and not companies that are making money to help even the playing field."
    keith.mendoza
    • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

      @keith.mendoza
      Obama is as socialist as a three dollar bill. He is nothing more than a lite version of your beloved GW. Just because he isn't an overt Fascist like GW, that certainly doesn't qualify him as a socialist.
      nothingness
      • Ah, bask in the Bush hate

        It's totally new, completely well-founded, and the insults make you seem at least 10% smarter.... or something like that.
        Michael Alan Goff
    • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

      @keith.mendoza
      I grew up in Europe before the wall came down. Obama is not a socialist by any stretch of the imagination.
      OffsideInVancouver
  • Google... the new Microsoft, but more evil

    It's Google that is now trying to be all things to all people with fingers in all aspects of the technology field and it now faces the same anti-trust concerns and scrutiny that Microsoft faced during the late '90s.

    Google, going from a (THE) popular search engine, now infesting...
    - mail (GMail)
    - maps (along with Street View and Google Earth)
    - online apps (Picasa, Docs, etc)
    - online advertising
    - OS/browser (Chrome)
    - phone (and OS - Android)
    - phone apps (store)
    - tablet (soon)
    - new movie codec (WebM)
    - TV box (Google TV)

    Have I missed any?

    Makes MS's anti-competitive, anti-trust moves look rather amateurish. Might as well try to control Google before it controls everything else.

    Playing the "it's good for consumers" card is specious and disingenuous.

    Is it any wonder some are looking at, and fearing, a "monopolistic" Google as they once looked at MS?
    MacCanuck
    • The big thing you missed is that Google does not have a monopoly in any of

      the areas they have entered. The best they have is in search, a little over 60%, but far, far away from the 90% or so needed to be defined as a monopoly. This means that they must compete on the merits without monopoly power.

      Further, voluntarily, Google offers the ability to always get your data out. Most of their competitors do not.
      DonnieBoy
      • No monopoly YET

        but with Google's reach and domination I see it as mirroring the Microsoft scenario... get their fingers into many markets and grow dominance, especially with it's now bottomless pit of money to throw around. It's practically become the defacto standard for search.

        The recent market "invasion" I forgot in that list was the online travel search software and concerns that potential purchase is raising.

        Google is also rumoured to be one of many going after bankrupt Nortel patents.

        A coincidental story re Google vs Microsoft rivalry(2 "monopolists" duking it out)...

        http://www.itbusiness.ca/it/client/en/home/News.asp?id=60554&PageMem=1
        MacCanuck
    • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

      @MacCanuck
      Chromium, Android, and Webm: All open Source, free for anyone to do whatever with. How dare they give all this stuff away? EVIL! They try to make getting online easier and allow you do do more things just so that they can have more people see their ads! EVIL! As a corporation they used 10% of their stock(and continue to add 1% of profit & assets) to run google.org, their philanthropic organization, I'm sure as a PR stunt to make people like them. EVIL! I wonder what they'll give away next!
      jljansen
      • Yes evil...

        or did you forget that IExplorer dominance was obtained not because it was a superior browser at the time but because MS included it with Windows and it was FREE (despite the hundreds of millions to develop).

        Google isn't giving away all you mention out of the goodness of anyone's heart.

        Like a drug pusher... give out free samples and get the customer hooked and reliant on you.

        No ulterior motive there... (rolls eyes)
        MacCanuck
  • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

    I love the fact he Google owns my data, I get really good browsing experience when ever i am online, mostly because i never feel out of place as in very chrome session that i log in, i have everything, from my bookmarks to my extensions synced.

    Google Maps/Earth let me plan all of my roadtrips and Docs lets me collaborate with friends with whom i am planning the road trips (making iterneries etc.)

    GMail is my mail of choice, i dont use picasa that much.

    My Galaxy S is my second android smartphone.

    Some of the google ads have actually let me to buy the stuff i want and have never felt the advertisements were obtrusive in any way.

    Google IS playing it good for consumers, actually the only company that genuinely give you the best experience when you're online (provided you use their services)

    and its not like i havent given microsofts and yahoos services a try, i still have mail accounts with them but i rarely go there, simply because they arent giving me a better experience than google.

    if anything, Google is the reason why most of the web-based innovation is being driven forward....

    most of the anti google companies/people are the ones who're paranoid about something or the other, people who have something to hide, and most of all, non - techies.

    With people like these, it'll be very hard for the American Govts (including the future governments) to make any progress regarding the techno-power situation.

    But be happy, you still got most of the tech innovation coming from you
    hretic
  • Poor Google

    Somebody wrote a less-than-positive article about them. *cries*
    Michael Alan Goff
  • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

    OMG!
    james347
  • Analysis Too Shallow

    Like Wall Street's, Diaz's analysis is too shallow. The principal (capitalist's) mistake is to judge companies largely on their growth and profit. Yet even Diaz opens by stating he is concerned about technological advancement ... and then wonders about a disconnect, thinking we can't have it both ways.

    We don't want it both ways: we don't want M$ to grow; we don't want Apple to grow; we don't want Google to grow; they are big enough to remain in business with good management. We want them to develop increasingly innovative products and services at increasingly value for money prices ... and keep an eye on the environment. What they are doing with their power is to limit the release of products to remain just ahead of their competitors ... or if they have none, cease development like all 'good' monopolists do ... to concentrate on grabbing another part of the pie.

    Ed Bott has a good description of the current subscription music offerings: silos of incompatible, restricted, expensive options ... controlled by ancient copyright laws to be bolstered by secret Government talks (ACTA).

    Certainly don't pick on Google ... look at all the big players: each has been convicted by its own Government.

    What's bad then: nobody on ZDNET will address the heart of the matter. You pussyfoot around the central issues pointing fingers everywhere but at the problem :-(

    What happens then when an Asian Government decides it wants to 'do broadband'. Gigabit connections everywhere. What happens in the West? "Well we can't upset the delicate economic balance and interfere with companies like M$, Apple, IBM, AT&T, Verizon and ORACLE."

    Now do you know why we are behind and what to do about it?
    jacksonjohn
  • Google's "core mission" is sellling ads

    [b]Not[/b] some warm and fuzzy BS like [i]"expand digital horizons in ways that allow people to use the Internet to improve their lives."[/i] They certainly aren't earning that 30% margin on providing "free" email.
    matthew_maurice
  • RE: By picking on Google, Washington (Post) shows why the U.S. is losing in 21st Century business

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