Why I think Google's new unified privacy settings make great business sense

Why I think Google's new unified privacy settings make great business sense

Summary: There has been lots of noise since Google announced its unified privacy settings. We are so used to getting software for free that we don't want to pay. But Google needs to earn revenue from its ads.


There has been a heck of a lot of kerfuffle since Google announced in January that it was going to unify its privacy settings.

We are so used to getting social software for free that we are reluctant to pay for anything. But how does Google get its revenue?

By advertising.

And if Google does not specifically target users that click on adverts then its advertisers will go away. Google’s revenue will go down and it won’t have the cash to spend on R&D to innovate any further.

Which is fine if you are happy with that. The stock market however, will not be so happy.

Every advert that you clicked on Google’s search results page earns Google about $6.20 in revenue. It earns less for the adverts down the side, more for each ad on the top of search results.

Each time you click, you ensure Google gets continued revenue streams to create new products which are offered to you for free.

You do click on those ads don't you?

Clicking on those ads helps Google keep its products free. Advertisers pay, you benefit. Isn’t that what you want? You do prefer a streamlined service from Google after all?

Prefer to pay?

Would you complain if a new service, let’s say Google+ is offered as a pay as you go service? You might not be happy. You might not use the service.

Perhaps you would prefer to pay for Google software, following the software licencing model that Microsoft employs? Pay upfront, use the software for a fixed amount of time before it becomes obsolete. Get patches and security updates.

Then pay for the next version of the software.

Perhaps you would prefer to pay per search, or pay per software access. Would you rail against paying 10c for each search you do, or would you prefer to let the advertisers pay for Google innovation with ads targeted to you?

Social = free right? Just forget the hundreds of thousands of dollars needed to buy the hardware in the datacentres. Forget the salaries paid to enthusiasts and geeks who love coding and bringing new products to market. Let companies scrape by on a shoestring budget and not worry when hardware fails or becomes obsolete.

Remember how frustrated you were with Twitter’s ‘Fail Whale’. Twitter started out with a couple of servers under a desk in California. The free service and no advertising meant that there was no money to buy better servers and improve uptime until decent investment was secured.

Your choice

Remember, you explicitly created that Gmail account, so you could get early access to Google+. You created the YouTube account so you could comment and rate videos. You signed up for Google Reader, because you wanted the power of a good online RSS reader.

You signed up to access different Google software products. No one forced you to. You accepted the privacy terms when you signed up. You accepted the fact that the terms might change someday.

And Google is still not forcing you to sign up. It is your choice.

But if you do have more than one Google account, Google wants to mine the information that you have already willingly given it, to offer its customers, the advertisers, a better revenue stream.

There is nothing wrong with simplifying things, and simplifying privacy policies is a good idea.

If you really don’t like the idea of Google knowing so much about you then there are several things you can do. You can remove your data.

Delete your Gmail, Google reader, Google plus and Picasa account.

Don’t use Google search or Google maps.

Remember, you do not HAVE to use Google. You have a choice. There is always Bing, Hotmail, Facebook, Flickr, Bing maps -- and the iPhone of course.

Or you can put up with it..

Related content:

Topics: Apps, Banking, CXO, Enterprise Software, Google, IT Employment

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  • Excellent article

    Excellent article. I'm glad that someone finally put this together in a cohesive and comprehensive way. I use Google, and I would rather see ads than pay for their products - which are excellent, by the way (much better than a certain Redmond-based company.) And - believe it or not - the personalized paid ads are actually sometimes helpful at finding something that I am looking for.

    Having said that, I would be a little insecure about putting all my personal stuff anywhere in the cloud - but not just Google.
    • Sorry, but there are no free lunches...or Web-apps

      You pay for the advertisers to advertise on Google's site. You just don't know who or how much you are paying.

      You pay by spending more for the products that you use. If you didn't pay more for those products, it wouldn't be worth advertising them and so they wouldn't [i]be[/i] advertised on Google. If Google's advertisers weren't seeing an ROI, they just wouldn't do it. Note that you must both pay (in the form of increased prices) a "fee" to the advertising company and a "fee" to Google, because they are the middle man.

      Furthermore, you skew the relationship you have with your application provider. MS has to listen to their customers because their customers pay them money. As an MS customer, I have power over MS. Google, too, must listen to their customers. But Google's customers are [i]not[/i] their users; neigh, their users are their product. The change in privacy policy is a perfect example of Google improving their product [i]for their customers[/i], with whom their loyalty must lie.

      So know this: Assuming Google's techniques work, and they in fact target adds to you for products that you are actually likely to buy, you do not have more money in your pocket at the end of the year after using Google's products "for free" than you do after using Microsoft's products which you pay for. In fact, you may have less. It may be harder to quantify than "$150 for a 3-PC license of Office Home," but you paid for it. There is no free lunch.
      x I'm tc
      • Revisionist history

        It's funny. Sear built the Sears Tower to track it's catalogue sales. Everyone thought it was a great idea. Now, it's somehow evil. I bet they secretly built it as a massive middle finger to the whole country!

        Also, there is no valid basis for attacking EFFECTIVE advertisers. If there is an ROI on advertising, it's because it's an effective way of matching consumers with the products they need/want. That's a good thing. Spam in e-mails and snail mails is much more wasteful.

        For that matter, has anyone read it yet? It's only like a page long now. It seems much clearer to me. I don't see any changes, but I didn't carefully review the morass of policies that came before. I do know that different services were DEFINITELY sharing info back and forth, for instance Buzz, Picasa, YouTube, and now Google+ have always been asking me if I want to use the social services to share the content from my media services.
  • Great Article

    Great Article, you summed it up better than anyone else, innovation + Free products are what Google stands for, someone has to pay for the R&D, the data centres and the trillion bytes of storage. I had my account for years, way back when hotmail was snailmail, capacity was loww, Google became the leader and everyone else's followed.

    Information is collected for advertisers and Google's benefit, so we can't get paranoid about Google knowing all our habits, shopping, browsing otherwise we should buy a newspaper circle the ads, or walk to a mall like the good old days, the choice is always ours

    Thanks for an excellent article
  • Thanks!

    My new "Word of the Day": kerfuffle
  • invasion of privacy

    Blatant invasion of privacy and Google is making money with our personal data. Lot of public is ignorant and thieves like google are taking advantage of this ignorance.
  • User Responsibility

    It is important to recognize user responsibility when talking about online privacy. Choosing to create an account with Google, YouTube, or any other outlet is just that ??? a choice. When creating these accounts, users are agreeing to the privacy policies and settings beforehand but the vast majority of mobile users don't even bother reading the terms and conditions before agreeing to them. While the consumer should take some of the blame for agreeing to terms, companies should still make it easy for consumers to know what their data will be used for. http://www.neustarintelligentcloud.biz
    • Beforehand?

      Google's TOS state that they can change their TOS at any time. Therefore, there is no contract with Google. The rules can change, as they see fit, at any time.
      x I'm tc
    • Common sense

      Yes this is the main reason because people have to STOP USING GOOGLE PRODUCTs... Its just Microsoft and Apple are good for you..and Google or Facebook are not...
  • Fraud

    Wtf!!! I dont wanna be part of google+ i didnt ask for... This is a fraud!!!!
  • Google collects data surreptiously

    When Google started making money by profiling people from their searches, nobody understood what they were up to. Virtually nobody reads Eula's so most people do not understand that they are giving information to Google. And, I cannot believe that Google was not already assimilating all the data they have been accumulating into user profiles since they introduced Gmail as the common login.

    It is true that you cannot get something for nothing, but most people do not understand the price they are paying. Privacy has become a joke until your identity gets stolen. Yes, Google has the right to make money. But we have the right to not be such fools as to give them our lives.
    • We have the right to not be such fools as to give them our lives.

      Yes everyone has the right not to be a fool.
    • "surreptitious"

      Missed by 2 letters there. Surreptitious means secret. I, and most of the people I know who use Google, were well aware of the fact that the data we were posting on Google's servers would be, at least theoretically, accessible by Google. At no point did Google attempt to mislead or obfuscate their objective. In fact, they've been publicly traded longer than Facebook and publicly submitted far more disclosures of their business. It wasn't a secret before, and the new EULA only increases transparency. The media gets a fail for trying to sensationalize a company for doing the right thing. Note, they also do this with automobile recalls, which only creates incentives for the automotive companies to delay and resist recalls.
  • Fairly isolated analysis...

    Google is no angel; their investors have one focus - maximise return. The arguements about 'paying for search' and being grateful are pretty laughable - Google cannot and would not do this; if you understand anything about internet advertising you know that a domain is worthless unless it has sufficient traffic. Google have been winning innovators in providing useful products however there is a tipping point at which quality of service loses to financial greed.

    Do not feel sorry for these savvy internet gate-keepers; they are sitting on a cash pile that would dent a government deficit.

    Google is still barely adolescent, with this new dimension of indexed data and years of behavioural data still to be analysed it will get very interesting.
  • Their Policy is fine. And they still don't know WHO clicked the ads.

    It is /so/ easy to just clear cookies periodically. It takes me less that 10 seconds. I've checked my Google profile and they have almost zero info on me. And yet Google are the ONLY search engine I ever use - and I use it dozens of times every day. The best advice for privacy is, clear cookies and don't shop or search while logged in to a Google account such as gmail.
  • Google is scummy

    Do no harm....rigghhhhtttttt, I don't trust Google and prefer to use other better products than their perpetual beta crap.
  • Awesome Article Eileen

    It's about time people realised that they have a choice. Nobody is forcing them to use the internet. Just because something is on the internet does not mean it's free. There is always a condition of use. Even content under Creative Commons licences have restrictions on its use.

    Get real people life costs.

    If you don't like it go somewhere else it's your choice.
  • well . . .

    "Would you complain if a new service, lets say Google+ is offered as a pay as you go service?"

    A lot of people will, but personally I'm not sure. I'm not against the idea of paying for services, and I'm not really sure why so many people are.

    "Would you rail against paying 10c for each search you do, or would you prefer to let the advertisers pay for Google innovation with ads targeted to you?"

    10 cents per search seems like a bad way to do it - most services would probably opt for a monthly fee if they were ever to start charging for this stuff.

    I actually don't have much of a choice when it comes to pricing, to be honest - I don't see many of them offering premium services for a fee anymore, which is how many of these services used to work.

    I [b]do[/b] actually pay extra for Dropbox, which offers larger plans for a monthly fee.
  • No kidding!

    my roomate's step-sister made $19634 past month. she gets paid on the internet and bought a $452200 home. All she did was get lucky and use the advice explained on this link N U T T Y R I C H . C O M
  • How is this different...

    I fail to understand how this is any different from the brick and mortar businesses we used to physically visit, who would sell our information to other companies to add to their mailing lists and send us mounds of unwanted junkmail?