The New Yorker's Ken Auletta Talks about Google, Facebook, and the Future of Content

How did Google get to be one of the dominant Internet companies of our time? What did it do right that Yahoo, Microsoft, and other competitors failed to do over the last decade?

Based on two and a half years of research, and extensive interviews with Larry Page, Sergey Brin, former CEO Eric Schmidt and other principles in Googled: The End of the World As We Know It (Penguin Press), Ken Auletta has constructed probably the best narrative yet about this crucial company's rise and rise, as Google, and we the public, look ahead to the next imminent developments in Internet culture.

Aultta, prominent media critic and "Annals of Communication" columnist for The New Yorker, explores the origins of Google in the partnership between two brainy Stanford graduate students, Page and Brin, Auletta identifies the strengths and weaknesses of the massive global corporation that has evolved from the garage tinker shop in Menlo Park in 1998. Google's motto -- "Don't be evil" -- is well-ingrained in the public's mind, despite periodic public relations lapses, such as Google's censorship deal with China, or the ruckus over Google's desire to digitize all the books in the world.

Auletta describes the company's growing pains, as it tries to remain true to its innovational spirit, yet admit the realities of being one of the world's largest corporations. To what extent is Google now a behemoth in control of its destiny?

I recently had the chance to have an email discussion with him about search, social media, monetization, and other issues.

Anis Shivani: In the past, you have generally written about media personalities or companies past their prime -- the TV network executives in 1991, Bill Gates in 2001, Ted Turner in 2004. Yet this time you're writing about Google at its peak. This is akin to writing about Microsoft in 1991. How was the experience different, and did you face new journalistic challenges?

Ken Auletta: I liken what I do to visiting a new planet. Each visit brings a similar challenge, which is to try and penetrate and understand a different world.

Perhaps the hardest part of my Google journey was grasping the meaning of the words. I would sit in engineering meetings with Page and Brin and [then] CEO Eric Schmidt and maybe understand half the words spoken. They could have been speaking Swahili.

But with a book you have the luxury of time, time to use a translator to learn the meaning of alien words, time to understand things like cloud computing. Then the challenge is to explain these in simple English.

Shivani: All your previous work, like this book too, suggests that the public ought not to worry too much about bigness -- given minimal regulatory mechanisms -- since bigness leads to bureaucratese, which in turn leads to new innovators displacing the bloated hegemon. Yet there are certain novel economies of scale, which become reinforcing, in Google's business model, which might lead to self-perpetuation toward more and more bigness, without sacrificing profitability.

Auletta: I would challenge the premise of your question.

I worry about bigness. In my book about Microsoft, World War 3.0, I agreed with the conclusion of two federal courts that Microsoft was guilty of violating the anti-trust laws. Where I differed was in one of the remedies proposed by the Clinton Justice Department and endorsed by Judge Jackson: Microsoft should be broken up. I believed that Linux and news technologies, coupled with the other penalties imposed on Microsoft, would break its vise-like hold on PC operating systems. This was the position taken by the Court of Appeals, and it has proven to be correct.

Your point about economies of scale becoming self-reinforcing -- which is the network effects argument that benefited Microsoft -- does aid Google. With a search market share of about 66 percent in the U.S. (and 70 percent worldwide), and advertising revenues of $22 billion, and a mountain of data advertisers crave, the more searches Google does, the more data it collects and the more its juggernaut grows.

The government must play a referee role, blowing the whistle on fouls, assuring that rules of fair play are followed. Unlike in the Microsoft case, where they held a market share of 95 percent of all operating systems and consumers and vendors could not easily escape, consumers can easily escape Google search by clicking on to Bing or some other search engine. This ability to escape does not minimize the dangers the referee is there to prevent, but it does not argue for a lawsuit.

Shivani: Google now explicitly recognizes itself as being in the advertising business. This might come as a surprise to people still carried away by its warm, fuzzy motto of "Don't be evil" and the public's definition of it as a search engine. Google has carried off this double game exceptionally well.

Auletta: Google is one of the world's most trusted companies because it has placed the interests of consumers first.

It did not try to trap them in a Google portal, as Yahoo and AOL did. Instead it sent them off the Google site and to their search destination. It refused to clutter its simple search page with ads. It has been the fastest and best search engine.

And let us not overlook that it is free. Nor should we overlook that those small text ads on the right side of the search results are perceived as information, not just ads, by users.

But as Google's search growth slows, a danger is that advertisers will gain more leverage and demand more data from the cookies Google uses to retain data on every search we make, every ad we click, every online purchase. As they demand more data, privacy questions will take center stage.

Google will be compelled to decide whether their customer is the user or the advertiser. They will risk exploding the consumer trust they have earned.

Shivani: Are you satisfied with the way Google is moving toward an agreement with writers and copyright owners, after the hue and cry that erupted over its plan to digitize books? Or do writers and copyright owners still have something to worry about? On the surface, allowing access to snippets of books out of print doesn't seem like such a bad idea. But there are issues of copying, piracy, and how Google exploits this in the future.

Auletta: Google is led by engineers, and engineers usually have difficulty with things they can't measure -- like fears.

I applaud Google's willingness to invest vast resources to digitize all the world's books, an estimated 20 million in all. But while Google worked with libraries, they neglected to invest sufficient efforts to work with publishers and authors who own the copyrights to many of these books. They were thus sued for copyright infringement. They settled in 2008 and agreed to pay $125 million. But a federal judge must approve the settlement, and others have petitioned the court to amend the agreement.

Since Google is the only entity currently digitizing all these books, there are fears of a monopoly; fears that this monopoly could raise prices, could dictate prices for electronic books, could claim ownership of so-called "orphaned" books whose copyright owner is unknown. Google recently agreed to amend its agreement, and I suspect the government referee (not just the U.S. government) will demand further changes.

Shivani: Google defines search as everything. This is one of the main thrusts of your narrative. And if everything is search, then Google becomes the dominant gatekeeper to the Internet. Does this worry you? Or is Google right in defining search so broadly?

Auletta: Too much power should worry us all.

Google stopped calling itself a search company several years ago, and now calls itself a media company. They realized as the years passed that their brilliant engineers could figure out how to more efficiently sell ads, download videos, make telephone calls, aggregate news, bypass expensive software packages.

In a sense, these are extensions of search, for they search for the most efficient -- and cheapest -- solution. In the process they bump into and disrupt other media companies. Traditional media companies are wrong to blame Google or the Internet for their woes. They are not wrong to worry about what happens to quality journalism or more expensive quality programming -- or copyright protections.

Shivani: You articulate criticism in the book by Google's competitors that Google is a one-trick pony -- it does search better than anyone else -- and while it has found ways to monetize search (in one case borrowing from another company's model), it has so far failed to earn substantial revenues from anything else. Google has developed more than 150 other applications, but obstacles to monetizing even YouTube remain formidable.

Auletta: True. Almost all of Google's revenues flow from search. Since Google generates $22 billion in revenues and over $4 billion in profits, it is, as Eric Schmidt says, "a pretty good trick." But search growth is slowing, and Google knows it needs to find another revenue spigot.

They have targeted three: YouTube; its Android operating system for mobile phones; and cloud computing to replace packaged software. It remains unclear whether Google will succeed in figuring out how to monetize each.

But they have made advances in selling ads on YouTube, largely because they abandoned the engineers' approach to selling ads. YouTube enjoyed tremendous traffic with its user generated content, but advertisers shunned placing their friendly products in unpredictable spaces. Now YouTube is seeking to display more professional content, and advertisers are flocking to it.

Shivani: Google didn't invent YouTube. It bought it. It didn't invent MySpace (Rupert Murdoch bought it) or Facebook. It didn't invent Twitter. Yet it would have liked to have invented all of these, since they all fall under search. Does the pattern, despite all the emphasis on Googlers' creativity, not already seem similar to Microsoft?

Auletta: Of course. Like Microsoft, Google invests a healthy sum in R&D. They produce some cool applications, like Google Voice. They have been weak in social networking, and companies like Facebook and Twitter could menace them the way they menace Microsoft.

Shivani: Facebook seems to be a real threat as the home page of choice, yet it is a "walled garden," a portal where people like to hang out and not leave, whereas Google's mission, as you point out, has always been to get people out of their homepage and onto wherever they want to go to as soon as possible.

Auletta: Facebook is a threat because it is a satisfactory walled garden for so many of its 800 million users.

If they stay on Facebook, it becomes their universe, a substitute for the Internet. That could exclude Google. And Facebook -- and Twitter -- could create a different search engine. If you want to buy a camera and you type a camera question in a Google search box, you may receive thousands of links. Imagine that you asked that question of friends and received 20 replies from people you knew and trusted. That may be a more efficient search.

Shivani: In all your books, the particular culture of the corporation -- and in media, it's generally a self-righteous, self-justifying, even arrogant self-conception, couched as virtue -- plays a big role in clarifying the gap between image and reality. As for Google's motto of "Don't be evil," so far, when it comes to privacy -- Google's very business depends on accumulating the greatest possible amount of data on individual preferences -- the public doesn't seem concerned. People hated Microsoft, contrasted to innovators like Netscape, in a way they don't hate Google. Search is another name for data mining (which was Brin's specialty in graduate school), which has evil connotations in the public mind. Still, there must be something good--or people would have picked it up by now --about Google's attempt to try to make things easy for the consumer.

Auletta: I think privacy could become an atomic issue for Google. Its young founders are not as acutely aware of its dangers as they should be.

When asked what privacy issues concerned them, Brin and Page said they were most concerned about false things written about people on the Internet. They do believe data is virtuous, just more good information. Whether the public -- or its governments -- agree or not, the jury is out. Looking at the personal data people share on Facebook, one could conclude that privacy is over-rated. That is certainly the view of many corporations, who want to sell or tap that data.

Shivani: Google has not yet defined itself as being in the content business. Yet its recent innovations, for example in putting professional content on YouTube, make it lean in that direction. Do you foresee the distinction becoming irrelevant over time?

Auletta: Like so many of the issues we've already discussed here, content also poses a conundrum for Google.

They need good content, yet risk undermining the trust that is so essential to Google's success if they seem to favor their own content. They don't get into trouble by putting professional content that is produced by others on YouTube. They would get into trouble if they produced their own content and favored it with special placement.

This is why Larry Page told me that Google did not try to buy the New York Times, knowing that each time a search featured Times articles at the top Google would be accused of favoritism. Despite the fact that Google ventured into content by launching a lame competitor to Wikipedia, to its credit this site rarely ranks high in the search results and Wikipedia almost always does.

Shivani: You hint throughout the book that Page and Brin have a tin ear when it comes to decisions driven by data and algorithms, the "wisdom of the crowd" -- obsessions that non-engineers outside the company might view as reductionist.

Auletta: They are brilliant engineers, but sometimes lack the Emotional Intelligence of more rounded executives who have a feel for people.

Shivani: Google prides itself on the superior quality of its search. It is better than anything else out there, or it wouldn't be so successful. Yet search remains primitive, despite the resources Google dedicates to improving it. Does it seem that way to you?

Auletta: In my book I describe a search I did by typing into the Google search box, Who was the real William Shakespeare? A debate has raged for centuries whether Shakespeare was really Shakespeare or someone else. It would not be possible to provide one or even a handful of answers to this search question. But I received 5 million search answers from Google. That is terribly inefficient.

Shivani: Google -- the new means of distribution of content, if you will -- poses a profound threat to traditional generators of content, including book publishers and newspapers. Their business models, and perhaps the nature and quality of the ultimate content, will have to be transformed, now that the reality of infinitely cheap distribution is here. Should producers of content have been more assertive in defending their turf in the beginning? It seems too late now, as you point out, to move to a system of micropayments. Or is it possible that over time traditional makers of content will emerge stronger than ever?

Auletta: Traditional media should have done many things. They should have responded to the Internet as if it were a five-alarm fire. Invest in digital companies. Set up an online newspaper that recognized it had to be different from the newspaper and free to break stories. Stop insisting on selling entire CD albums and let consumers buy individual songs, as iTunes would do. Etc.

I do not think most traditional makers of content will emerge stronger than ever. I do believe they have to try and charge for content. I also believe it is crazy for digital companies to rely solely on advertising as their only revenue source, aping what broadcast television does. Interestingly, I see a shift in the Valley on this subject, with many early proponents of the Internet coming to the view that a second revenue source is needed. This could bring some of old and new media into partnership.

Shivani: Advertising as the only model to subsidize content seems shortsighted. As you point out, newspapers are complaining that they are losing dollars and gaining dimes. Besides, if we follow your logic, the end result would seem to be total disintermediation. What would that mean for content?

Auletta: The end.

Shivani: You mention internal dangers -- mainly loss of innovation -- and external ones -- awakening the government bear -- to Google's continued dominance. Which of these do you think Page and Brin have the blindest spot for?

Auletta: The government bear.

This interview appears in the current issue of Boulevard magazine.