Kryptonite and SAT Analogies

I was listening to the most recent TWiT where there was discussion about the recent algo change at Google.  During the conversation, there was an off-hand comment about whether or not the following relationship held water:

Google:Social as Microsoft:Search

That one kind of bent my mind around a bit.  There isn’t any new thought here.  Social is presenting all kinds of problems for Google, and despite their success in South America and some other locales with Orkut, they really haven’t made much of a dent in social.  A fact made more known by the recent additions of the talents of Marissa Mayer to the task.

Some have argued that social isn’t in the DNA at Google, and that’s the source of their problems.  It’s not too hard of a stretch to make the same claim about Microsoft: that we never had search in our DNA.

The analogy, however, breaks down when you spend a bit more time thinking about the subtleties of the companies.  Microsoft, at the core, is a platform company.  This is an important distinction, and one we will revisit in a little bit.  Microsoft started with dev tools, moving to operating systems, into desktop publishing and productivity, into the enterprise with OS and database, and branching ever more from there into mobile, cloud, web, etc, and of course into search.

Microsoft has had many successful forays beyond what is viewed as it’s knitting.  I have tried, quite unsuccessfully, to drive home the following point to people: Microsoft is a tremendous business even without Office and Windows Client.  Think about these businesses:

  1. Windows Server
  2. SharePoint
  3. SQL Server
  4. Project
  5. Visual Studio
  6. System Center
  7. Exchange
  8. Xbox

Those are businesses which are very, very large.  As in, start thinking about three commas.  Think about that for a moment.  Let that wash over you.  What else does Google have?  Search is their hit.  It’s a master stroke sort of hit, but really, what else have they done?  Android is big business, to be sure, but it exists to serve search.

In one way or another, each of the above MSFT big revenues businesses exists to create wealth for other participants in the ecosystem.  That’s how we think about things.  That’s what being a platform company is all about.

It’s for this reason that our approach to search (note: I have no inside specific knowledge of our search strategy – completely different group, management chain, etc) renders the analogy incorrect.  We will pursue opportunities for search that make our partners money; not to use it as a gravity well which is meant to extract value and perhaps share some of that with partners.

Let’s look at this another way.  Microsoft did a deal, in theory, with a social networking company (Facebook) to benefit our other businesses.  Search is a primary beneficiary, but things like docs.com and Windows Phone are immediate beneficiaries from this closer relationship.  Facebook stands to gain as well, with increased usage and traffic.  There’s shared value.  Google would have to fundamentally rethink their reason for existence to do the same.  They are not shy about saying that all value accrues to search.  Everything they offer is to get you to search more.  Searches have an expected revenue, and Google wants you to do more of them, and do them with Google.  Ask any AdSense partner, and they will tell you Google isn’t in the business of equitable sharing of that value creation.

So as a company casting about to bolster it’s position in social, Google would have to have something on offer for trade.  Microsoft did a deal with a social company which bolstered our search business.  Who, then, would Google do a deal with to bolster their position in social?  They have nothing to offer other than search, and they don’t want to share that.

Microsoft, as a search company, can do a deal with a Facebook (social), and there are many surface areas for equitable value transfer.  Same thing with Nokia – listen to Elop and Ballmer from the press conference.  How many times did they say the word “ecosystem?”  Google cannot offer the same.  This problem is further exacerbated by the fact that Google’s core search business is under attack by social.  Microsoft didn’t have a social business under attack by search.  We had a search business under attack from the search incumbent, and we had value to trade with other partners to bolster out position.

Back to Google’s core business: the content on which Google seeks to chew, and from which they seek to generate relevant links for their customers, is being generated more and more behind the worst kind of pay-wall; one for which there is no price of admission.

The Google bot assimilates any unstructured data it can find for its own benefit.  The beneficiaries in this relationship are those who create the unstructured data.  StackOverflow is a great example of a company being built on the search platform.  So is Demand Media.  StackOverflow is a company you would want to be in the search results.  Demand Media, and the content farms, have debatable quality content which don’t exist to make their customers raving fans, as SO.com does.

Google, unfortunately, finds itself as Germany did in 1944 – in a two front war.  Social on one side, the content farms on the other.  The value creation has proved too rich a honey pot, and the content farms are gaming the hell out of the algorithm to the detriment of the Google customer experience.  So what does Google do?  They can’t “fire” all the content farms – there’s not enough StackOverflows to backfill that lost content.  The longer the content farms exist to the detriment of Google’s customers, the less revenue available in that honey pot.  It’s a mutually destructive symbiotic relationship.  Social has the curated link content which could backfill the content farms, but they exist in an unreachable land.

Microsoft used to get compared to the Borg. That time has largely passed. The Google-bot is the new Borg.  Facebook, in this particular versioning of the Star Trek polemic, is Picard.  However, at the risk of causing a level of nerd rage which is unquantifiable, I would suggest that Facebook is not only Picard, but that he is also made out of Kryptonite.  It’s not enough to simply stop the Google-bot at their front door, but the mere co-existence of the two creations causes one to wither.

The incessant probing and attempts to gain entrance to this walled garden of socially curated web essence is an exercise in futility.  Worse, there is no retreat point.  If we got search wrong, we at least had safe harbor in any of the handful of large, other, businesses.  The proverbial light at the end of this tunnel for Google is so bright that, despite being so far off, it feels just within their reach.  Sadly, it’s not.  Reversing course is impossible, and the only egress is forward through this abyss layered with energy sapping detritus.

One more nerd reference: Admiral Akbar said it best: “It’s a trap!”

To throw one more analogy onto the blog-fire, think about the following chart:

image

If you don’t know it, click on it and learn (perhaps one of the greatest graphics ever).  Google is Napolean, marching into Russia in the dead of winter.  Their social endeavor has the risk of moving them along the path of resource losses, only to reach some point where they call it quits, and follow the retreat line out, badly depleted, and a shell of what they once were.  It’s an extreme pronouncement, but I don’t think it’s crazy.  Disagree?  Let me know.

The only way out of this is for Google to buy Twitter.  Sad as it makes me to suggest such a thing, that’s the only current viable alternative.  Maybe Tublr or Posterous, but Twitter is the only logical choice.  And it will cost a shit ton of money (that’s a technical term).  This will only serve to temporarily stave off parasitic destruction by the content farms.  How long before the Demand Media for the Twitter platform rises?  Without credentialing like Facebook, all of the relevant metrics from Twitter are ultimately subject to gaming, and we repeat the cycle anew.

It must really piss Google off that Facebook can ride on the back of every Android phone, and that those users are 2x more active for Facebook than through the website, and there’s nothing Google can do about it, and they can’t benefit from it.

  • I think Eric Schmidt was forced to resign because of Facebook gains. Google and Facebook are the two forces really different and really similar at the same time. I just think they are both evil empires. 🙂

    I would compare them rather to Nazis and Soviets. 🙂

    I am not so sure about the importance of content farms. And I don’t see so clearly why Google has to fail in Social. I think it may hit the mark, although it is really quite unlikely. Nazis and Soviets were not so different…

  • Brandon, remember

    Twitter Vs Buzz = Google #Fail
    Gtalk Vs Messenger = Google #FAIL
    Gmail Vs Hotmal = Google #FAIL
    Google Wave = #FAIL

    Im sure 100% Chrome Netbook = FAIL

  • Anonymous

    “Gtalk Vs Messenger = Google #FAIL”
    GTalk seems to be competing more with Facebook Messenging. None of my peers (college-age and a bit older) use any IM services anymore. We grew up on AIM but facebook IM is basically it. And of course SMS.

    “Gmail Vs Hotmal = Google #FAIL”
    Hotmail may win in numbers but GMail definitely owns the mindshare. I’d like an accurate count of truly active users of each service. Microsoft has done a great thing in getting universities onboard with Hotmail based services though (my university, the 2nd largest in the US is using Windows Live for it’s student email now for example).

  • I think while many of your points above are individually understood, looking at it as a whole story casts some light on the problem Google faces.

    Great write up.

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