Is Google Really as Open as It Says?

| About: Alphabet Inc. (GOOG)


Monday, Google (NASDAQ:GOOG) published a long manifesto on the “meaning of open” in the form of an email to all employees republished as a blog post. In it, senior VP of product management Jonathan Rosenberg, makes an eloquent argument for why open systems always win and urges Google’s employees to always strive to be open when designing products. An open Internet spurs innovation and brings more consumers on board, which ultimately means more searches and increased use of Web applications.

The gist of his argument is that a bigger, better Internet is good for Google. He writes that Google employees should resist the impulse to create closed products and systems, and even makes a swipe at Apple (NASDAQ:AAPL) for doing so (bold added for emphasis):

. . . open systems win. This is counter-intuitive to the traditionally trained MBA who is taught to generate a sustainable competitive advantage by creating a closed system, making it popular, then milking it through the product life cycle. The conventional wisdom goes that companies should lock in customers to lock out competitors. . . . a well-managed closed system can deliver plenty of profits. They can also deliver well-designed products in the short run — the iPod and iPhone being the obvious examples — but eventually innovation in a closed system tends towards being incremental at best (is a four blade razor really that much better than a three blade one?) because the whole point is to preserve the status quo. Complacency is the hallmark of any closed system. If you don’t have to work that hard to keep your customers, you won’t.

It all sounds great and Google certainly is a champion of open systems with Android and Chrome and countless other projects. Google is making a very public effort to claim the mantle of openness. But the battle for this mantle has been going on for a long time. Two years ago, I wrote a post titled “Who Is The Opennest Of Them All?”. What I noted then bears repeating:

But don’t be fooled. Companies are very selective about the areas where they choose to be open, and they very rarely open up their core source of profits voluntarily. . . . So the next time a company touts how open it is, ask yourself how that will help it make more money. Don’t confuse openness with altruism.

Google is only open when it is convenient for them. Google will never open up the source code to its search algorithms or its advertising system, or share the core data which gives it a competitive advantage in those areas because that is where it makes all of its money. Again, I pointed this out in that post two years ago:

Just because industry pressures and increased interconnectedness are forcing companies to embrace open technologies, don’t confuse openness with profitability. Open standards tend to be good for spurring the adoption of new technologies, but not so good for generating profits directly. That is why companies choose to be open along axes where they don’t compete. Google, for instance, is a big proponent of open standards in social networking, mobile networks, Web applications, and practically everywhere —except the one place it makes money. Its advertising system is a black box. You also never hear any talk coming out of Google about opening up the search algorithms that drive all of those advertising revenues. In contrast, Google has no problem championing open standards in industries that it is hoping to disrupt (by commoditizing existing business models with open standards, and making money with advertising instead).

Rosenberg realizes there is an incongruity between what he is saying and what Google is doing. He takes a stab at rationalizing this huge exception to Google’s embrace of everything open:

While we are committed to opening the code for our developer tools, not all Google products are open source. Our goal is to keep the Internet open, which promotes choice and competition and keeps users and developers from getting locked in. In many cases, most notably our search and ads products, opening up the code would not contribute to these goals and would actually hurt users.

Maybe, but it is more likely it would hurt Google. The company has good reasons for keeping those things closed tight. Opening up those black boxes would make it easier to spam search and game AdWords and give competitors valuable data to make their own search engines and advertising systems better. If it opened all of that stuff up, it would have to work harder to keep its customers.

And really nobody should begrudge them the right to keep products they’ve spent a lot of time, energy, and money building to themselves. But don’t give us this song and dance about how everything should be open and how Google is the opennest company in the world. Google has nothing to lose if operating systems, mobile phones, browsers, books, news, and every other industry becomes open and free, as long it can make money from search and advertising. That is exactly why Google is so disruptive. It can offer products for free that other industries charge for, as long as those products result in more searches or other advertising opportunities.

There is nothing wrong with this strategy. The fact that Google is pushing openness in so many industries is generally a good thing for startups and consumers alike. But Google should just be honest and say that they think everything should be open—except for search and advertising.

(Image via j/f/photos).

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