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Not evil, just misunderstood

|Includes: Alphabet Inc. (GOOG)

Maybe it’s the rainbow-colored logo, or the company’s advocacy of net “neutrality,” or the fact that almost everything Google offers to consumers is free of charge. Or maybe it’s the pre-school corporate motto, “don’t be evil.” It may be all these things in combination that have caused us at times to turn a blind eye to the notion that Google is hardly a neutral not-for-profit organization or some charitable cause, to idealize Google as the champion of an open web system, free for all, as compared to the colder sentiment we might nurture about, say, Apple, a company that makes no qualms at all about charging a premium price for any of its products, which has a sharp silver logo and the founder of which wears a black turtleneck, (to Google founder’s red t-shirt.) With the introduction of Google’s latest online trinket, Buzz, this protective bubble of benevolent web Willy Wonka may have at last been punctured.

I am not only referring to the splash and uproar since the Google Buzz release some days ago, although there has been plenty of that. The early adopters have learned a hard lesson of beta testing, and the bloggers have been having a feast with privacy issues that seem to get more messy with every new fix. Even the New York Times is chiming in, a legit publication that also covers sports and the economy. A more lasting concern, however, even as the kinks get ironed out, may underlie the very nature of the Buzz product: We see, for the first time, that Google’s business goals are not necessarily costless for the consumer.

To state the obvious, and despite possible protests by the company to the contrary, Google is ultimately and almost purely an online search business, as evidenced by the search product comprising some 100% of the company’s otherworldly cash flows. This business is not only limited in its future growth potential, with already 60%+ market share, but is at that massive level vulnerable to attack and diminution. Every new Google offering, every new announcement, has to be seen in this context, which is to say, from the perspective of Google’s commercial motive to protect and even extend its search business dominance.

Google Chrome, for example, by all accounts the speediest browser around, increases the number of websites we are likely to access within a fixed timeframe, which in turn increases web traffic, which in turn increases the likelihood that we will search for something, which will likely be via Google. The company’s recently announced “fiber to the home” national infrastructure initiative aims at the same result – to expedite web traffic flow – by improving broadband connectivity. YouTube, Maps, Docs, and Google’s other free online services are all meant to keep us browsing longer.

The linking of Google Buzz to the Gmail system – which is at the root of the privacy issues and aforementioned uproar – is not a flaw, but an essential element of the product. Because Gmail, unlike Twitter or Facebook, is necessarily a browser based offering that comes with its own Google search box built in. Contrariwise, Twitter is increasingly being accessed on derivative platforms such as Tweetdeck – a browser-free experience that bypasses websurfing altogether – and Facebook is developing its own search platform that would altogether bypass Google. Both of these competitive trends won’t do at all for Google, and when we see Google as the market-conscious web operation that is behind the “don’t be evil” mantra, Buzz not only makes sense but is a necessary strategic move for which the company cannot be faulted. Beyond good and evil, however, what does arise is a new question that Google has not had to answer before: can Willy Wonka be trusted?

The question is huge, because trust and search reliability are closely connected, and the market’s answer could in the long term impact Google’s core business.



Disclosure: No positions.