Facebook is taking over Google in sourcing the flow of news

Fortune runs an article showing Facebook's influence growing in the news segment:

...it’s clear that search has hit a kind of plateau and isn’t really growing any more as a referral source for media. Meanwhile, Facebook’s influence has “shown it’s on a continued growth trajectory."

Source: Forbes.com (click images to enlarge)

The competition for advertisers' money between Facebook and Google is heating up. We should expect that Facebook will make further inroads into information segments other than news. Although it's too early to pronounce Search dead, its dominance on the web no longer translates directly into the mobile space, especially, when users spend more and more time on social. (Based on system analysis, we anticipated this trend in Scalable Innovation, Chapters 20-22).

It is also somewhat surprising that Twitter is such a non-factor in the race. Despite the "freshness" of their links, they don't have enough users to play the game. Furthermore, unlike the Facebook's, Twitter connections don't have the strength of social relations.

tags: mobile, information, control, google, facebook, twitter, system

Google's anti-trust problem: users

Many news agencies reported on a new study about Google search results, painting it in anti-trust tones, e.g.,

(BloombergBusiness, June 29, 2015) The new study, which was presented at the Antitrust Enforcement Symposium in Oxford, U.K., over the weekend, says the content Google displays at the top of many search results pages is inferior to material on competing websites. For this reason, the paper asserts, the practice has the effect of harming consumers.

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In reality, Google's biggest anti-trust problem is its users who believe that Google search engine can provide them with best results. The belief still holds true for the web because Google has the ability to access, index, and rank web pages. As information and (more importantly!) user interactions shift toward the social world and proprietary mobile applications, Google gradually loses its ability to access the data and make best judgements. In Scalable Innovation (Chapter 22: Google vs Facebook) we identify at least three major consequences of this shift: no full access to social feedback, e.g. "likes"; the reactive nature of the web search itself; Google's lack of access to app-specific data. As a result, people who use search to ask questions like “What’s the best pediatrician in San Francisco?” are not going to get the best answer because Google simply doesn't have it.

On the surface, it looks as if a big monopoly is trying to hurt consumers. That's not the case. The study presented in Oxford assumes that Google is omnipotent and omnipresent. That is, the authors seem not to realize that the information world has changed and our information habits have to change accordingly. Today, consumers hurt themselves by thinking that googling will give them the right answers. Although this powerful illusion works on the web, it begins to fall apart as we enmesh ourself in social networks and mobile apps.

tags: innovation, search, google, facebook, science, technology, 3x3, world

Lunch Talk: The Magic of Story

Storytelling is an essential leadership skill. It will enable you to be more influential and persuasive and less technical and boring. It will set you apart and make you and your ideas memorable.
Doug Stevenson is a former actor who has brought lessons from the theater and great storytelling to the corporate world. He has translated these techniques into what he calls The Story Theater Method for Strategic Storytelling in Business. While he has no intention of making you into a great actor, he does want to make you a “star”.
In this interactive session, Doug will model effective business storytelling and show you how to apply his storytelling technology to your role in Google. He’ll even coach a few people on their stories to illustrate how you can be a better storyteller. If you want to be more engaging, interesting and convincing, Doug Stevenson will show you how.

tags: lunchtalk, google 

Invention of the Day - Instant Messaging

It's hard to imagine today's life without instant messaging. The service has become one of the Dominant Designs in the Internet era. As we write in Scalable Innovation (Chapter 13):

Dominant Design is an implementation of a new functionality that the market adopts as the prototype for future implementations. Simply put, the dominant design is what everybody thinks all products or services in the new category should imitate.

US Patent 6,449,344

Today's IT giants — Google, Facebook, IBM,  Microsoft, Yahoo, Alibaba, and others provide instant messaging services as a "must have" feature. Recently, Facebook paid $19B for Whatsup, a company that built its mobile service using the instant messaging ideas. 

The original technology was developed in 1996 by an Israeli company Mirabilis and released during the same year as ICQ chat software. The service was extremely successful, even despite being characterized as the world's "ugliest website." 

In 1998, AOL bought Mirabilis for $287M - a pitiful sum by today's Internet M&A standards. Eventually, AOL rebranded the service as the AOL Messenger. 

Instant Messaging had other important implications for the world of technology. First, ICQ influenced the development of other peer-to-peer (P2P) services, such as Napster, Gnutella, Skype, and others, which revolutionized content distribution and communications in the beginning of the 21st century.

Second, the business success of Mirabilis put Israel on the global map of Internet innovation and served as a catalyst for the creation of a thriving tech entrepreneurship culture in the country. 

Third, Instant Messaging helped initiate the Internet services era that exploded with the introduction of the iPhone and other smartphones.

Arguably, the invention of Instant Messaging is as important to the world as Graham Bell's invention of the phone in 1876. 

tags: invention, innovation, facebook, google, microsoft, dominant, design, 10x

Lunch Talk: Vinod Khosla interviews Sergey Brin and Larry Page

Google + Nest GSV = the Web is Dead

Google announced that they are buying Nest GSV, the smart thermostat company, for $3.2B. The acquisition extends Google's push into the Internet of Things (IoT), including robotics, automatic cars, etc. Gartner's 2013 Hype Cycle report puts IoT firmly at the top of the hype chart.

Recently, Cisco added to the hype with an estimate for the IoT market of $19T by 2020. Since Google missed badly on Social Networking, the company is eager not to miss on the next big thing. With the web going away (Scalable Innovation, Chapter 20), Google needs new massive sources of data streams to process; otherwise, all their data-crunching technology could become worthless. The Internet of Things seems to fit the requirements. Although the valuations are of hype-size proportions, today's web advertisement (search) produces enough cash to finance the future S-curve.

When I worked in research on IoT concepts in the early 2000s, it was too early. We did get a number of good patents, e.g. US7,620,703, US7,257,839, US7,092,861, US7,069,345, US6,838,986, out of that work, but the inventions didn't become mass-market innovations back then. Even today, it's still too early for the mass market. Interesting questions to consider would be, What does it mean to be too early? What problems do we need to solve, so that an innovation in this particular technology market becomes real?


tags: invention, innovation, hype, google, system, synthesis, web

Lab Notebook: Silicon Valley and the Law of Diminishing Marginal Utility

Silicon Valley seems to defy one of the fundamental laws of economics: The Law of Diminishing Marginal Utility. The law, according to an investopedia article (need to find a textbook reference), says:

A law of economics stating that as a person increases consumption of a product - while keeping consumption of other products constant - there is a decline in the marginal utility that person derives from consuming each additional unit of that product.

They illustrate the law with a short video about a hungry girl with a pizza. The first slice of pizza tastes better than anything before.

The second slice of pizza still tastes good, but by the fifth piece, the girl is already full and she hates the fact that she has to eat the entire thing.

Let's try to apply this law to a major Silicon Valley innovation: web-based email. We skip the Hotmail vs Rocketmail controversy and go directly to the Yahoo vs Google email rivalry. In the early 2000s, Yahoo mail was an undisputed leader in this web services domain. The company was giving users 10 or 20 MB storage for free and charged for extra. Then came Google and offered at least 1GB of free storage with its brand new gMail. According to the law of diminishing marginal utility, this move would be "unlawful." That is, why offer people a lot more if we know from economics that usefulness declines with quantity of goods consumed?

Paradoxically, the more storage gmail offered, the more useful its service proved to be to the users, myself included. Millions flocked to gmail, abandoning their yahoo mailboxes.

In general, exponential growth in processing power, storage, and bandwidth (what I call "Machine 1") that Silicon Companies have been driving for the last 50 years makes users happier, defying the economics textbook wisdom taken at face value.

tags: machine1, economics, 10X, innovation, book, google, yahoo

Death by partnership with Google

In 2006, Facebook (FB) decided to partner with Microsoft (MS), rather than Google, to serve ads to its US-based users. One year later, FB and MS extended this partnership worldwide. This choice may have helped FB to become dominant in the social media market. Despite multiple attempts by Google to friend its way into Facebook's business, e.g. through social search services, Zuckerberg treated them as rivals, not partners. And for a good reason.

Two other major companies that chose to partner with Google — Yahoo and Apple — ended up loosing their market share when their partner turned into a dominant competitor. In 2000, Yahoo hired Google to provide search results for its web portal. After a couple of years, most search requests ended up on Google's site, not Yahoo's. According to comScore, Google now has 2/3 of the search market in the US.

Source: comScore, August 14 Press Release.

In 2006, Steve Jobs partnered with Google to provide email, map, and youtube video services to launch the iPhone. Several years later he found himself staring in disbelief at the growing market share of Google's Android smartphones, which now account for a staggering 81% of the total.

Source: CNet, Oct 31, 2013. Android Snags Record 81 Percent of Smartphone Market.

With Yahoo's help, Google got themselves a ticket into the web-world, including maps and email; taking ideas from Apple propelled the company into dominance in the world of mobile media services. In both cases, Google outsmarted their business partners. Just like that was the case with Microsoft partnerships in the 1980-90s, Google's highly intelligent technologists took advantage of their close proximity to huge new markets discovered by others.

Since its early days, Google has been eager to acquire ideas and startups. The original adoption of the search-relevant ad model has brought them the bulk of today's revenues. Acquisitions of startups that developed interent-based maps, docs, videos (Youtube), social navigation (Wase) etc., provide for the bulk of the company's most popular services. Due to its dominance in search, Google is in a great position to detect early user trends and buy growth before most people recognize it. Having learned from their own industry experience, Googlers would rather acquire a potential "disruptor," than give it an opportunity to become a powerful competitor. Nobody can pull off a google-style partnership on Google itself!

It's all fair (Steve Jobs famously disagreed calling Google Android "a highway robbery") and we should probably "like" the company for being a relentless innovator. What bothers me is Google's increasing emphasis on lobbying its case in Washington. This year, Google was ranked #8 lobbyist in the US, a position that no Silicon Valley company has ever tried to attain before. The Steve Jobs' generation of innovators grew out of California counterculture. They considered it to be wrong to rely on the government to advance your business case. Obviously, the times have changed. As Bloomberg reports,

Google passed two Washington power tests when it escaped an FCC probe in 2012 of improper data collection with a $25,000 fine, and the FTC dropped an antitrust probe in January. Now lobbyists for the company are working on protecting its reputation amid revelations about U.S. spying.

When the next Google antitrust probe comes up for consideration who is going to resist the high-power lobbyists? As the ancient question goes, "Who is watching the watchman?"

P.S. The lack of checks on Google should work well for their stock price.

tags: technology, innovation, business, google, facebook, system, growth, startup

Google Glass is the ultimate surveillance machine.

Google Glass has the potential to turn everybody into a surveillance camera. By capturing and analyzing video streams coming from multiple sources, Google would be able to cross-reference its image recognition algorithms with GPS data gathered by the target's Android or iOS device.

For example, when Bob's Google Glass device captures Alice on University Street in Palo Alto, Alice's mobile sends its location data to a Google Maps server. Although the two devices work independently, the information can be easily matched by timestamps and location data. Moreover, if Charlie sees Alice from a different angle, his Google Glass stream can be used to complement data received from Bob's and Alice's devices. If David — independently — tags Alice in his G+ post, the process of verification is complete. Unknowingly, Bob, Charlie, and David form a Google Glass spy network capable of tracking Alice's every move.

Although this scenario sounds a bit far fetched, Google has already implemented it in its web search engine. Because Google strives to download and index every available web page in the world, it knows which pages contain links to a particular page. Knowing the relationship helps Google assign high rank to pages that have a greater number of "incoming" links — the algorithm was Page's and Brin's research topic at Stanford. In short, if Alice, Bob, Charlie, and David are web pages, Google knows who sees whom. Similarly, Google has the ability to implement this logic for video streams, location data, and other bits and pieces of information collected from mobile devices.

tags: control, detection, social, network, packaged payload, google

Trade-off of the Day: happiness vs blindness to obvious

Paying too much attention to detail may cause you to miss the obvious:

(Science 5 October 2012) To our surprise, whereas attention improved the monkeys' ability to detect subtle orientation changes, it worsened their performance when the change was very obvious, which suggests that strongly attending to one feature (e.g., vertical stripes) makes it more difficult to see a very different feature (e.g., horizontal stripes).   -- Marlene R. Cohen. When Attention Wanders. Vol. 338 no. 6103 pp. 58-59. DOI: 10.1126/science.1229552

Paradoxically, attending to the present makes people happy, while having a wondering mind produces unhappiness. Is there a trade-off between one's happiness and blindness to the obvious just outside of the focus of attention?

Was Steve Jobs paying too much attention to the color of Google icon on the iPhone that he missed the obvious fact that Google was ripping off the overall iPhone design?

tags: trade-off, psychology, creativity, apple, google

Teens flock to Instagram/Facebook. Youtube next?

(Sept. 8, 2012. CNet) According to Nielsen, Instagram is the top photography site among teens ages 12 to 17, with 1 million teens visiting the site during July.
Also, a Pew report presented over the summer about teenage online behavior found that 45 percent of online 12-year-olds use social-network sites and that the number doubles to 82 percent for 13-year-old Internet users. The most popular activity for teens on social networks is posting photos and videos, the study found.

10 years ago, the conventional wisdom was that mothers of small children were the most avid picture-takers.  Kodak, HP, and others spent billions of dollars marketing to this demographic. Furthermore, when digital cameras emerged, the old guard saw an increase in picture printing revenues because people took more pictures and, out of habit, printed them. The entire business model was based on the trade-off: the more pictures one wanted to share, the more money she had to spend on printing them.

On the other hand, social networking and cheap mobile cameras broke the trade-off. That is, taking/sharing pictures became free and teenagers could finally afford an infinite amount of sharing. As the result, Kodak went out of business and HP's printing division tanked. At the same time, Facebook and Instagram soared.

A similar situation happened in the personal video space. Sony and other consumer electronic companies lost, while Youtube and Facebook won. If Google continues its momentum with Android (driving video content to Youtube), they might capture a large portion of ad revenue associated with social interaction.

tags: s-curve, trade-off, media, facebook, social, networking, google

Lunch Talk: Innovation at Google

Presentation by Google CIO Douglas Merrill on Innovation at Google

tags: innovation, lunchtalk, google

Winer-takes-all market: mobile search.

(Chart of the Day via Business Insider). Google totally dominates mobile search.

tags: market, search, google, business, internet, control

Apple vs Motorola: no damages, no right to exclude.

June 22, 2012. CNet:

A U.S. judge has tossed out the Apple v. Motorola patent case for good, according to reports.

Judge Richard Posner of the U.S. District of Northern Illinois said that neither Apple nor Motorola has been able to prove damages and that neither company would be permitted to refile a claim.

Posner strongly questioned Apple's bid for an injunction against Motorola smartphones, saying, according to Reuters, that a ban on sales could have "catastrophic effects" and would be "contrary to the public interest."

the judge also pointed to serious problems with the U.S. patent system and questioned the worth of many software patents, saying, Reuters reported, "You can't just assume that because someone has a patent, he has some deep moral right to exclude everyone else."

In the judge's mind considerations of public interest seem to be prevailing over the patentee's right to exclude others from using the technology.

tags: patent, apple, google, portfolio

Google+ ghost town.

Even Google with its deep pockets and broad user base has trouble competing with Facebook, an established player in the social media industry.

Feb 28, 2012. WSJ -- Visitors using personal computers spent an average of about three minutes a month on Google+ between September and January, versus six to seven hours on Facebook each month over the same period, according to comScore, which didn't have data on mobile usage.
Behind the lack of engagement are Google's difficulties in differentiating Google+ from Facebook.

Youtube seems to be a much better social media property for Google than Google+. Unlike Google+ it addresses a new need with a new technology.
If Google enters the enterprise market with Google Apps, then Google+ can become an internal enterprise version of social networking, especially on mobile devices.

tags: mousetrap, social, networking, media, google, facebook, youtube

Google: Let's Do Some Evil!

VBeat complains about Google using its dominance in the search market to promote Google+. When Microsoft used a similar market dominance tactic to promote Office and other products on Windows, a lot of people in the developer community thought them to be evil. Now we see how corporate logic takes over good intentions on the Internet.

Jan 14, 2012. VBeat -- Google’s introduction of Google+ links into its search results is a big departure from the company’s previous more neutral approach to search, and it exposes the company to a huge risk.

By offering us only Google+ results, Google is forcing us to go outside of Google to find a fair representation for social results competitors like Facebook or Twitter. Those companies have larger usage, and therefore they have more relevant results.

Twitter is open, Facebook is semi-open, therefore, Google will be able to dominate search, including its social component. Will Facebook go the way Yahoo Maps went when Google started favoring its own mapping service? I don't think so. But the gloves are off in the social networking market. First, Google ripped off Facebook user interface, now they start favoring Google+ in search results. I won't be surprised if Android comes with Google+ as the default social option. Somehow they need to pay for this $12.5B Motorola acquisition. For all intents and purposes, Google is the new Microsoft.

Go 49ers!

tags: business, model, domination, commerce, platform, google, microsoft, social, networking

Lunch Talk: (TED) How Youtube drives innovation.

TED's Chris Anderson says the rise of web video is driving a worldwide phenomenon he calls Crowd Accelerated Innovation -- a self-fueling cycle of learning that could be as significant as the invention of print. But to tap into its power, organizations will need to embrace radical openness. And for TED, it means the dawn of a whole new chapter ...

link

tags: lunchtalk, video, google, youtube, information, 10X

Quote of the Day: Google design with no human bias.

Probably the greatest contrast between Google and Apple is their approach to design. Apple is famous for its attention to human aesthetics. On the other hand, Google culture prides itself on the total lack of thereof:

Marissa Mayer*, the fierce protector of Google’s look, once quelled an incipient revolt by designers by finally defining what rankled her about a stunning design submitted to her. “It looks like a human was involved in choosing what went where,” Marissa told them. “Google products are machine-driven. They’re created by machines. That’s what makes our products great.” 
In other words, the message Google wanted to convey was that its products had no human bias. 

quoted from "In the Plex: How Google Thinks, Works, and Shapes our Lives", by Steven Levy.

*VP at Google, one of their first 20 employees.

Patent battles: how media makes us clueless.

The media does a major disservice to the public when they describe current patent disputes between various parties in the mobile industry. For example, the headline in Wired reads: Google Thumps Oracle In Heavyweight Bout Over Android. What's behind the headline? A minor change in the number of patents asserted against Google.

Dec 29, 2011. Wired -- Just before the Christmas holiday, as reported by Groklaw, the US patent office effectively invalidated one of the seven patents Oracle asserted against Android in a suit filed in August 2010.

Instead of 7 patents we've got 6 patents active in the lawsuit - big deal. And what if Oracle prevails, which is a highly like outcome? Wired claims "the case could have a very real effect on the mobile phone and tablet market." What's the impact?

The two sides would enter a “hypothetical negotiation,” Dergosits says, where each hires economists to estimate Google’s revenue from the product and what it’s paying other licence holders. The jury would then award damages based on these estimates.

Based on industry discussions, top estimates for licensing fees for Java are about $5 per unit. If Google wanted, they could've negotiated a volume discount, similar to the deal Microsoft made with Samsung. But Google provides Android for free and makes money on search and other services, which default to Google properties on Android phones. This way Google can claim losses on Android and try reject demands for licensing fees, which are customarily calculated as a percentage of revenue. Usually, the seller of software operating system includes the fees into the price. But ... Android is "free." Tricky, tricky, tricky.

It's funny though, that a dispute about a method of calculating licensing fees is presented in the media as a battle for or against innovation. 

tags: business, strategy, mobile, google, patents

Высоко сижу, далеко гляжу.

Years after becoming the dominant web search engine, Google remained extremely paranoid about Microsoft:

In 2004, prior to the IPO, the company was still hiding its success. “Google didn’t want Microsoft to know how big search was,” says Sacca. “And if you knew how many computers Google was running, you could do some back-of-the-envelope math and see how big an opportunity this was.” ( Steven Levy. 2011. In The Plex: How Google Thinks, Works, and Shapes Our Lives.)

This also helps appreciate how well Google is positioned relative to its business competitors. E.g. the company can easily detect a new hot startup through increased search queries. It allows them to evaluate and buy potentially competitors before anybody else have a shot at them - another information asymmetry provided by a dominant position within a large economic system.

tags: detection, business, model