Excursion 21
Brilliant impact: Google's valuable information
Arguably the best example of distinctive value structure is Google. To be sure, the company’s page-rank algorithm, at the core of super-profitable services AdWord and AdMob, is an important company resource. And Google’s transactive relationships with everything from mobile phone manufacturers to music labels have facilitated the spectacular growth in Google products and services. But at the heart of everything Google does is a simple value formula in which the direct cost of information is borne by companies rather than individuals.
Obviously, we can argue that individuals pay eventually, perhaps through higher prices or even via some subjective quality of life assessment based on advertising overload. But individuals have, overall, dramatically benefited without significant financial costs. Consider that “Google” is effectively a verb for finding out information; or how quickly mobile phone capabilities have improved compared to phone prices. YouTube was not invented by Google, but Google saw the role of video in the emerging realm of information value before almost anyone else. Google bought YouTube for $1.65 billion in 2006, prompting concerns of overpayment and challenges to monetizing the content. In hindsight, YouTube’s value to Google in terms of information access, management, and distribution, is obvious. Some estimates suggest the asset is now worth more than $70 billion, which would put YouTube by itself in the top 100 companies in the world by market capitalization. Nearly everything Google does can be linked back to their mission: “organiz[ing] the world’s information and make it universally accessible and useful.”