Feeds

When Google sneezes, the internet gets flu

Algorithms don't help solve the net's biggest problems

Application security programs and practises

Much of the web-based new economy hinges on the behaviour of how one company deals with two mammoth challenges next year. Both are potentially lethal, and a poor response to either will have dire consequences for many operations doing business on the internet.

Fortunately, that company is supremely well-equipped to deal with problems of a technical nature, employing some of the best scientific brains in the world. Unfortunately, neither of these two potential company-crushers has a technical solution: and the answers the brains come up with are only likely to make the problem worse.

The company in question is Google, of course, and here are the two problems.

The first is that most of Google's wealth - and with it the earnings of businesses large and small who depend on the advertising broker for the majority of their income - is generated from a system Google controls.

The self-service contextual classified advertising operation is a black box. It looks like a "market" - with buyers and sellers negotiating a price - but it's a market that Google dominates. Google ultimately sets the price, and when it comes to disputes it's hanging judge and jury too.

This doesn't particularly appeal to Wall Street. Not because capital has suddenly been overcome with a dose of ethics - there's nothing it loves more than a sure monopoly - but markets needs arbitrage. When they're presented with an opaque model, there's no way to measure the risk, let alone hedge it.

Google has been most fortunate in that its technological prowess - which we've been reminded of constantly over three years of near-hysterical Googlemania - has proved a successful distraction. The deep questions aren't being asked about its business (and that of Yahoo! of course, too) because the people who usually ask the questions hadn't realised it yet. But that's changing.

(When we raised this issue in June, making the Enron comparison, the mailbag drew two very different responses. An injured contingent of fans wrongly assumed we were suggesting Google's profits are a fiction - of course, they're very real. But a second set of respondents - from financial institutions - confirmed that this is a make-or-break issue.)

Internet advertising is ripe for fraud, and Google - let's assume - is doing everything it can to prevent it. But everything might not be enough. From the Church of the Algorithm, there isn't an algorithm that can help, so long as Google remains judge and jury.

Google's cultural legacy of secrecy, and it's sheer geeky pleasure in cranking the handle of its black box, is also evident in this tale Nick Carr relates. Like a casino owner, Google bets with the house's money to promote its own products, rigging the market. When attention is drawn to its behaviour, it first protests its purity and innocence - then overturns the routlette table. A picture is worth a thousand words, so here's an illustration of how Google tips the playing field in the direction of its choosing.:

Screenshot of Google search results for ‘yahoo calendar’

In a decade defined by the hedge fund, how curious it is to see what's called the "future" of online business given a pass by the risk business.

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
prev story

Whitepapers

Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.