Original URL: https://www.theregister.co.uk/2006/07/10/google_enron/
Google - cult or corporation?
Inside the black box
Is Google a cult, or is Google a corporation? It's hard to tell, and from the company's official literature it seems like it would really, really like to have it both ways.
There's a big difference. Cults demand obedience, while corporations are obliged to be accountable. It's tricky to reconcile the two.
And while it ponders, and makes up its collective hive mind, Google has let its hiring do the talking. Google has been recruiting the kind of people who you can rely on to enforce a cult-like mentality, inside and outside the organization. In the UK, Google has hired spin doctors from the ruling "New" Labour party, which itself is steeped in Californian cult-speak, borrowed from 1970s fads such as NLP. In the United States, Google has been more pragmatic and focussed, hiring chief neo-con headbanger and former Carlyle Group bagman Dan Senor to make its case in DC.
(Dan's role is so er, covert, that his name isn't listed in the Google company directory. So don't even think about asking him how the war's going.)
But Google is cultish in many more obvious ways. Google's cash cow, from which it derives 99 per cent of its income, is as an advertising broker. And at the core of Google's advertising business is a black box. It's an auction system in which Google controls the price. Whether you're a buyer - selling stuff you want to place on Google - or whether you're a seller, Google sets the terms. No arbitrage is permitted.
(Keyword arbitrage was a VC favourite a couple of years ago - until the VCs realized you couldn't buck a market controlled by an entrenched oligopoly of two: Google and Yahoo!)
For financial experts who believe that derivatives markets and hedge funds are a safety valve that insures the integrity of the market - and let's suspend disbelief for a moment and assume that they're being rational - this news comes as quite a shock. No matter how slowly, and how gently we explain it, the shock is palpable.
Permitting a company to "define" the market, then control it, was demonstrated in a far distant era many readers may not remember - by a company called Enron.
Enron created something called the "energy market" and worked hard to control it. Millions of Californians felt the effects, when Enron imposed artificial blackouts on the Golden State.
But this is now, and technology utopians pin fables as the "Long Tail" onto economic evidence as threadbare as Google's "advertising model". When businesses are entirely reliant on Google's integrity and transparency, where are the founders?
Apparently, they've fallen out over their sleeping arrangements. They can't decide where to put the hammocks in the "Party 747".
It's nice to see version two of the "new economy" is in such safe hands. ®