Googled: The End of the World as We Know It

PART THREE Google Versus the Bears

CHAPTER NINE War on Multiple Fronts

(2007)

Once you get to a certain size, you have to figure out new ways of growing,“ said Ivan Seidenberg, CEO of Verizon. ”And then you start leaking on everyone else’s industry. And when you do that, you sort of wake up the bears, and the bears come out of the woods and start beating the shit out of you.“ Seidenberg was speaking of Google, with whom he started jostling in 2007 to prevent Google from entering his mobile phone business. The Verizon bear was now awake to the perceived Google menace, as was Viacom.

Of the two, Sumner Redstone was the more openly belligerent. In late 2006 and early 2007, he demanded that YouTube immediately remove one hundred thousand clips of Viacom’s copyrighted content. Viacom CEO Philippe Daumann became convinced that Google was “very lackadaisical” about the content that appeared on YouTube. He cited Al Gore’s movie, An Inconvenient Truth, which Paramount released and which appeared on YouTube in its entirety. “We got frustrated. We told them to take our content down.” How come, he asked, YouTube could successfully block spam and pornography and hate speech from appearing, yet said it couldn’t block copyrighted Viacom content from being displayed? Redstone, who had long championed the idea that content was king, was furious. He and Daumann resented having to pay what they claimed to be one hundred thousand dollars a month to monitor what appeared on YouTube.

Google countered that only the copyright holder knows what content is under copyright, said Eric Schmidt, citing the Digital Millennium Copyright Act, which makes monitoring a shared responsibility. “The law basically said that the copyright owner monitors, and then we expeditiously remove, and we’ve done that,” he told Wired magazine. “And it’s well documented, because Viacom told everybody that they gave us one hundred thousand video takedowns, which we did very, very quickly. And what was interesting was that our traffic to YouTube has grown very strongly since then. So one of the arguments that they made was that somehow YouTube was built on stolen content, which is clearly false.” He said Google was testing various technologies but had yet to solve the piracy puzzle. Viacom did not believe a technology company could fail to find a remedy—unless it lacked the will.

In March, Viacom filed a lawsuit in federal court charging Google and YouTube with “massive intentional copyright infringement” and asking for $1 billion in damages. Viacom said YouTube effectively stole almost 160,000 clips of its programming and allowed these to be shown more than 1.5 billion times. YouTube’s Chad Hurley doesn’t deny there were copyright infringements, but he insisted they were not deliberate. His argument was twofold: First, YouTube is just “a clip site. We don’t want full programs.” And second, Web videos are so new that “everybody’s still trying to figure it out.” Viacom, he believed, sought clear answers when there were none. Hurley, like top executives at Google, believed the litigious Redstone was using the lawsuit as leverage to negotiate a better deal. Schmidt grows uncharacteristically agitated when Viacom’s suit is mentioned. At a 2008 conference at which Philippe Daumann spoke and castigated Google for stealing copyrighted materials, Schmidt sought me out and growled, “Everything Philippe said was a lie. And you can quote me!”

There were those who recognized Viacom’s concerns yet thought Redstone was wrong. Esther Dyson, an early and prominent investor in digital media, said, “As a business, I think they are behaving foolishly—like the music companies. They are fighting their customers. What they should do is use YouTube as a platform and share in all the revenues.” Those who agree that YouTube is a platform, not a content competitor—including some who work for Redstone but dare not be quoted—think the lawsuit is a declaration of war when what is needed is an agreement that encourages more trial and error.

Many media bears sympathized with Viacom even if they didn’t join the lawsuit. “If we’re putting up programming for free, why should cable or DirecTV pay us for content?” asked Mel Karmazin. And if consumers can get the content online or on iTunes, he said, unless the digital company pays a substantial licensing fee “you’re trading analog dollars for digital dimes.” Moreover, once a copy is made, it is easily duplicated and shared.

Anxiety about piracy was not peculiar to television. On the eve of Viacom’s lawsuit, all the major Hollywood film studios jointly protested that Google was selling keywords such as bootleg movie download or pirated for two Web sites it knew to be illegally downloading their movies. Google assured the studios it would prevent a recurrence. But although those keywords can be blocked, there will be others. Even the company that a decade earlier aroused the same fears Google now did, Microsoft, publicly accused Google of a “cavalier” approach to copyright, charging that Google was making “money solely on the backs of other people’s content.”

Undeterred, Google vowed to take the case all the way to the Supreme Court. Because Google was already warring in the courts with publishers and the Authors Guild, this battle with Viacom opened a second front in the war with old media. And soon there would be other skirmishes, including those with new media companies like Facebook, the fastest growing social network. With more than forty million active users in the summer of 2007, Facebook “doubles in size every six months,” said founder Mark Zuckerberg. Then twenty-two, Zuckerberg is a Harvard dropout who in the early days of his company’s life slept on a mattress on the floor of a Palo Alto apartment he rented near his office, allowing him to move effortlessly between work and sleep. His baby face is framed with curly hair, and because he is thin, with a relatively long torso, one is surprised that he stands only five feet eight inches tall.

He arrived for dinner at an outdoor Thai restaurant in Palo Alto sock-less, wearing Adidas sandals and a green T-shirt, and ordered lemonade that he sipped through a straw. He was on guard to avoid saying anything boastful about Facebook, or intemperate about rivals. He said he did not feel competent to discuss almost anything but Facebook. He lacked Brin’s unguarded zest or Page’s quiet confidence. But his long pauses when asked about Google, and the way he shifted uncomfortably in his chair, suggest the tension between the two companies. He was somewhat less circumspect about MySpace, his main competitor among social networking sites: “What they’re doing is very much different from us. On a fundamental level, what they’re doing is not mapping out real connections. They’re helping people meet new people. Rather than using the social graph and the connections people have in order to facilitate decentralized communication, they’re using it as a platform to pump and push media out to people. They call themselves a next-generation media company. We don’t even think we’re a media company. We’re a technology company.”

Facebook is not a content company, he said, just as a telephone company is not. In fact, in some ways Facebook is like a telephone conversation, with all your friends on the same call. But on this call, your friends can share photographs, text, political summons to action, video, and music, or can click to make purchases. “There is a big misconception around what social networks are,” Zuckerberg said. “People think there are communities, or media sites, where people are going to meet new people or make new connections or consume a lot of media. But what they really are is a completely different paradigm for people sharing information. The traditional media models are all centralized. What we’re enabling here is decentralized individual communication. When that happens with a certain level of efficiency, it starts to become easier for people to communicate and get a lot more of their information through this network than through a lot of the centralized approaches they used before.”

This is precisely why Google, starting in 2007, began to worry about Facebook. If Facebook’s community of users got more of their information through this network, their Internet search engine and navigator might become Facebook, not Google. As media companies agonized that Google and YouTube were capturing more eyeball time, Google began to have the same concerns about Facebook. What if Facebook became the equivalent of AOL’s former walled garden, the home page, the place its users went not to roam but to comfortably nest? Google depends on more and more people surfing the Web. Relations were further strained when Microsoft outbid Google in October of 2007, laying claim to 1.6 percent ownership of Facebook and establishing Microsoft as Facebook’s advertising sales agent.

There was another reason Google fretted about Facebook. The social networking site operated on a different business model than Google’s. Like Flickr (Yahoo’s photo-sharing site), Twitter, or Linux, they are part of what Lawrence Lessig, in his book Remix: Making Art and Commerce Thrive in the Hybrid Economy, refers to as hybrids—companies that take the shared efforts of many and build communities that help create commercial value. They are not strictly part of a “commercial economy,” as Google, Amazon, and Netflix are, according to Lessig, nor are they strictly part of the not-for-profit “sharing economy,” as Wikipedia and the open-source Linux operating system are. The hybrids, wrote Lessig, are those that combine making money with sharing—as Red Hat did by offering Linux for free but selling consultant services to corporations; as Craigslist does by offering 99 percent of its listings for free; as YouTube does by allowing users to freely share videos; and as community-building sites like Facebook do. Google was free, but it was not building a community.

While Google warily watched Facebook, a real skirmish broke out between Google and the bear that is the advertising industry. Ad executives had been uneasy for some time that Google would displace media-buying agencies. But there were additional concerns. How many more ad dollars would Google siphon from traditional media companies? Would Google disintermediate the sales forces of these companies? Might Google bypass advertising agencies and develop a direct relationship with advertisers? If Google’s automated auction system brought the cost efficiencies Larry Page touted, would it not inevitably lower old media’s advertising rates as well as the fees ad agencies charged clients? Perhaps the overriding concern was the one identified by Herbert Allen III, who said of Google: “They want to be the digital advertising network for all forms of advertising. They want to be the advertising operating system, sitting in the middle of all advertising.” Google was indeed “fucking with the magic.”

Concern turned to fright in April 2007 when Google paid $3.1 billion to purchase DoubleClick, outbidding Microsoft and Yahoo. “There’s no way Google would have acquired DoubleClick if not for their fear of Microsoft,” said a DoubleClick executive close to the negotiations. The executive said that because Microsoft and Google were bidding against each other, DoubleClick was able to inflate its sales price by about $1 billion.

In the world of online advertising and marketing, DoubleClick was as dominant in its arena—placing display advertising—as Google was in placing text ads. DoubleClick provides the digital platform that allows sites like MySpace to sell online ads and advertisers and ad agencies to buy them, with DoubleClick culling from its database the information that targets the ads. The acquisition gave Google “an opportunity to be the infrastructure backbone for all ad-serving on the Internet,” said a worried Wenda Harris Millard, then Yahoo’s chief sales officer. In addition to potentially controlling the plumbing, DoubleClick offered rich new data-mining possibilities. By combining DoubleClick’s data with its own, Google would house an unrivaled trove of data. As Randall Rothenberg, the CEO of the Interactive Advertising Bureau, said the day the deal was announced, “You can dive deep into that data and say, who were those people, where do they live, what were they doing when they looked at those ads?”

DoubleClick’s promotional materials boast that they “track more than 100 metrics,” including which ads users download, how long they view them, where they scroll, what links they click on, if they view an ad and later visit the site, what products interest them, what ads “resonate the most,” what they buy and choose not to buy, and how much they spend. According to then CEO David Rosenblatt, the company delivered as many as twenty billion online ads each day. For the “sell side” (the content providers, who in the online world are called publishers), DoubleClick provides tools that help them evaluate the inventory they have to sell and where to target it, delivers the ads, and reports the results. For “the buy side” (advertisers), it provides the same service.

Google’s purchase of DoubleClick triggered a flurry of digital advertising acquisitions. Within months, Yahoo, AOL, Microsoft, and the WPP advertising/marketing colossus each swallowed online marketing agencies that compete with DoubleClick, with Microsoft spending six billion dollars, twice what Google had paid, to buy aQuantive. Why the rush to acquire digital ad agencies? And why was DoubleClick sold?

Since DoubleClick and Google share the same one-square-block building on West Fifteenth Street in Manhattan, CEO Rosenblatt joked that the free food was an enticement. But the main reason was that he saw the sell side changing. DoubleClick had promised to transform the business of selling remnant ads, the roughly 30 percent of an ad seller’s inventory that is hardest to sell: the least read part of the magazine, the least watched TV shows, the least listened to radio programs. Selling these remnant ads was becoming more expensive for DoubleClick, and Rosenblatt feared that a Google or a Yahoo would come along and offer to sell these for free in exchange for an opportunity to sell more of a client’s premium advertising, luring away his customers. DoubleClick needed to widen its scope. “We were selling transmissions. We were not in a position to sell cars,” he said. In Google, Rosenblatt saw not just “the single best monetization engine on the Web,” and a company with a base of over one million advertisers, but more vitally, a fellow and necessary “middleman” who did not compete with clients by entering the content business.

DoubleClick offered Google a way to pool the two databases and their networks of advertisers. But DoubleClick also brought something Google lacked: a dominant online position in display advertising (banner and video ads), which meshed nicely with YouTube’s video offerings and Google’s narrower text-based expertise. Tim Armstrong, Google’s president, advertising and commerce, North America, envisioned three advantages for Google: better measurement of all online advertising, from text ads on search results to display ads on YouTube; better targeting of ads, which pleases both consumers and advertisers; and finally, higher fees for these better targeted, better measured, ads. Google’s game plan, said Richard Holden, its product management director, is simple: “We’d like to create one-stop shopping for advertisers.”

With reason, the advertising bears translated “one-stop shopping” to only-stop shopping, provoking dread about market domination. Rosenblatt, a bald, cheerful man of forty-one with a bright smile that provides cover for the technologist within, rises and goes to the whiteboard in his office to draw what he envisions as the future of advertising. Between “buyer” and “seller” he elongates an “ad exchange,” a clearinghouse for all online inventory to be sold. There could be many of these, but Rosenblatt, who would become Google’s president, display advertising, makes clear he hopes the Google/DoubleClick exchange will be dominant. This new approach can be much more efficient, he thinks, likening it to how online trading siphoned business from brokerage houses. Imagine, he said, that “instead of just selling remnant advertising to the exchange, the seller said, ‘We’ll expose all of our inventory onto this ad exchange. Maybe we’ll carve out a small percent—maybe ten percent—of the really premium stuff and our sales force will sell that directly. But this other stuff”—he acknowledged that the distinction between remnant and premium ads can be arbitrary—“’I don’t know where the line goes. I don’t want to figure out where it goes. Instead, I want the ad network to bid.”‘

Why shouldn’t a media buying agency, such as Irwin Gotlieb’s GroupM, conclude that DoubleClick/Google might gobble his piece of the advertising pie by offering to charge, say, 2 percent rather than his 4 or 5 percent? And by promising better data about what ads worked? Irwin Gotlieb did see DoubleClick and its ad exchange as a potential disrupter. He was uncomfortable with the wealth of data that Google would now possess, and could one day refuse to share with advertisers. He was uncomfortable with Google’s dominant market share. He was wary of its deals with EchoStar satellite television and Clear Channel radio and some newspapers, allowing Google to serve as the media-buying middleman for their online ads. He was rightly concerned that Google could be trying to usurp his role.

If that was Google’s intention, Gotlieb did not believe they would succeed. He welcomed Google reaching into the long tail to match advertisers with smaller Web sites. But he did not think Google/DoubleClick could make inroads with brand advertisers, in part because these clients want to be serviced, to have relationships with media agencies they can consult. And he also expressed skepticism that Google would loom as large in the future as it now does. “If you and I were talking about this in 1998, we would have been talking about AOL,” he said. “Two years later we would have been talking about Ask Jeeves.”

IN THE ADVERTISING WORLD, if you say “Irwin,” insiders instantly know whom you mean, just as people in Hollywood know who Warren and Bar bra are without hearing their surnames. In four decades in the advertising business, Irwin Gotlieb has seen fads come and go, though he hasn’t changed his hairstyle (his bouffant, graying mane sits flat atop his head, like the deck of an aircraft carrier) or his attire (dark suits and ties). He is confident that with the largest worldwide market share of media buying—estimated to be 19 percent—GroupM is secure. He disputes the notion that there is a sharp definitional difference between new and old media. “As all media moves to digital delivery,” he said, “the distinction between media types is going to become less relevant, or perhaps irrelevant. Hypothetically, if I’m reading my newspaper on an electronic display and I see a photograph of a touchdown in the Super Bowl and I click on it and get to see a sixty-second video of that touchdown play, am I now reading a newspaper or watching television? Or does the distinction cease to be relevant?” And whether the consumer is leaning forward over a PC, or leaning back to watch TV, or a combination of the two with a mobile device, he believes each medium will be “addressable,” which means his agency will know a lot about that consumer, and each medium will allow the user to click a button for additional information or to make purchases.

Irwin Gotlieb approaches life with the air of a knowing skeptic, one who is conversant in nine languages, including Japanese, Russian, Polish, and Hebrew, and has lived all over the world. He believes Google, like most businesses he has observed in his sixty-one years, is a great company that does one thing brilliantly, but “will probably be leapfrogged by something that two Ph.D.’s in China are working on.”

Irwin Gotlieb knows China, and much of the rest of the world. He was born in Shanghai in 1949 to Jacob Gotlieb and Genya Diatlovitzky, who were second cousins and Belarusian émigrés; when he was a year old, the family left for the newly forming Israel. His father, Irwin said, bribed an official to allow them to exit with valuables, including small antiques and precious metals. Because Jews could not pass through the Suez Canal, the refugee boat took six months to arrive. A year later his father flew alone to Japan—Irwin does not know why—and several weeks later the family flew to join him. In Japan, his father suddenly had a new career as an exporter of pearls and an importer of diamonds. Irwin knew his father wasn’t a trained jeweler, and he knew Asian currencies “were not worth the paper they were printed on,” but he did not know how his father came to that business, or who funded it.

Irwin lived in Japan until he was fifteen and was a precocious student. His parents encouraged him to attend college in the United States and he was accepted by New York University, arriving alone at fifteen with a stipend of cash from his parents. He rented an apartment, learned to speak English, and served as his father’s U.S. representative, working with Japanese and Chinese diamond dealers. In keeping with the many secrets held by the Gotlieb family, he never told his parents that he dropped out of college ten days after entering. “They were teaching me stuff I already knew,” he said.

He met Elizabeth Billick, a paralegal, in 1968, when he was nineteen. They eloped the following year, fearful that his father, who at the time was not speaking to Irwin, might try to block their marriage. Irwin displayed the stealth of his father. “My mom and dad went to their graves,” he said, “not knowing that I didn’t go to school and that I eloped.”

He had a friend in advertising and it sounded like “a fun business,” so Irwin, at age twenty, sent a resume to various agencies. Over the next five years he worked for two of them, amassing a quiverful of skills: cash and barter syndication, spot buying, research, planning, network TV negotiations. He was recruited by Benton & Bowles in 1977 to run their national broadcast group; over the next twenty-two years he helped build their overseas business and also supervised the production of prime-time shows and made-for-TV movies. Throughout, he dabbled in computer software, creating the first application to measure the audience that ads attracted, and building software to manage ad inventory. “I wrote my first full-blown software system in 1973,” he said. In 1979, he built “the first Monster system—eventually two million lines of code,” he said, which became the standard yield management software that determined prices, modeled the national marketplace, and allocated ads. His last job at Benton & Bowles was CEO of MediaVest, their media buying and planning agency. In 1999, Sir Martin Sorrell, the CEO of the WPP Group, who was knighted in 2000, recruited him to become global chairman and CEO of Mindshare, a MediaVest competitor. Sorrell acquired other media-buying and planning agencies, and in 2003 Gotlieb was elevated to run them all under the rubric of GroupM. Today, 73 percent of his company’s revenues come from outside North America.

Gotlieb’s background well served GroupM’s global expansion. “The fact that I didn’t grow up in the United States was incredibly helpful as the business began to morph globally,” he said. His techie background better prepared him to understand and compete against the Googles and Double-Clicks. His friend Michael Kassan, who had a successful advertising career and founded and is the CEO of Media Link LLC, which serves as a consultant to Microsoft and AT&T, among others, remembers the time he and his wife visited the Gotliebs’ Westchester home and watched a movie in his screening room. “In Hollywood, a screening room is a show-off room,” he said. “At Irwin‘s, he takes you behind the wall and shows you the wiring and how he does it himself.”

Gotlieb tries to stay a step ahead. When digital recorders allowed viewers to dodge TV ads, he pushed to place his clients’ products in programs, establishing a production arm of the agency to do it. He grew his digital staff, which now numbers more than two thousand employees. He invested in various companies with technologies that gather consumer data. Invidi, one of those investments, is a software system that resides in a cable box and monitors viewer behavior. It collects data on what we watch, what we like, and how much time we spend watching ads, and can correlate reams of television-watching data with other data collected from motor vehicle records, credit cards, purchase cards, and other credit-rating services and databases. The technology allows the advertiser to show different ads to different potential customers watching the same program.

Gotlieb doesn’t think Google, outside of its search advertising, can rival GroupM because most advertising was “not in the sweet spot of their capabilities.” Like Mel Karmazin, he believes that engineers cannot replicate what his sales force can do. They can’t do product placement, an increasingly popular form of advertising requiring subtle judgment to avoid offending viewers. They miss the “art” part of selling ads, the judgment required to build a brand, the relationships that seller and client forge and that spark ideas. “As complex as the Google processes are, as robust as they are,” Gotlieb said, “there is an inherent oversimplification because it is purely quantitative.”

ASSUMING THAT GOTLIEB is truly undaunted by Google as a competitor, his would have been a lonely voice in the advertising community. Sorrell, the CEO of the WPP Group, worried that DoubleClick would allow Google to “take our client data.” He began to refer to Google as a “frenemy,” not quite a friend or enemy but a rival power to guard against. With mounting anxiety, executives noted that Google TV Ads was selling advertising for EchoStar’s fourteen million set-top boxes and for Astound Cable, a small cable company. Google’s sales pitch was that it could find new local advertisers and help advertisers better locate their targeted audiences. The way it works, according to Keval Desai, the product manager and director for the project, is that Google finds the advertisers through ad agencies or by dealing directly with companies that advertise and brings them to one of one hundred satellite channels. Once the ad airs, Google has software in the set-top box that collects data and analyzes the results. Among the things they learned, he said, turning to a series of slides to make his point, is that when grouped together the shows that have “less than a half of one percent audience share can have a share equal to ESPN.” Unlike the Nielsen ratings, which make an estimate of the audience’s size by extrapolating from a relatively small sample, Google takes a digital measurement of actual homes. Desai said they learned that advertisers were spending half their dollars on the twelve largest cable networks when they could be reaching audiences of comparable size by grouping smaller networks together. Because the ESPN and other large cable network spots are much more expensive, Google is saving advertisers money, removing the “inefficiencies,” as Google had told Mel Karmazin they would. Or as Desai now said, “This slide fucks with the magic!” Through a digital box “we can measure second by second” what ads and programs viewers are watching or turning off, and share this information with advertisers within a day.

As Google’s director of media platforms, Eileen Naughton, said, “It is absolutely our intention to be in every cable box.” To accomplish this, she knew, would require the cooperation of the cable companies that own the box. And that cooperation depended on trust. Naughton said, “Google aims to improve the advertising quality in traditional media.” If traditional media trusts her word, then Google is servicing them, not supplanting them. If they mistrust Google, they will never allow its software to invade the cable box. A decade ago, when Bill Gates tried to persuade the cable companies to trust Microsoft to be the operating system for digital cable boxes, he didn’t get past first base.

Television executives had reason to be paranoid about the seventy billion dollars spent each year on TV advertising, as did advertising agencies. Not only was Google telling its customers they could do a better job of targeting ads and telling them which spots worked, but it was also extolling its array of other products. Among them were Google Print Ads, which by early 2008 was selling ads for seven hundred newspapers and allowing them to use an “ad creation tool” to craft inexpensive advertisements; Google Audio Ads, which was hoping to build on the deal it had made with Clear Channel Communications, the largest radio station owner in the United States, to sell 5 percent of ad inventory; and Google TV Ads, which on the Google Web site is described as “a searchable directory of specialists” to create television commercials. Was Sorrell right? Was Google intent on taking over the media buying function? “Yes, he’s right,” said Terry Semel, the former Yahoo CEO. “Google and Yahoo are always working on platforms to sell ads. All [of the new Google programs] at the end of the day will have the capability to sell ads in any medium.”

So why would a company like Procter & Gamble need a middleman media buyer like Irwin Gotlieb’s GroupM? Smita Hashim, the group product manager for Google Print Ads, said “that’s a good question,” and conceded that, “the roles will start shifting.” But Hashim, like Desai and others at the company, quickly assert that Google requires the “expertise” of ad agencies. With passion, Desai insisted that Google is engaged in a “win-win” game. If these programs succeed, the advertising revenues of traditional media as well as Google’s will rise. This is a familiar Google refrain, one that relies on what might be called Google “magic”: everyone wins. If old media gets with the program, makes a push to be more Internet-centric and share with Google, there will be no losers, no zero-sum games in this brave new digital world.

But these claims did not allay the anxiety of Sorrell, who feared Google would vie to obviate his creative teams as well as his sales and media-planning teams. The wellspring of this concern was not the Google TV Ads program, which does not generate the kind of slickly produced commercials his agencies create. He was troubled by Google’s hiring of Andy Berndt, who was copresident of one of Sorrell’s ad agencies, Ogilvy & Mather. Berndt was recruited in 2007 to run a new Google unit, the Creative Lab. Google denied that this was an attempt to enter the advertising business, and Berndt said his job is to focus on the Google brand, “to remind people why they love Google,” and to create ads only for his new employer. His staff consisted of just twenty people, he said, and would expand to only thirty-five. He said “the short version” of why he joined Google is simple: “When the spaceship lands in your backyard and the door opens, you just get in the spaceship.”

To most consumers, Google remained an iconic brand, a force for good, a company that made search easy and fast and free; a company that retained its bold, entrepreneurial spirit and was both a beneficent employer and a benefactor to shareholders.

To most media industries, Google was becoming a dreaded disrupter. The engineering efficiencies touted by Google were also perceived as threats to the sales forces of the television and radio and print industies. Weeks after the DoubleClick purchase, Beth Comstock, then the president, integrated media, for NBC Universal, and now the chief marketing officer for its parent, General Electric, said, “If Google could introduce us to tens of thousands or even a thousand advertisers we currently can’t have, that would be a great thing. But when they start moving up the pyramid and they think you can put a self-serve model to what we know of as a very highly customized, high touch, more intuitive kind of business—it’s a content co-creation in some cases—you can’t do that with self-service and algorithms.” In her dealings with Google, she said, “There is this undertone of: Is that all they’re looking for? Why are they into television advertising?” Are they intent on replacing NBC’s sales force? She would have gladly outsourced the selling of remnant advertising to Google; what she wanted to retain control of was the selling of premium advertising. Like Karmazin, she wanted her salesperson in on the process, persuading clients to spend more.

Days after the DoubleClick transaction, Microsoft and AT&T publicly called on federal regulators to block the deal, saying it would reduce competition and give Google access to too much private data. Sorrell called on regulators to review the acquisition, declaring, “It raises issues as to whether we are happy to let Google have our clients’ data and our own data, which Google could use for its own purposes.” A senior executive at Time Warner, who did not want to be identified because its AOL division is a Google partner, told me at the time, “You always have to worry when someone gets so much more powerful than all the competition out there. This is why I come down to this: I hope the government starts understanding this power sooner rather than later.”

Tim Wu, a professor of law at Columbia University and a former Supreme Court clerk, looks at the issue from a different angle. He said he’s not “worried about Google becoming large.” One can make the argument, for example, that size brings standardization, he said. “I’m less concerned how they’re behaving in their own market than what a company does to other markets.” Will Google use its power to unfairly dominate other markets, as Microsoft used its operating system dominance to cripple the Netscape browser? “If Google remains true to its mission of being an ‘honest broker,’ I’m pleased. If they have an agenda, that’s when I become fearful.” He wasn’t sure Google had an agenda, but was plainly worried: “If they’re willing to block sites to placate China, are they willing to block sites to placate powerful advertisers?”

Here the issue of privacy becomes entwined with the issue of power. Together, Google and DoubleClick amass a mountain of consumer data. The more “personalized” this data, as Eric Schmidt said, the better the search answers. “When I decide to go to the movies,” said Schmidt, “I’d like to rely on the recommendations of friends. How do we capture that? The more we know who you are, the more we can tailor the search results.”

Of course, when a company retains as much data as Google does and also proclaims, “We are in the advertising business,” as Eric Schmidt does, this arouses more privacy concerns. And since Google believes advertising is information users want if it is“relevant,” it follows that sharing data serves users, which exacerbates these fears. Or as Sergey Brin told Wall Street analysts during Google’s third-quarter conference call in October 2007, “I am really excited to tell you today what we have done over the past quarter in ads and apps. As you all know, for advertising our real philosophy is to create a win-win between advertisers and customers by presenting users with really relevant information which is interesting to them, but is likely to cause a transaction to commence.” With technology making inroads toward improving how users’ real desires are gauged and finding patterns of behavior, the data-mining discipline Sergey Brin studied at Stanford enters a new age. The pressures on Google—and all sellers of advertising—to share more data will intensify.

Privacy fears escalate when Google executives express peculiar ideas about privacy—ideas that suggest they don’t grasp the reasons people are fearful. Each fall, Google hosts a two-day Zeitgeist Conference on its Mountain View campus, inviting a cross section of people from various fields. Much of the conference is moderated by journalist James Fallows, and a cavalcade of prominent scientists, musicians, artists, public officials, and others make presentations or appear on panels. The last event of Google’s Zeitgeist is when Brin and Page come on stage—in jeans, of course—to answer Fallows’s and the audience’s questions. At the 2007 conference, Randall Rothenberg of the Interactive Advertising Bureau rose to ask Brin to access the importance of privacy.

Brin declared that “the number one” privacy issue was “stuff that is untrue about people on the Web.” Because information “travels so fast” online, and because “anyone can publish anything,” these untruths gain currency. The number two privacy issue, he said, was the “hijacking of credit cards.” He dismissed concern about the information collected on cookies “as more of the Big Brother type”—in other words, fantasies. “Do they [users] trust what you’re doing? That’s not so much a privacy issue.” By this logic, if we trust Google, there is little reason to fear they will misuse our data. Afterward, at a small press lunch with the founders and Schmidt, Page signaled his agreement with Brin. “Sergey is just saying there are practical privacy issues that are different than the ones debated.” As was true when the founders pushed to add a delete button and allow Google’s Gmail scanning technology to more aggressively deliver ads when users typed certain keywords and to forgo a delete button—a mistake Brin told me showed “we just weren’t good” at anticipating fears, but “I think we’ve now learned”—once again, Brin and Page displayed an inability to imagine why anyone would question their motives and a deafness to fears that can’t easily be quantified.