Google Search bar is free, but that doesn't mean there isn't a cost- You are the product | Tech News

Google Search bar is free, but that doesn't mean there isn't a cost- You are the product

Will you still Google in the future? The word Google is synonymous with browsing the internet, but with more search results being handed over to ads, will that last?

By:BLOOMBERG
| Updated on: Feb 20 2022, 00:35 IST
google
A scene from Google's 2022 Super Bowl NFL football spot. (AP)
google
A scene from Google's 2022 Super Bowl NFL football spot. (AP)

How many times do you “Google” a day?  How about a year? Rough estimates put the number of searches that Google processes at more than 2 trillion per year and, worldwide, it has a search engine market share of more than 90%. We enjoy Google Search bar for free, but that doesn't mean there isn't a cost. It just means we are the product.

Bloomberg Opinion columnist Parmy Olson spoke with former Google advertising chief Sridhar Ramaswamy on a Twitter Spaces about the company's ad model, the intrusive nature of browsing the web and why Google still rules internet search. Ramaswamy was at Google for 15 years, and for the last five years, ran the company's all important advertising division. He left in 2018 and has since co-founded a competing search engine, Neeva, which makes money through a monthly subscription. Here is a lightly edited transcription of their conversation.

Parmy Olson: You joined Google as a search ad engineer, and rose up the ranks to end up running the advertising division and a team of more than 10,000 people. The year you left Google, it cracked $100 billion dollars in revenue just from ads, and that number's only gone north from there. You were clearly overseeing one of the world's most powerful businesses. Why did you decide you didn't want to work on ads at Google anymore?

Sridhar Ramaswamy: I was fortunate to be at Google when I was, but after 15 years I wanted a change. I had worked on ads the entire time and helped create a very large and clearly powerful ecosystem. But there was a part of me that wanted to go back to my roots as a software engineer, as a thinker and creator.

There were also aspects of ads at Google that disillusioned me. All of us want to feel good about our jobs. With complicated platforms like YouTube, where there's all kinds of content — including an endless amount of objectionable content — ads were seen as directly or indirectly supporting that. In particular, 2017 was a year of controversy and towards the end of that year I decided that I really needed a clean break.

I started Neeva because I love the problem of search and wanted to create a simpler, friendlier product. I'm proud that we have created the world's first ad-free, private search engine.

Parmy: Why has it been that, for more than a decade, there's been no meaningful competition to Google's search engine?

Sridhar: First and foremost, it's a very hard problem. It involves a scale that dwarfs any other technical problem that has been solved. It's really hard to crawl through all of the world's web and sift through it meaningfully in an adversarial, open environment. Then there's the fact that the best result for a query is one that everybody says is the best result. So in some sense, it's a popularity contest. That means the more users and usage you have, the more data you have to improve.

I think everybody acknowledges that when it comes to pure search, Google is still the the gold standard. But increasingly, things like ads and specialty places like Twitter and Reddit pose a challenge for how Google approaches search.

Parmy: Your point about how Google is arguably the gold standard, do you see that changing at all? I've noticed ads taking up a lot more of the real estate on search results. Do you see any degradation to the quality of search at Google, either now, recently or in the future?

Sridhar: It is a slow but very definitive change for the worse. A big part of this is the ad load. I'm sympathetic. I used to run that team and there is tremendous pressure to make money. Remember what happened to Facebook recently. All tech companies are defined not just by what they have accomplished but by their future prospects, too. There is pressure on Google to take up more and more space for ads, or play with an endless number of attention-grabbing maneuvers. 

Parmy: If this is an issue that you see going forward, did Google ever entertain the idea of selling a premium tier subscription to weed out all of the ads when you were there?

Sridhar: Not seriously. I'll give you a rough, but stunning, stat. Almost certainly, Google makes more than $50 billion just in the United States. That's more than $150 per person per year, just on Google search. You work that out to a monthly number and you realize not many people are going to pay for a product like that at that kind of price range.

The other thing that is vastly underestimated, especially from outside of Google, is there are large teams whose livelihood depends on the ad model. You can get away with introducing something like a subscription early on, but when you're very successful and there are strong economics at play, it becomes very hard. Also, within the company, a dramatically different way to approach something may just be rejected.

Parmy: If you actually look at the diversification of Alphabet's business, 80% is in ads. Facebook is even more horribly undiversified: 98% of all their revenue comes from ads. It's just like a tanker kind of going in one direction, it's just too difficult to pull in any other direction. Is that what you're saying?

Sridhar: These are incredibly successful companies and the ad model, in terms of its ability to monetize attention and extract value from advertisers, is just incredible. These people run incredibly efficient auctions, billions of times a day. It's a completely different ball game to start over with a different model in which you have to earn and keep one customer at a time.

Parmy: Speaking of the ad business generally, it's an incredibly complicated business. When we talk about Google's ad business, we're not talking about one monolithic organization, but many different divisions. Can you talk a little bit about the complexity of that business?

Sridhar: The simplest ad products are the “owned and operated” ad networks that Facebook and Google run. Early on, Google also got into the business of serving ads on third party sites. This was eventually expanded into DoubleClick, which is an incredibly complicated business. Google makes products for publishers. Google makes products for advertisers where an advertiser can say, I want to buy on the New York Times, on Google search, on YouTube, but also on Bloomberg and other sites. They also run something called an ad exchange, which is a way of bringing together advertisers, publishers, and other ad networks which aggregate demand from advertisers.

This ecosystem just gets more and more complicated. Now, every time we go to a website, there are literally thousands of companies that are collecting data about what we are doing and trying to figure out what ads to show. It makes for a very unpleasant experience. This rampant lack of privacy is one of the things that we wanted to address.

The split loyalty that the acquisition of DoubleClick entailed was vastly underestimated. Google makes products for users, advertisers and publishers or other companies. It also makes a browser and an operating system. Regardless of what it does, somebody is unhappy with the decision, because in some sense, Google is trying to be everybody's friend.

Parmy: You talk about a rampant intrusion on privacy. Did this bother you when you were still at Google?

Sridhar: 100%, this used to be a fairly constant argument. Another subtle point here is that, when you talk to one of these tool provider teams — let's say these teams represent advertisers and how they get clicks across the internet — they don't have a passion for the user because the user is anonymous.

These tool teams basically lose sight of the north star, which is the user and giving them a pleasant experience. You can easily end up in situations where you're just pulling levers at a very complicated system and saying: “If I show Parmy the headphone ad 20 more times, there's a small chance that she will break down and click on one of those ads and go buy the headphones. There's no cost to any of us. Let's just do it.”

Parmy: Is the challenge for Google that its north star is advertisers or does it have too many north stars?

Sridhar: The company has too many north stars, but that does not take away from the very important fact that Google is all about search. It's the flagship product, the thing that makes the most money. If Google is driven by revenue, it has to keep showing ads on that search result page and it has to figure out how to keep making the money that it makes and how to make more money. There is a fundamental conflict of interest where, unless there are artificial and clear boundaries for what's okay and what's not, it's just really hard to put the user first.

Parmy: Given that Google's flagship product is search, it's what we all use Google for, how much money has Google been investing in the technology behind search over the years?

Sridhar: One rule of thumb that I have is that I think it'll take about $500 million to $1 billion a year to run search at scale for every person on the planet. You'll likely need 1,000 to 1,500 people to do a really good job at this. And if you add those two numbers up, you realize that it's a minuscule amount of money compared to how much Google makes.

Parmy: Your goals for Neeva sound like you're not aiming to be as big as Google has been. Do you expect Google to continue to have that 90% share of search for another 10 years or even 20 years? 

Sridhar: Twenty years ago, would you have predicted today? Likely not. It's hard to predict that far out, but I think it is unlikely that search is going to exist in its exact current form for the next 20 years.

Parmy: Although it hasn't changed that much in 10 years.

Sridhar: Yes, but I think it's very unlikely that the shares will remain constant. This is too important a problem, and there is enough innovation.

Parmy: Going back to the ad model, Apple's privacy settings made it harder for Facebook to cross reference all our personal data. Google is preparing to phase out third party cookies in Chrome next year. Does it seem like online ads are moving in a healthier direction for our privacy?

Sridhar: It's a little early to say. The changes being contemplated do not affect Big Tech's own flagships as businesses. So you'll see, for example, Facebook do more within Facebook. This is the reason why they're so keen on things like Facebook Marketplace, not to mention the big pivot to the metaverse. Similarly, Google with its incredible products in search and YouTube will continue to do enormously well. There'll be more and more resistance to this rampant proliferation of data, so I expect the smaller tech companies to have a more difficult time.

The well-off and the technically savvy install ad blockers, pay for premium versions of YouTube and other apps that they use. They're not subjected to ads as much. So even though this free, ad-funded internet has been such a meme for the last 20 years, I feel like well-off people have moved away from ads and it's become a tax on the rest of humanity.

Parmy: The digital ad market grew by about 20% during the first year of lockdown, and then by 17% in 2021. Do you think this fast rate of growth for digital ads is just going to continue or do you see that petering out at some point?

Sridhar: Digital ads are growing because we are all doing more and more things online. Clearly that trend is accelerating, especially with the pandemic, but I think much of it will go to a few key players, like Google and Facebook and some of the other social media companies that can grab so much attention.

But for a product like search, there is no reason for anyone to search a lot more today than they did yesterday. So I think that growth will slow down. But what will continue unimpeded is the growth of companies like TikTok. There's clearly a lot of innovation happening with shorts and videos. I see them conquering a lot of ad dollars. As long as there is innovation and growth in the time that we spend online, the ad dollars will follow because online ads are incredibly efficient.

Parmy Olson is a Bloomberg Opinion columnist covering technology. She previously reported for the Wall Street Journal and Forbes and is the author of 'We Are Anonymous.'

Catch all the Latest Tech News, Mobile News, Laptop News, Gaming news, Wearables News , How To News, also keep up with us on Whatsapp channel,Twitter, Facebook, Google News, and Instagram. For our latest videos, subscribe to our YouTube channel.

First Published Date: 20 Feb, 00:35 IST
NEXT ARTICLE BEGINS