This week I've been contributing to a roundtable discussion about Google hosted by SiliconValley.com. Each day's discussion focuses on a different issue, and today's issue is "ethics and trust." It so happens that I've recently been thinking about how Google's search engine changed as it moved from academic prototype to commercial service - from ideal to reality - and what the shift might suggest about the company's organizational ethics. So that's what I wrote about today. Here's what I posted:

In a 1998 academic paper titled The Anatomy of a Large-Scale Hypertextual Web Search Engine, Google cofounders Sergey Brin and Larry Page laid out their vision for what would soon become their companyís core product. They addressed the question of advertising in an appendix, calling into question whether ads were compatible with effective, unbiased search:

Currently, the predominant business model for commercial search engines is advertising. The goals of the advertising business model do not always correspond to providing quality search to users. For example, in our prototype search engine one of the top results for cellular phone is "The Effect of Cellular Phone Use Upon Driver Attention," a study which explains in great detail the distractions and risk associated with conversing on a cell phone while driving. This search result came up first because of its high importance as judged by the PageRank algorithm, an approximation of citation importance on the web. It is clear that a search engine which was taking money for showing cellular phone ads would have difficulty justifying the page that our system returned to its paying advertisers. For this type of reason and historical experience with other media, we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.

Brin and Page concluded that ìwe believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm.î

Today, I went to Googleís home page and did a search on ìcellular phone.î After three paid advertising listings for cell phone providers, the top result was Nokiaís home page, followed by Cingularís. In total, six of the nine results on the first page were commercial sites selling cellular plans or equipment, two were commercial sites providing information about cell phones as a platform for advertising, and one, the last on the page, was a governmental site providing information about phone safety in cars. On the right side of the page were eight more advertisements.

I point this out not because I think PageRank is in any way biased toward Google advertisers, but simply to show how different Google is today from the vision that Brin and Page established in their 1998 paper. Googleís adoption of a commercial model built on advertising ñ its formative event as a company ñ was in a very real sense an act of self-betrayal, in which the founders abandoned their ideal of a ìcompetitive search engine that is transparent and in the academic realm.î

In this context, the companyís famous ìdo no evilî motto begins to appear like a salve for a guilty conscience. Any discussion of Googleís ethics needs to begin with an acknowledgment that the businessís commercial interests have in the past compromised its foundersí ideals, and that such compromises can be expected in the future as well.

12:32:07 PM    comment   

Here's an odd little innovation from a small Long Beach, California-based company called Tavi. It's a tad bit cryptic if the company is just an OEM or making its own product, but it looks like it should be introducing the TAVI 030, calling it the world's smallest portable multimedia center. With a 3.5-inch screen, you can pretty much watch or listen to any type of multimedia, including music, movies, photos and games. But again, the website isn't very forthcoming about exactly what this is or when we'll actually see it.

Home Entertainment Solution [Newmedialife]

12:25:51 PM    comment   

Washington Post business columnist Steven Pearlstein writes about my ideas on utility computing in today's edition. He notes:

It was only 20 years ago when everyone was sure that computing would become increasingly decentralized - out with the old mainframe and in with the personal computer, which would become ever more powerful with each generation of computer chip. Now, however, the swing to centralization is driven by the new economics of the Internet and dirt-cheap communication, and technological advances that make it easier for different programs and operating systems to work with each other and allow large numbers of servers and disk drives to effectively act as one big computer.

It's interesting to watch how discussions of the utility computing model are broadening to a general audience. When I was writing my MIT Sloan Management Review article The End of Corporate Computing about a year ago (Pearlstein focuses on that piece), I assumed that discussions of utility computing would mainly concentrate on its business applications and that interest in consumer applications would develop more slowly. Since then, though, the hype about Web 2.0 (which is in one sense a code word for utility computing on the consumer side) has overturned that assumption. At the moment it's the central services provided to the general marketplace by Google, Yahoo, Six Apart et al. that are shaping our understanding of and our conversations about the utility model, even more so than the purely business applications.

The consumer side also provides, at the moment, the greatest insights into how centralization (e.g., iTunes Music Store) and decentralization (e.g., iPod) can happen simultaneously and symbiotically.

12:24:58 PM    comment   

For companies today, "breakthrough innovation" has become something of a holy grail. But achieving a breakthrough - even a truly momentous one - doesn't guarantee commercial success. Some products that represent great technological advances never gain a profitable place in the market - they're too good for this world. I look at one example - the Concorde SST - in Flying Blind, my latest column on innovation for Strategy & Business. The Concorde's unhappy fate, I argue, tells us something important about how easy it is to misread the dynamics of both technological progress and marketplace change.

12:24:19 PM    comment   

It (STAR) has already deployed the platform on a trial basis in China and India, where it is enabling chat and voting applications on the music channel, Channel [V] and the Hindi entertainment channel, STAR ONE. Its deal with STAR, which has a five-year term, will see Two Way TV Australia receiving an upfront fee and an ongoing share of the revenues generated by SMS messages sent by viewers who interact with Simcast-powered applications on STAR's channels. Two Way TV Australia will also provide support and maintenance in return for a monthly fee. The companies say that, in a few weeks, they plan to sign a long-form contract to implement the MOU.

12:23:11 PM    comment   

After the success of The Great Indian Laughter Challenge, Star One launched a series of one-minute gags on mobile. Deepak Sehgal, VP content and communication, Star TV, says that thereâo[dot accent]s always demand for new kinds of content. "The Laughter Challenge lent itself easily to the short format and is a great way for fans to relive funny moments from the show anytime," he says.

Zee is currently working on assembling humorous moments from the show into mobisodes. Theyâo[dot accent]re also considering relaunching some vintage projects like Banegi Apni Baat on mobile. "The main constraint right now is technological, only GPRS phones can download them," says Neil Chakravarti, VP, Convergence, Zee.

12:22:37 PM    comment   

Masayoshi Son is the original maverick of the internet space. He is also its biggest investor. After all, how many people can claim to have invested $3 billion into some 800 internet companies, continuing to bet on something that others had long given up on? Then, the President and CEO of Japan's SoftBank Corp. hasn't lost any money. He has made some $7.5 billion on exits, and the holdings in the listed companies in his portfolio are currently worth $22 billion.
Much of that (and maybe more) will flow to his hands over the next few years as more companies (one estimate is 20 a year) in the portfolio make initial public offerings. Son, now 48, is currently busy with his next big bet-an internet Protocol (IP) TV project. Dubbed TV Bank, it will bring all major TV channels together on the internet and deliver video content over broadband. Son was in India recently to rope in the country's leading TV channels to his TV Bank project. A highly unassuming Son spoke to BT in between his busy schedule in New Delhi.

What is the purpose of your visit to India?
I am working on my next big venture. It's called TV Bank (an IP TV project that will deliver television on broadband). We will provide a platform for all major TV channels in the world and integrate their content on the internet.

When do you expect to launch this venture?
We will have the commercial launch by end of March next year. We have started the beta test in Japan.

What exactly is TV Bank? Are you planning to become a Google for the video content industry?
Yes. That's my wish, to become a Google for TV over the internet. We will have several TV channels on the internet. It will have the live streaming of sports, news, entertainment and so on.

How many TV companies have you talked to?
We have talked to most of the TV channels in Korea, Taiwan and Japan, and they have agreed to provide content. Major Indian news channels have also agreed, so have the Chinese. As for the US, we are in the last stage of negotiations. We are also talking to some major European and South American channels. We have a very good start.

How much money are you investing in this business?
The size of the money is not that big for a company of our scale. What is important is the technology. We are the first company to provide live streaming of TV content. Many channels can be watched simultaneously-on demand.
"We have made returns of $30 billion on a $3-billion investment. It's not bad. Who else has made better returns?"

What, according to you, is the next big bet in the internet space?
This is it.

On Web 2.0:

There is Web 2.0 revolution going on, and a lot of money is chasing internet deals. At the same time, there is a view that Web 2.0 is a bubble. What is your opinion?
I don't think it's a bubble. There is a difference between Web 1.0 (the first dotcom rush during 1998-2000) and Web 2.0. The former had reached a peak (in valuations, although the companies were not making money). Then the share prices crashed. But now most of the internet companies are making money. If Web 1.0 valuations had a very high multiple, today's multiple is very reasonable. It is a very promising industry. Several years ago (in 2001), BusinessWeek magazine had done a cover story on me saying that I was the last believer of the internet (laughs). I was actually proud of it. Many people, especially in the investment community, became very sceptical about the internet. But I did not lose confidence. I believed that the internet industry is for genuine. It's going to grow and it has a high potential. So we kept on investing (in internet companies).

On earnings:

What is the earning situation now? Are you making money?
SoftBank is back to the market cap of $25 billion (Rs 1,12,500 crore). I still own 33-34 per cent of it. Our revenue is $10 billion (Rs 45,000 crore) a year. We have started making money again. Our shares have bounced back. (Ed: This is not the full interview, only excerpts.)

[ContentSutra]
12:22:06 PM    comment   

November saw the highest ever new GSM additions, with the user base touching 55.31 million, up 4.4% over October when 2.11 million users signed up. India’s total (GSM+CDMA) mobile user base surged to 70.81 million.

As per the COAI figures:

category C circles continued to witness the highest growth rate at 8.31 per cent - much higher compared with metros and A & B Circles.

Category B circles recorded growth of 4.94 per cent, while category A circles and the metros witnessed growth of 3.90 per cent and 3.17 per cent, respectively.

Latest market share of GSM operators:

Bharti = 1.5 crore users (27.87% market share) +675,636

BSNL = 1.33 crore users (24.02% market share) +778,259

Hutch = 1.06 crore users (19.31% market share) +520,357

Idea = 62.10 lakh users (11.23% market share)

BPL = 28.68 lakh users (5.19% market share)

Aircel = 22.28 lakh users (4.03% market share)

Reliance Telecom = 16.23 lakh users (2.94% market share)

Spice Telecom = 15.53 lakh users (2.81% market share)

MTNL = 14.43 lakh users (2.61% market share)

Of the CDMA operators, Tata Teleservices announced that they have added 8.69 lakh new subscribers in November. The company has now set an ambitious target of reaching the mark of nine million mobile subscribers by the end of 2005 from little over 7.1 million now.

11:10:55 AM    comment   

Both Vodafone and France Telecom are now considering a rival bid for Virgin Mobile, following a "unanimous" decision by the Virgin board to reject the starting offer from NTL. Financial sources say both companies have asked to look at the Virgin Mobile books.

10:46:39 AM    comment