Google, privacy, evil, and advertising
Eric Schmidt, CEO of Google, caused a flap this week by responding to a privacy concern with “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”
I have a few comments.
Essentially all of Google’s revenue comes from targeted advertising. If you use Google’s services, it collects as much as information as it can about you in order to better target the ads that it serves you. If targeted advertising isn’t evil, and if the information collected is used only for that purpose, it isn’t evil either, right? That’s how Google sees it.
Many people are in fact totally fine with having no privacy, especially those who indulge their exhibitionistic tendencies via Facebook and Twitter and location-sharing services such as Foursquare. That group consists mostly of younger people, and I would guess that some observers expect their attitude to dominate over time, i.e. it’s just a matter of waiting for the old fogies to become outnumbered and perhaps not realize what’s happening in the meantime (i.e. the frog in the slowly heating water).
I don’t believe that’s what lies ahead. According to Socionomics, which greatly influences how I view many things, we’ve been living through a very unusual period in history in which optimism and trust have been running at much higher levels than usual. If that period is in the process of ending, as I believe it is, we can expect a loss of confidence that it is safe to trust other people and companies with information about us that we wouldn’t necessarily want to be public knowledge. Not just the highly sensitive stuff that we generally manage to keep under wraps, but even some information that privacy-oblivious Googlers would think harmless.
Facebook has recently also been hit with privacy concerns, and although they haven’t done the best job of dealing with them to date, they’re continuing to respond and I believe can achieve an acceptable middle ground.
But Facebook and Google are in different revenue situations. Although Facebook too is largely dependent on ad revenue, it’s also going after other revenue that should in time reduce that dependence. Google also has non-ad revenue, in particular the growing Google Apps for Business, but relatively speaking the dependence is quite different. For Facebook, privacy is a pain in the ass but one that can be accommodated sufficiently to mollify users, while for Google, privacy is an enemy to be overcome.
Then there’s the dependence of advertising on the general economy. And then there’s what I believe is a long-term decline in advertising as the nature of customer engagement changes in a more connected world. What if advertising declines slowly over time, plus is hit across the board in a worsening economy, plus even its least-vulnerable spot of highly targeted advertising is hit by privacy concerns?
I understand why Eric Schmidt would like to think that privacy is in the past, because privacy is a major threat to Google. I think that belief is incorrect.
UPDATE added the following day: I forgot to mention one point I’d intended to make: advertising is widely seen as slightly on the evil side of the evil-good spectrum – and when the social mood (to use the socionomic term) is down, any perception of evilness gets magnified in the eyes of the public.