Google is Microsoft 2.0

Sometimes you just have to hate people - this piece by Nick Carr gets to the ideal helicopter altitude and encapsulates the Google strategy very succinctly, and without even having to resort to comics. Because Google owns one of the main "choke points" on the Internet (Search), and has learned to monetise ads on what flows through its choke point aka toll booth, then it's optimal strategy is to remove all other choke points to maximise flow:

For Google, literally everything that happens on the Internet is a complement to its main business. The more things that people and companies do online, the more ads they see and the more money Google makes. In addition, as Internet activity increases, Google collects more data on consumers’ needs and behavior and can tailor its ads more precisely, strengthening its competitive advantage and further increasing its income. As more and more products and services are delivered digitally over computer networks — entertainment, news, software programs, financial transactions — Google’s range of complements expands into ever more industry sectors. That's why cute little Google has morphed into The Omnigoogle.

Because the sales of complementary products rise in tandem, a company has a strong strategic interest in reducing the cost and expanding the availability of the complements to its core product. It’s not too much of an exaggeration to say that a company would like all complements to be given away. If hot dogs became freebies, mustard sales would skyrocket. It’s this natural drive to reduce the cost of complements that, more than anything else, explains Google’s strategy.

And, as Nick points out:

But while Google has an odd business model, it's not an unprecedented one. The company it most resembles is, ironically, its archrival, Microsoft. Just as Google controls the central money-making engine of the Internet economy (the search engine), Microsoft controlled the central money-making engine of the personal computer economy (the PC operating system). In the PC world, Microsoft had nearly as many complements as Google now has in the Internet world, and Microsoft, too, expanded into a vast number of software and other PC-related businesses - not necessarily to make money directly but to expand PC usage. Microsoft didn't take a cut of every dollar spent in the PC economy, but it took a cut of a lot of them. In the same way, Google takes a cut of many of the dollars that flow through the Net economy. The goal, then, is to keep expanding the economy.

In other words say hello to the new Microsoft.

The interesting thing though, is that this is all pre-supposed on Google being the No 1 search Engine - so when you see things like Marissa Mayer saying search is 90% done, you start to wonder - as Arthur C Clarke once noted in his laws of prediction:

When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.

The ancient Greeks, who had seen all this many a time, had a word for it - hubris. It goeth before a fall.