Why I trust Google

August 19, 2009

From this article that Nick shared a while ago:

Every product in the marketplace has substitutes and complements… A complement is a product that you usually buy together with another product. Gas and cars are complements. Computer hardware is a classic complement of computer operating systems…

Demand for a product increases when the prices of its complements decrease. For example, if flights to Miami become cheaper, demand for hotel rooms in Miami goes up–because more people are flying to Miami and need a room. When computers become cheaper, more people buy them, and they all need operating systems, so demand for operating systems goes up, which means the price of operating systems can go up.

The whole thing is definitely worth reading. (Though, I have to say: the principle doesn’t seem to hold perfectly true all the time, or at least it doesn’t seem to work out that well, e.g. the netbook market is pretty well commoditized, I think, which you’d think would help Microsoft a lot, but it turns out that, among other things, people don’t want to pay $300 for an operating system on a $500 computer. But that’s a different, and itself pretty involved topic.)

The article got me thinking about Google in these terms, and about how Google’s business model works and the incentives it sets up. And I concluded that I trust Google. Okay, to be honest, I trust Google in the sense of “with my data” because, well, it is convenient to do so. But I trust Google to keep doing great things not because I think Google’s motives are altruistic, but because Google’s incentives are ultimately aligned with my own.

Google makes the vast majority of its money on advertising, Google Search ads and Adsense, which really translates to web use at large. The more people use the web, the more ads they see, and the more money Google makes. So if you look at Google in the terms of the above-linked article, its complements are everything that sit between consumers and using the web on any medium. That includes everything from web browsers and e-mail clients to operating systems, mobile and desktop, to actual laptop and desktop hardware, and even telephony applications and infrastructure at large.

And Google’s many fragmentary product launches and announcements make a lot more sense in this context. Google provides free alternatives like Chrome, Android, Gmail, Google Apps, Google Voice, Youtube, and the upcoming Chrome OS not because it wants to win in any of these markets, but to create competition so that these markets provide a better experience to the consumer, making it easier to spend more time on the web, where they can see Google ads.

Google wants to make it easier for us to use the web faster and everywhere, which is a win for everyone.

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