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Render unto Caesar

How Google Came to Rule the Web

Google dominates the World Wide Web. There was never an election to determine the Web's rulers. No state appointed Google its proxy, its proconsul, or viceroy. Google just stepped into the void when no other authority was willing or able to make the Web stable, usable, and trustworthy. This was a quite necessary step at the time. The question is whether Google's dominance is the best situation for the future of our information ecosystem.

In the early days it was easy to assume that the Web, and the Internet of which the Web is a part, was ungoverned and ungovernable. It was supposed to be a perfect libertarian space, free and open to all voices, unconstrained by the conventions and norms of the real world, and certainly beyond the scope of traditional powers of the state. But we now know that the Internet is not as wild and ungoverned as we might have naively assumed back at its conception. Not only does law matter online, but the specifics of the Internet's design or "architecture" influence how the Web works and how people behave with it. Like Jessica Rabbit in the film Who Framed Roger Rabbit, the Internet is not bad-it's just drawn that way. Still, architecture and state-generated law govern imperfectly. In the People's Republic of China, the state clearly runs the Web. In Russia, no one does. States such as Germany, France, Italy, and Brazil have found some ways to govern over and above Google's influence. But overall, no single state, firm, or institution in the world has as much power over Web-based activity as Google does.

So Google, which rules by the power of convenience, comfort, and trust, has assumed control, much as Julius Caesar did in Rome in 48 B.C. Before Caesar, there was chaos and civil war, presided over by weak, ineffective leaders who failed to capture the support of the people or to make Rome livable. Like Caesar, Google has found its mandate to rule through vast popular support, even in the absence of a referendum. And like Caesar's, Google's appeal is almost divine. Because we focus so much on the miracles of Google, we are too often blind to the ways in which Google exerts control over its domain.

So how, exactly, does Google rule the Web? Through its power to determine which sites get noticed, and thus trafficked, Google has molded certain standards into the Web. Google has always tended to degrade the status of pornography sites in response to generic or confusing search terms, thus making it less likely that one will stumble on explicit images while rarely blocking access to such sites entirely. Google has ensured that the Web is a calmer, friendlier, less controversial and frightening medium-as long as one uses Google to navigate it.

Through its advertising auction program, Google favors and rewards firms that create sites that meet explicit quality standards set by Google, such as simple pages that load quickly, lack of flashy animation, and coherence in search terms that helps ensure users are not tricked into clicking on a pornography site when seeking travel advice. Google has limited access to sites that place malicious programs on users' computers. This fight against "malware" is one of the keys to keeping the Web worthy of users' trust and time. If too many sites infected users' computers with harmful software, people would gravitate away from the relatively free and open Web into restricted and protected domains, known as "walled gardens" or "gated communities," that seem less vulnerable to electronic pandemics. Google also, extremely rarely, directly censors search results when they are troublesome or politically controversial, or when the company determines that a firm or group is trying to rig the system to favor its site. When that happens, Google usually places some sort of explanation in the search results to explain and justify the policy.

Overall, these policies have the effect of cleaning up the Web, ensuring that most users have a comfortable experience most of the time. Google can usually achieve this goal without stooping to raw censorship. The net effect is the same, however, because the protections that we rely on, including "safe search," are turned on by default when we first access Google, and our habits (trust, inertia, impatience) keep us from clicking past the first page of search results. Google understands the fact that default settings can work just as well as coercive technologies. Overall, Google orders our behavior and orders the Web without raising concerns that it is overbearing. It's a brilliant trick.

Nothing about this means that Google's rule is as brutal and dictatorial as Caesar's. Nor does it mean that we should plot an assassination, as killing off Google might have the same effect on the state of the Web as Julius Caesar's death had on Rome: a return to unbearable chaos and fractured alliances. In fact, the institutions waiting in the wings to assume governance of the Web, such as commercial telecommunication companies and media conglomerates, are definitely less trustworthy than Google is today. In many ways, we should be grateful that Google governs so well. Google has made Web commerce and communication, stable, dependable, and comfortable. By hiding how it does all this behind its simple and clear interface, Google convinces us that it just knows how to make our lives better. We need not worry about the messy details.

But how did we get to this state of affairs? How was Google able to assume this role so quietly and profit so handsomely from it? What sorts of trouble is Google causing for states and firms? And how-if at all-should we consider regulating the regulator?

The Scope of Google

Google is sui generis. At its core, it's a Web search-engine service. The primary reason anyone uses Google is to manage the torrent of information available on the World Wide Web. But as the most successful supplier of Web-based advertising, Google is now an advertising company first and foremost. Its search function is why we visit Google. Advertising is what keeps it going. However, there were search-engine companies before Google, and several competitors still do just as good a job linking people to information as Google does. And there were Web advertising companies before Google, just as there are now other firms, such as Facebook, that try to link a user's expressed interest in subjects to potential vendors of goods and services that reflect those tastes. But there has never been a company with explicit ambitions to connect individual minds with information on a global-in fact universal-scale. The scope of Google's mission sets it apart from any company that has ever existed in any medium. This fact alone means we must take it seriously.

Google has expanded in recent years into a general media company because it delivers video and text to users, even if much of that content is hosted on other institutions' sites. Its 2006 acquisition of YouTube, the clear leader in hosting short videos contributed by users, made Google a powerful disseminator of video content. This role has put Google and YouTube at the center of major world events, such as the antigovernment protests in Iran in the summer of 2009 and the election of Barack Obama as president of the United States in 2008.

Since about 2002 Google has steadily added to the roles it plays in people's lives, thus complicating the Web's taxonomy. It now hosts e-mail for millions of users. Google purchased the innovative and free blog-hosting service Blogger in 2003. It runs a social networking site called Orkut that is popular in Brazil and India, but nowhere else. Google Voice offers a voice-over-Internet-provider (VoIP) that competes with Skype's long-distance Internet phone service. It facilitates payment for Web-based commerce through Google Checkout.

Google is also a software company. It now offers online software such as a word processor, spreadsheets, presentation software, and a calendar service-all operating "in the cloud" and thus freeing users from managing multiple versions of their files and applications on different computers, and easing collaboration with others. In 2008 Google released its own Web browser called Chrome, despite many years of collaborating with the Mozilla foundation in supporting the open-source Firefox browser. And in 2009 it previewed its Chrome operating system for cloud computing, a direct assault on Microsoft's core product, Windows. It hosts health records online. On top of all that, since its beginning in 2004, its Google Book Search project has scanned millions and millions of volumes and has made many of them available online at no cost, simultaneously appropriating the functions of libraries on the one hand and the rights of publishers on the other. In 2007 Google announced plans for a mobile phone operating system and attempted, but failed, to change the ways that the United States government allocates radio bandwidth to mobile companies in an attempt to open up competition and improve service. And since 2005 the company has been Googlizing the real world through Google Maps, Street View, and Google Earth, a service that allows users to manipulate satellite images to explore the Earth from above. Only one company does all that, so it does not even need a label beyond its increasingly pervasive brand name.

This diversity of enterprises has confused and confounded other firms that compete with Google. Because no other company, not even Microsoft, competes in more than a handful of these areas, it's also hard for regulators to get a sense of Google's market power. In most of these arenas, such as e-mail, applications, blogging, photo-image hosting, health records, and mobile-phone platforms, Google is far from the dominant player. In online video, out-of-print book searches, online advertising, and of course Web search, Google has such an overwhelming lead that other competitors can't hope to develop the infrastructure needed to compete with Google in the long run.

Google thus has been the victor in the winner-take-all race to serve as the chief utility for the World Wide Web. In 2010, in the midst of a massive two-year economic downturn that hampered every sector of the global economy and devastated some, Google was worth more than US$120 billion and made more than US$4 billion in total net income. More than twenty thousand people worked for Google in 2010, although the company shed a few thousand through layoffs in 2008.B /B


Because of its presence in a broad array of markets and its brazen unpredictability, many established industry players have taken aim at Google and have demanded either regulatory intervention to pressure Google or regulatory relief for themselves. When Google in 2007 made a strong case to the U.S. Federal Communication Commission that newly released radio spectrum should be licensed only to firms that promised openness in mobile-phone design and business practice, the major American telecommunication companies banded together to stifle and limit the proposal. When Google proposed collaborating with Yahoo in online advertising placement, U.S. regulators quickly squelched the plan because advertisers feared total market domination by the two companies, which would hold 90 percent of the search market in the United States. When Google moved to purchase the leading placement service for website banner advertisements, DoubleClick, national advertising companies demanded intervention-unsuccessfully. When Google refused to prevent YouTube users from potentially infringing copyrights and instead relied on the provisions of copyright law that protect service providers such as Google from liability, Viacom sued in a naked attempt to change the law. And when telecommunication companies that act as Internet service providers tried to alter how the Internet works by charging fees to services that might wish to have their content delivered faster-and thus downgrade service for those that didn't pay-Google lobbied to preserve "network neutrality." Google thus has made many powerful enemies in a very short period. Many of Google's positions correspond roughly with the public interest (such as giving empty support to network neutrality policy and "safe-harbor" exemptions from copyright liability). Others, such as fighting against stronger privacy laws in the United States, do not.

When confronted with questions about its dominance in certain markets, Google officials always protest that on the Internet, barriers to entry are low, and thus any young firm with innovative services could displace Google the way Google displaced Yahoo and AltaVista in the early days of the twenty-first century. With Google unable or unwilling to leverage its advantages though some sort of lockdown, such as holding users' content and data hostage with technology or exclusive contracts so that they must continue to use Google services, they point out that users could easily migrate to the next Google-like company. As Google's lawyer Dana Wagner says, "Competition is a click away."

Of course, that argument relies on the myth that Internet companies are weightless and virtual. It might be valid if Google were merely a collection of smart people and elegant computer code. Instead, Google is also a monumental collection of physical sites such as research labs, server farms, data networks, and sales offices. Replicating the vastness of Google's processing power and server space is unimaginable for any technology company except Microsoft. Wagner's argument about user behavior could be valid if boycotting or migrating from Google did not incur significant downgrades in service by losing the advantages of integration with other Google services.

Google's argument also ignores the "network effect" in communication markets: a service increases in value as more people use it. A telephone that is connected to only one other person has very limited value compared with one connected to 250 million people. YouTube is more valuable as a video platform because it attracts more contributors and viewers than any other comparable service. The more users it attracts, the more value each user derives from using it, and thus the more users it continues to attract. Network effects tend toward standardization and thus potential monopoly.

The network effect for most of Google's services is not the same exponential effect we saw with the proliferation of the telephone or fax machine. If only one person in the world used Gmail, it would still be valuable to her, because it can work well with every other standard e-mail interface. But if only a few people used Google for Web searching, Google would not have the data it needs to improve the search experience. Google is better because it's bigger, and it's bigger because it's better. This is an arithmetic, rather than geometric, network effect, but it matters nonetheless. Opting out or switching away from Google services degrades one's ability to use the Web.

It may seem as if I'm arguing that Google is a monopoly and needs to be treated as such, broken up using the antimonopoly legislation and regulations developed over the late nineteenth and early twentieth centuries. But because Google is sui generis, business competition and regulation demand fresh thinking. It's such a new phenomenon that old metaphors and precedents don't fit the challenges the company presents to competitors and users. So far, Google manages us much better than we manage Google. Just because Wagner's defense of Google is shallow does not necessarily mean that we would be better off severing the company into various parts or restricting its ambitions in some markets. But the very fact that Google is nothing like anything we have seen before both demands vigilance and warrants concern. That fact also means that there is no general answer to how competing firms or regulators should approach Google's ventures. Everything must be considered case by case and with an eye on particulars. "Is Google a monopoly?" is the wrong question to ask. Instead, we should begin by examining what Google actually does and how that compares to what competitors do or might do in the future. That approach will give us a better sense of what the Googlization of everything means and what has already been done about it.

The Search for a Better Search

There is a broad consensus that Web search is still in a very pedestrian phase. Both Yahoo and Google generally work the same way, and neither offers consistently superior search results. People tend to choose one or the other platform based on other factors-habit, the default search service embedded in a browser, their choice of e-mail client, appearance, or speed. At most search-engine companies, the computers tend to take the string of text that users type into a box and scour their vast indexes of copies of Web pages for matches. Among the matches, each page is ranked instantly by a system that judges "relevance." Google calls its ranking system PageRank: links rise to the top of the list of search results by attracting a large number of incoming links from other pages. The more significant or highly ranked a recommending page is, the more weight a link from it carries within the PageRank scoring system. Each Web site copied into Google's servers thus carries with it a set of relative scores instantly calculated to place it in a particular place on a results page, and this ranking is presumed to reflect its relevance to the search query. Relevance thus tends to mean something akin to value, but it is a relative and contingent value, because relevance is also calculated in a way that is specific not just to the search itself but also to the search history of the user. For this reason, most Web search companies retain records of previous searches and note the geographic location of the user.

While this approach is standard, and works fairly well in most situations for most users, a number of search-engine companies have been working furiously to deepen the "thinking" that computers do when queried. Since 2008, we have seen the debut of a number of new search engines that offer a different way of searching and depend heavily on the ability to understand the context and purpose of the search query. And Google, understandably, refines and alters its search principles with regularity.

Cuil, which debuted ignominiously in 2008, was founded by a group of former Google employees. Its launch was marred by too much publicity and attention. The first users found the system terribly slow and fragile. Cuil boasts of searching a larger index of sources than either Google or Microsoft's search engine, Bing. It also claims to be able to conduct rudimentary semantic analysis of the potential results pages to assess relevance better than the popularity method of PageRank. By the summer of 2009, Cuil delivered consistently good results to basic queries, but no one seemed to notice. Most importantly, Cuil pledged not to collect user data via logs or cookies, the small files with identifying information that Google and other search engines leave in every user's Web browser, because it is more interested in what the potential results pages mean than what the user might think about. Cuil is a clever and innovative search service that has suffered from terrible business and public-relations decisions. It remains at best a niche player in the search-engine contest.

In early 2009, the eccentric entrepreneur and scientist Stephan Wolfram released what he called a "computational knowledge engine," Wolfram Alpha. By staging a series of small-scale demonstrations for the most elite Web thinkers in the United States, Wolfram was able to seed curiosity and attract attention for his service. Unlike a commercial search engine, Alpha is not so much designed to find pages and videos on the Web as to answer research questions by mining publicly available data sets. It does not even attempt to index Web sites. Its utility to users and advertisers, therefore, is narrow. But as a concept in knowledge management and discovery, it is potentially revolutionary. If you ask Alpha, "How many atoms are in a molecule of ammonia?" it will tell you the answer. It finds facts. It even generates facts, in a sense, by computing new information from different, distinct data sets. Wolfram Alpha is not intended to compete with Google in any way or in any market (although Google's Web search can answer the same question by directing users to the top link: a page from Yahoo Answers!). However, if it succeeds, Alpha will remove a small set of scientific queries from the mass of Google searches. Google will hardly notice-unless it decides to adopt elements of Alpha technology for its own services. Wolfram Alpha is certain to serve as a useful experiment in the development of machine-based knowledge development. But it's not for shopping. It won't have anything like Google's effect on people worldwide, and it, too, is designed to remain a clever resource but never to become a major player in general information or Web searching.

Currently, the major search engines do not "read" the query for meaning. They are purely navigational: They point. However, all the big search companies (and most of the small ones, as well) are working on what is known in the industry as "semantic search," searches that take account of the contextual meaning of the search terms. For example, in 2001, if a user typed "What is the capital of Norway?" into Google, the results would have been a set of pages that included the string of text "What is the capital of Norway?" By contrast, a semantic search engine that reads what computer scientists and linguists call "natural language" can understand the patterns of human diction well enough to predict that a user expects the result of this search to be the answer to the question, not a set of pages asking the same question. To accomplish the goal of generating a natural-language or semantic search system, search companies need two things: brilliant thinkers in the areas of linguistics, logic, and computer science, and massive collections of human-produced language on which computers can conduct complex statistical analysis. Many companies have the former. Only Google, Yahoo, and Microsoft have the latter. Of those, Google leads the pack.

It's no accident that Google has enthusiastically scanned and "read" millions of books from some of the world's largest libraries. It wants to collect enough examples of grammar and diction in enough languages from enough places to generate the algorithms that can conduct natural-language searches. Google already deploys some elements of semantic analysis in its search process. PageRank is no longer flat and democratic. When I typed "What is the capital of Norway?" into Google in August 2010, the top result was "Oslo" from the Web Definitions site hosted by Princeton University. The second result was "Oslo" from Wikipedia.

One search company is trying to combine the two approaches, blending semantic search and with community-based assessment of the quality of sources. By those standards, Hakia should be the best search engine in the world. Hakia specializes in medical information, and it invited medical professionals to help assess the value and validity of potential result sites. The results, however, are not clearly superior to Google's. Hakia does place medical journal results higher in many searches. But a search for "IT band" on Google and Hakia conducted in July 2009 yielded excellent results on Google and inappropriate results on Hakia. Google directed me to sites such as the Mayo Clinic's orthopedic pages, where I leaned about the malady known clinically as iliotibial band syndrome, which involves chronic tightness and pain in a band of connective tissue that runs from the hip to the knee. Hakia, supposedly specializing in medical searches, directed me to the Wikipedia site for the Band, the musical group that first gained international acclaim by backing up Bob Dylan in 1965 and 1966 and went on to deliver some of the greatest American music until it broke up in 1976.

While Yahoo struggles to keep itself in the game, the two behemoths in the search-engine competition, Google and Microsoft, continue to battle each other, not just in the search-engine field, but increasingly across the whole domain of computer software and online services. In hopes of keeping Google off its guard, in June 2009 Microsoft released Bing, developed in a partnership with Yahoo, which is a completely revised version of its Live Search engine. To differentiate itself from Google, Microsoft has advertised Bing as a "decision engine" as opposed to a search engine. It specializes in searches about travel, shopping, health, and local knowledge. In other words, while Wolfram Alpha is experimenting with ways to peel off some searches from Google that concern factual data, Microsoft hopes to attract consumers. The advertisements Microsoft ran ridiculed Google for offering too much information when users just want to buy stuff. Early on, Bing seemed able to pry some users away from Yahoo but posed no major threat to Google in the U.S. search market.

In July 2009, just after Microsoft announced Bing in an attempt to force Google to refocus on its core moneymaking activity-Web searches and the advertising they generate-Google countered by announcing a the development of a light, clean operating system that would run on a small, cheap computer, a netbook. This operating system, to be known as Chrome OS (just like the Web browser Chrome), would simply run a browser-like Chrome, for instance. It would facilitate Web-based services, thus pushing more users away from bulky, expensive, poorly designed programs such as Microsoft Windows and Office and toward programs that operate via the Web ("in the cloud"), such as Google Docs. Realistically, Google's initiative is no short-term or direct threat to Microsoft's dominance in the personal computer software market. But over time it could chip away at new markets in the developing world that are much more price sensitive and whose consumers are interested in connectivity rather than processing power.

All these developments have occurred as part of the dance between these two behemoths. Among the arenas where that dance takes place are the law courts and the halls of regulatory agencies. Microsoft suffered some major legal hits in 2000 when regulators in the United States and Europe cracked down on its abusive practices that had limited competition in the Web browser market and threatened to lock down Microsoft's advantages in a number of markets. By 2008, Microsoft was pushing for regulators to rein in Google's ambitions and initiatives. Microsoft's complaints were a key element in scrapping the proposed Google-Yahoo collaboration on Web advertising in 2008.

Bing did not threaten Google's core revenues. Chrome will not threaten Microsoft's core revenues. But in the event that something changes in the world and one firm or the other undergoes a serious change in structure or personnel (because of pressure from new firms, consumer uproar, or government actions), the other would be poised to capitalize on the shift.

Among the most interesting responses to Google's dominance of search in Europe and North America was Quero. Funded in 2005 by a partnership between the governments of France and Germany, and with the support of the European Union, Quero was intended to correct for the perceived American cultural bias inherent in Google. Underfunded, slow to develop, and unable to resolve disputes between France and Germany over Quero's scope and role, the project died in 2007. As of 2010, Google is more popular than ever among European Web users.

None of these new search initiatives are compelling enough to wrest major portions of the search market away from Google, which is just so good at what it does, and clearly getting better every day. Even a slightly better service, result set, or interface design makes almost no difference to users. Google is now the comfortable choice for most users, and its array of services makes it undeniably useful. By default, it's easier to stay in the Google universe. One must consciously act to move beyond it (although, as I discuss in chapter 4, Google's dominance does not extend to some of the largest and most interesting markets in the world: Japan, South Korea, Russia, and China). Ultimately, Google's overall dominance matters chiefly if we are concerned with the intellectual and cultural health of the Web. And if we are worried about the economic effects of Googlization, we must follow the money. Users have no stake in questions of market share. Firms that advertise on the Web, however, do.


At least in terms of revenue generation, Google's core business isn't facilitating searches, it's selling advertising space-or rather, selling our attention to advertisers and managing both the price it charges for access to our attention and the relative visibility of those advertisements. In this field, Google is more than successful: it is simply brilliant.

In the era before Google, firms created products that they sold to customers by means of advertising that conveyed information to potential buyers. Google has completely reconfigured this model. Its own product, as I have said, is in fact the attention and loyalty of its users. While Google provides users with the information that they seek, seemingly for free, it collects the gigabytes of personal information and creative content that millions of Google users provide for free to the Web every day and sells this information to advertisers of millions of products and services. Through its major advertising program, AdWords, Google runs an instant auction among advertisers to determine which one is placed highest on the list of ads that run across the top or down the right-hand column of the search results page.

Using Google is far from free. Users incur up-front, sunk costs (computer hardware) and regular utility costs (Internet service), but Google doesn't profit from these costs. Google's real customers are the advertisers who pay Google to compete in an auction to rise to the top of a list of "sponsored results" that frame the "organic results" of each search. Content creators have passively allowed Google access to their sites for the privilege of being indexed, linked, and ranked. The data on who cares about which of these sites is accumulated, and access to those potential consumers is sold to advertisers at a profit.

It's here that some troubling effects of the Googlization of everything start to become apparent, and where existing efforts to deal with those problems have fallen short. If there is one market in which Google has an inordinate share and exercises alarming power, it is Web-based advertising. In 2008 Google earned more than $21 billion (97 percent of its revenue) from online advertisements. In contrast, Microsoft lost $1.2 billion in its online advertising business. Google gives away most of its services to users for free in exchange for their attention. Microsoft, by contrast, leases software to consumers so successfully that it has been among the fifty wealthiest corporations in the world for most of the past fifteen years. Viewed in these terms, it's inaccurate to consider Microsoft as even being in the same business as Google. The parties most concerned about Google's dominance in the field of advertising on search engines are not Google's ostensible competitors like Microsoft, but the companies that buy slots to run the small bits of text that sit to the right and just above the search results on most queries-the advertisers themselves.

Google did not invent contextual advertising on the Web, but it certainly mastered it. A long-gone search-engine company called developed a way to link search results to advertisements in 1998. By the time Google decided to adopt that practice in 2002, it had settled on an ingenious way to sell the best positions around a search term: an instant auction. If a user types "shoes" into a Google search box, Google's computers instantly solicit bids from shoe vendors. The highest bidder-the firm that offers the most money per click, with a clear ceiling of maximum clicks it is willing to pay for-gets top placement.

This formula often has served the interests of small firms better than large firms. Large firms can afford to waste money on advertising. Small firms must target their ads as carefully as possible. They don't need to scream at millions of people that they should be buying some brand of weak beer. They need to attract the attention of potential consumers who have expressed interest in, say, Bavaria. For this reason, Google needs to understand how patterns of searches indicate behaviors. If Google can customize the placement of ads, giving a user results listing only local shoe stores or only Bavarian lager, then it can generate more clicks per advertisement. This maximizes revenue without necessarily pushing a small firm out of the advertising market or out of business. Google takes its money in small increments millions of times per day rather than by using the network TV model of taking millions of dollars a few times per day. In addition, Google can demonstrate to firms that these advertisements do indeed attract interested customers. There is no such clear feedback with expensive broadcast advertisements.

Google's method of generating and selling advertisement placement is brilliant. It uses an unusual auction system that ensures bidders do not overpay for their winning bids. The bidding occurs dynamically and instantly on the initiation of any search. The results-the order in which ad links get placed on the results page-are determined by a number of factors, including the preferences and Web habits of the individual user or population of users in the general area (thus allowing local results to show up). Google does not charge the winning bidder the amount it bid, but instead the amount of the second-place bid, so that bidders need not fear placing a needlessly high "sucker" bid ; it thereby helps small firms compete with large ones. And earning the top place in a search for a term like "shoes" or "cars" is in part determined by the "quality" of the bidder's Web page as well as the amount of the bid. In other words, Google ensures that firms bidding on terms such as "shoes" and "cars" actually offer shoes and cars. Thus customers do not fall victim to "bait-and-switch" tactics and lose trust in Google's advertisements. This system not only enhances consumer satisfaction with Google's service but also, as I state above, helps keep the Web clean. If a firm's site does not say what it means and mean what it says, or if it installs malicious code onto users' computers, or if it is just ugly and complicated, Google will not reward that site with revenue, no matter how high the bid. This system has generally kept firms happy, consumers happy, and Google's stockholders very happy.

Google has not abused its market position in online advertising in any obvious way. It has, however, kept raising the minimum bid levels for many popular search terms. Although Google's contextual advertising and instant auctions often serve the interests of small firms, its freedom to set such rates at any level it desires allows it to crowd out some of the small firms that have grown to depend on Google for their most valuable advertising outlets-including small firms that are Google's potential competitors. That's mean, but it's not illegal. If Google's advertising dominance and revenues are a legal problem at all, it's because of a touchy issue called cross-subsidization.

Google can use its prominence in people's lives-the network effect-and its surplus revenues to support its other ventures-its online document business, for example, which is likely to lose trivial money for the company. This process is not yet a direct threat to Microsoft, which can withstand a few thousand customers sneaking off to the "cloud" instead of using Word on their own laptops. But it poses a serious threat to small, creative companies that offer Web-based word processors, such as Zoho, Thinkfree, Writely, and Ajaxwrite.

When I asked the New Yorker writer Susan Orlean why she uses Google Docs to compose her work, she replied that she found the cloud comforting. "I was starting a new book, working on two or three different computers, and finding it maddening to have different versions of work on each one, trying to remember which was the latest, etc.," Orlean wrote to me. "I happened to look at Google Docs and realized it would keep the work synced on all computers, so I thought I would give it a try. I also liked that it was so simple and clean-more like a piece of typing paper than a fancy program." When I asked her if she considered using Zoho, which is a superior service, she responded, "No, I haven't, and I trusted Google Docs because I figured it would be around for a long time, where smaller services might disappear (along with my documents)."

If Google uses its profitable ventures to subsidize those activities destined to lose money, and if that practice kills off innovative potential competitors like Zoho, Google has crossed the line into shaky legal territory. This is essentially what Microsoft did in the 1990s when it used its dominance in desktop software to subsidize and promote its Internet Explorer Web browser. Microsoft managed to kill off several innovative competitors, including Netscape, the original commercial browser. The only remaining major competitors for Explorer were Apple's Safari (also subsidized by Apple's profitable ventures) and Firefox, an open-source product released by the Mozilla Foundation. Explorer was for a long time the default browser on more than 70 percent of the computers in the world. Although it has been displaced by Firefox in recent years, Explorer is still installed along with Microsoft Windows, the operating system of choice for more than 90 percent of the world's personal computers.

Competition, both fair and unfair, is but one point of friction between Google and other powerful interests. Increasingly, Google is the target of attacks from firms that provide content to the Web, largely because they are failing to make much money from the Web and Google makes so much.

The Free Ride

Whenever we write blog entries, post reviews of products, upload photos, or make short videos for viewing by anyone who is using the Web, Google finds them. And it copies whatever it finds. All search engines must make a "cache" copy of material they find so that their computers can conduct a search. Then, when others search for content relating to their search queries, Google places revenue-generating advertisements on the margins of the search results through its Ad Words auction program, described above. In a sense, we could say Google is taking a free ride on the creative content of billions of content creators. But the ride is not free at all. Even though we don't ever negotiate terms of a contract, we essentially agree (by not opting out or actively disagreeing) that search engines may copy our content and make money from the process of judging, ranking, and connecting people to it in exchange for the privilege of our content being found. After all, why would we put content up on the Web if we did not want people to find it? And clearly, opting out of all search engines (there is no simple way to opt out of one or two search engines but not others) is infeasible. So although we get a pretty good deal out of the relationship, it is hardly a fairly negotiated arrangement. But we have little to complain about. Google invests billions in its techniques and technologies to make the Web a reasonable and navigable place. So if we are in the business of trying to get people to notice our work on the Web, we should probably be grateful that Google treats us as well as it does.

Besides, what is so free about a free ride anyway? In basic economic terms, a free rider consumes more than a fair share of limited resources or shoulders too little of the cost of a product or service. Economists consider free riders a problem because their presence can lead to underproduction or excessive use of a public resource. If most people in the United Kingdom pay their television tax for over-the-air broadcasting, but a few watch without paying the tax, then the norm of paying for the tax could break down, and more people might be encouraged to be scofflaws. If too many people jump the turnstiles on the Lisbon underground, then too few fare payers will bear the burden of supporting the service. If free riding becomes the norm, the entire system could break down. If a labor union succeeds in securing a wage hike or benefit for all the employees of a firm, but some employees refuse to join the union and pay dues, they are riding for free on the efforts of the union.

Another way of looking at a free rider problem, dealing with private firm behavior rather than unions, public goods, or public resources, is the argument that when firms provide services to the public that add to costs (such as a telephone help line), yet retailers sell the item below the suggested retail price, the manufacturer fails to benefit from providing the service while incurring the entire cost. This argument led to the legalization of the practice of letting manufacturers establish minimum prices for their products, even if such restrictions kept prices artificially high and limited competition. We see these arguments employed today in efforts by manufacturers such as book publishers trying to keep Amazon from offering or advertising extremely low prices for their goods.

So what does Google have to do with any of this? Not as much as some would assume. Our lives are full of goods and services that are built to enhance the value of other goods and services. Other goods we buy are generic replacements for parts of other goods, such as lightbulbs, universal remote controls for televisions, or replacement batteries for automobiles. In many of the cases in which Google has been accused of riding for free on the investment of others, Google is in fact just offering a cheaper and more effective replacement for part of the original service. But because of the state-granted monopoly that we call copyright, the role Google plays in the information world is nowhere as simple as the role that cheap lightbulbs play in the electric appliance economy.

Although no court has taken the argument seriously enough to endanger Google's core business, a growing number of firms have started voicing complaints that Google rides for free on the creative work and investment of others. This argument seems futile for a number of reasons, not least of which is the fact that Google has strong legal grounds (at least within the United States) to do just about everything it does with online content (but not, as I show later, with stuff that resides in the real world). One landmark U.S. case in search-engine law in 2003 set a good precedent that search engines could-in fact must-make copies of others' work to ensure that the Web functions well for everyone. And the American copyright concept of fair use generally protects anyone who wishes to copy and distribute small portions of copyrighted works as long as the purpose of the distribution fulfills some role that enhances the public good, such as education, informing the public about current events or debates, or creating highly transformative work out of the raw materials of existing expressions. So when Google scans someone else's site, it can feel confident in its practice of excerpting a small slice of descriptive text from the site to help users decide whether it is relevant to their search.

The story is quite different in much of Europe. In 2007 a Belgian newspaper trade organization won a suit against Google for incorporating its clients' content in searches on Google News. Because Europe does not have a flexible fair-use provision in its copyright laws, European courts consider different and much more clearly defined factors when determining whether a party has infringed on the rights of another. Since that time, Google has entered into partnerships with some European news organizations, essentially giving them preferential treatment over American sources that have the crude option of being searchable or not by the major Google services.

None of these arrangements have stopped the media from complaining. The media baron Rupert Murdoch has blustered about Google's ability to monetize the Web in general and Murdoch's News Corporation in particular. "Should we be allowing Google to steal all our copyrights?" Murdoch said in April 2009. In a speech in June 2009, the Wall Street Journal's publisher, Les Hinton, proclaimed, "There is a charitable view of the history of Google. [It] didn't actually begin life in a cave as a digital vampire per se. The charitable view of Google is that the news business itself fed Google's taste for this kind of blood." Hinton went on to complain that the news business had made a mistake by offering its content for free over the Web, and thus "gave Google's fangs a great place to bite. We will never know what might have happened had newspapers taken a different approach." And Robert Thomson, the editor in chief of the Wall Street Journal, went even farther by comparing Google to a tapeworm. "There is a collective consciousness among content creators that they are bearing the costs and that others are reaping some of the revenues-inevitably that profound contradiction will be a catalyst for action and the moment is nigh," he told an Australian newspaper in April 2009. "There is no doubt that certain websites are best described as parasites or tech tapeworms in the intestines of the Internet."

By the autumn of 2009, Murdoch had grown so alarmed at the decline in advertising revenues of his publications and the continued growth of Google's revenue even during a crippling global recession that he threatened to block Google from scanning stories from his prize properties, the Sun, the Times of London, and the Wall Street Journal, and begin charging for access to all of News Corporation's online content. By early 2010 he had done none of those things. But his anger and accusations of free riding set the tone for debates over the relationship between Google and news sources.

Google has some simple rejoinders to the complaints of Murdoch and others in the journalism field. First and foremost, Google drives traffic to quality sites, although the amount of that traffic is a matter of some dispute. The Wall Street Journal is a quality site. Its readers, and Web readers in general, have approved of its content by linking to its articles despite the fact that they have always sat behind a paywall, largely inaccessible to those without a subscription to the paper. Second, the fact that Google makes ad revenue off search results for a subject does not necessarily undermine the value of the site itself on the advertising market. There is no zero-sum game going on here. Although it's true that Google presents a potentially cheaper and more effective way for firms to purchase advertising space, that is true regardless of whether Google includes news results in its general searches (Google does not place ads on the Google News front page but does so on the first page of search results). In the meantime, Google officials have been working with news organizations to figure out ways to generate new interfaces that would privilege "mainstream" content over the noise generated by blogs and aggregation sites such as Huffington Post.

It is these secondary sites, not Google News or Google Web Search, that pose the real problem for news organizations, and potentially for Google. Many blogs reuse material from mainstream commercial sites, often copying most or all of the text of an news article in a blog post. And many blogs generate revenue through a different Google advertising placement service, AdSense (which is distinct from AdWords, described above). This service allows bloggers and other Web publishers to earn money from click-through ads placed on their sites by Google. Google takes the context of the content on the site into account when placing ads. So a blogger who has ridden for free on content from the Wall Street Journal could profit from readers who chose to read the story on the blog instead of the Journal's website and clicked an ad on the blog page. If there is any substantial free riding on news content going on in the Google universe, it is through these aggregators and Google AdSense. Still, that seems a trivial problem compared to those that the American and European journalism industries have been facing since the global recession started in 2007.

If Murdoch has a valid point at all in his complaints about Google, it is a minor one. The process of scanning a news site to pick a story to read exposes readers to advertisements. A particular news story might interest the reader and solicit a click. A particular advertisement might do the same. There is a chance that no stories and no advertisements would warrant a click. But at least if a reader is viewing the official site of a news organization, that organization has a chance to profit from that reader's attention and curiosity. If we assume that most readers ignore most news stories, then the rare and selective clicks from Google Web Search or Google News to a specific story on a news site are worth something to the reader, but possibly less than the scanning time that the reader spent on Google. Murdoch assumes that if Google did not offer links to news content, then readers hungry for his company's work would spend more time on official sites, giving those sites a better chance to attract a click on an advertisement. Whether this assumption is correct is an empirical question that no one has fully explored. In the meantime, this battle remains one of bluster and legal technicalities. Murdoch believes the world works one way. Google believes the world works another way. Murdoch is losing money. Google is making money. There is not much chance that under current conditions we will be able to design a system that supplies citizens with the knowledge they seek, consumers with the content they desire, and firms with the revenue they need. The intransigence and arrogance of the parties involved do not help.

In the meantime, and contrary to its Murdoch-inspired public image as an insurgent force against mainstream news, Google has been working furiously on a system that would combine the efficiency of news search with the depth and professional quality of serious journalism. The company has a team of engineers working with major news organizations such as the Washington Post, the New York Times, and the Associated Press to experiment with better ways to present serious journalism coherently and systematically, so that quality journalism does not get buried among the detritus of a million shoddy Web pages that share search terms. Google is essentially bending its news-search and indexing services to favor established, commercial sources in hopes of keeping the Web filled with quality content. What's good for the Web, after all, is good for Google. So clearly, Google's future role in the journalism industry will be far more complex-and perhaps more positive-than Murdoch's shallow accusations of free riding would indicate.

Viacom is the most notorious accuser of Google as being a free rider. The video production company, which owns MTV, Nickelodeon, and Comedy Central, among many other major video services, objected to the fact that millions of fans of its programs had the habit of taking bits of those shows and putting them up on YouTube. Digital copyright law in the United States is clear on these matters: the service provider has no legal obligation to block copyrighted content from appearing on the Internet if it's put there by a user, a third party. An Internet service provider is simply required to remove the content on receiving a notice of its existence. That way, providers don't have to spend resources inefficiently filtering and blocking the actions of their users. Congress decided to insulate them from liability for the damage that their users do, much as phone companies cannot be held responsible for crimes planned or executed using the phone. So the burden of enforcement, according to a law that Viacom helped write back in 1998, rests on the copyright owner to defend its own interests. Viacom no longer likes this policy, as the burden of scrubbing YouTube of Viacom content quickly became expensive. So in 2007 Viacom filed suit against Google asking for $1 billion in damages. In early 2010 Google prevailed in a court ruling. So for now, Google and other Internet companies may be secure in the belief that they are not responsible for the copyright infringement their users might commit within the United States.

The political significance of the case is clear, regardless of Google's victory in court: even though YouTube itself loses money, Google overall makes money. Therefore, Google is a source of Viacom's anxiety. Google does, in fact, try to police the content of YouTube, even though the law does not require it to do so. In fact, Google regulates YouTube more heavily than it regulates the Web in general, largely because of the more immediate threats to its reputation and the potential to offend millions of users with violent, hateful, or sexually frank videos.

YouTube Trouble

Since about 2002, every segment of the traditional media industries has apparently been losing money-or at least making less money than before. Yet Google has succeeded spectacularly. This fact has generated a significant sense of envy among media industry leaders and has led to many outbursts and frictions. Interestingly, Google's power over the media phenomenon of the first decade of the twenty-first century-YouTube-has challenged many of the core beliefs and values of the Google itself. If the stakes are high for governing the Web in general--a mostly textual collection of pages that are hosted beyond Google's control-they are enormous for running the most important source of visual entertainment and information in the world. YouTube is where politics and culture happen online. Video is uploaded at a rate of 10 hours of content per minute and consumed at a rate of 200 million videos per day worldwide. YouTube videos produced by Barack Obama's supporters generated more passion and interest than his official election campaign. YouTube is where global terrorists try to recruit followers and boast of their gruesome actions. It's where serious academic lectures and goofy home videos intermingle. It's where dogs ride skateboards. And while you and I create and donate the content, Google hosts it on its servers and acts as publisher of all this potentially litigious and controversial material.

Ever since Google purchased YouTube in 2006, when the video service was just over a year old and already a major sensation on the Web, YouTube has changed Google, and Google has changed YouTube. YouTube has become the central battlefield in the struggle to define the terms and norms of digital communication. YouTube is where Google most clearly governs, and not always gently. As YouTube grows in cultural and political importance every week, we hear more stories of important video clips coming down. It's understandable when YouTube removes a clip after a music or film company sends a "notice and takedown" letter to YouTube complaining that a user-posted video contains its copyrighted material and thus possibly infringes on copyright, but when someone demands the removal of clips simply because of their political content, that's a different problem. Here is an example in which copyright acts as an instrument of political censorship: U.S. Representative Heather Wilson (R-New Mexico) was running for reelection in a close race in 2006. Back in the mid-1990s, she chaired the New Mexico Department of Children, Youth, and Families. Her husband was being investigated about accusations that he had been sexually involved with a minor, and one of the first things she did as head of the department was remove his file. Soon, however, people across New Mexico found out about the cover-up. A political blogger in New Mexico posted on YouTube a news clip of Wilson and others discussing it. But New Mexico voters could not view the clip for long: the TV station invoked the "notice and takedown" provisions of the Digital Millennium Copyright Act to require YouTube to remove the video clip. Any of my media studies students could explain why posting a news clip of a public official under scrutiny and up for reelection is considered fair use under U.S. copyright law: it constitutes an allowable use of copyrighted material for the purpose of news and commentary. But when it comes to the Web, the copyright act respects fair use only as an afterthought, long after the provider has removed the content. The clip came down, and Wilson was reelected.

In another blatantly political example, the radical right-wing American columnist Michelle Malkin posted a video of a slideshow she had spliced together showing the consequences of violence by Muslim extremists. For some reason, the editors at YouTube judged it inappropriate. When Malkin asked YouTube officials to explain the their reasoning, especially in light of the fact that YouTube is full of clips that seem to glorify violence against American troops, she got no response. Malkin started a conservative YouTube group to protest the removal, and soon that group was flagged by users who dislike Malkin's politics for having "inappropriate" content.

The Malkin story is troubling and revealing on a number of levels. One of the clever things about YouTube is that it uses its members to police its content. Thus a virtual community could, in theory, enforce something like community norms. However, YouTube has no mechanism to establish what those standards or norms should be, and reaching a consensus among billions of viewers would be impossible. So YouTube employees make these decisions internally to minimize controversy. Current YouTube policies make sure that sexually explicit content rarely comes up in a YouTube search, and that's nice: YouTube is one of the few places on the Web where you can be confident that people won't appear naked uninvited on your computer screen. But such broad policies effectively invite flame wars and flag wars, in which competing political activists flag the other sides' videos as inappropriate. That is what seems to have happened in the Malkin controversy.

I watched Malkin's video on a competing site. It's pretty dumb and simplistic, consisting merely of images of victims of violent extremists, spliced with some of the controversial Danish cartoons of Mohammed. If all dumb and simplistic material were considered inappropriate for YouTube, far fewer videos would be posted there. In her writing, Malkin recklessly associates the deeds of a handful of marginal, murderous thugs with the sincere and humane faith of more than a billion followers. She spreads bigotry on her blog (to which Google's Web Search links) and her books (which Google offers on Google Book Search). But that does not mean that this particular video is bigoted: it's not. But because it's by Malkin, it's a target. Author-based rather than content-based editing is bad policy. The Web should always be the sort of place where you can find troubling and challenging material. It should accommodate stuff too controversial for the mainstream media. Because YouTube is a commercial enterprise, it has no obligation to present everything or to protect anything. But as it folds itself into the pervasive entity known as Google-which increasingly filters the Web for us-we need to find ways to pressure it to be more inclusive and less sensitive.

Market Failures and Public Failures

Google walked into its regulatory role out of opportunity and necessity. The Internet in the late twentieth century was too global, too messy, and too gestational to justify national or international regulation. Some illiberal states, such as the People's Republic of China, chose to step in and aggressively perform those regulatory duties either through direct action or through proxies in the quasi-private sector.

In the more liberal world of the United States and-to a lesser extent-Europe, a presumption that market forces can best solve problems and build structures so dominated political debate from about 1981 onward that even considering the possibility of state involvement in something so delicate and new as the Internet was implausible. After the recent collapse of the corrupt and disastrous command-and-control economies of Eastern Europe, it was difficult to propose a way of doing things that fell between the poles of triumphant market fundamentalism and incompetent, overbearing state control. Of course the market had survived and thrived. There seemed to be no other mechanism that could deliver positive results to a diverse, connected world. The notion of gentle, creative state involvement to guide processes toward the public good was impossible to imagine, let alone propose.

This vision was known as neoliberalism. Although Ronald Reagan and Margaret Thatcher championed it, Bill Clinton and Tony Blair mastered it. It had its roots in two prominent ideologies: techno-fundamentalism, an optimistic belief in the power of technology to solve problems (which I describe fully in chapter 3), and market fundamentalism, the notion that most problems are better (at least more efficiently) solved by the actions of private parties rather than by state oversight or investment. And it was not just a British and American concept. It was deployed from Hong Kong to Singapore, Chile, and Estonia. Neoliberalism went beyond simple libertarianism. There was, and is, substantial state subsidy and support for firms that promulgated the neoliberal model and supported its political champions. But in the end the private sector calls the shots and apportions (or hoards) resources, as the instruments once used to rein in the excesses of firms have been systematically dismantled. Neoliberalism may have had its purest champions in the last two decades of the twentieth century. But it's still with us, and harming us, today.

Our dependence on Google is the result of an elaborate political fraud, but it is far from the most pernicious result of that fraud. Google has deftly capitalized on a thirty-year tradition of "public failure," chiefly in the United States but in much of the rest of the world as well. Public failure is the mirror image of market failure. Markets fail when they can't organize to supply an essential public good, such as education, or have no incentive to prevent a clear harm to the public, such as pollution. Market failure is the chief justification for public intervention. For instance, market actors don't envision sufficient financial returns to justify investing in the production of children's educational television, folk festivals, or opera. If a society wishes to enjoy the benefits of such productions, then it must subsidize them with public funds. The U.S. government justified the creation of the Corporation for Public Broadcasting in 1967 to correct for precisely these market failures.

Public failure, in contrast, occurs when instruments of the state cannot satisfy public needs and deliver services effectively. This failure occurs not necessarily because the state is the inappropriate agent to solve a particular problem (although there are plenty of areas in which state service is inefficient and counterproductive); it may occur when the public sector has been intentionally dismantled, degraded, or underfunded, while expectations for its performance remain high. Examples of public failures in the United States include military operations, prisons, health care coverage, and schooling. The public institutions that were supposed to provide these services were prevented from doing so. Private actors filled the vacuum, often failing spectacularly as well and costing the public more than the institutions they displaced. In such circumstances, the failure of public institutions gives rise to the circular logic that dominates political debate. Public institutions can fail; public institutions need tax revenue; therefore we must reduce the support for public institutions. The resulting failures then supply more anecdotes supporting the view that public institutions fail by design rather than by political choice.

The most lucid example of public failure in recent years involves the role of private firms in the relief efforts after Hurricane Katrina hit the southern coast of the United States in 2005. After the hurricane wiped out large sections of New Orleans and much of coastal Louisiana and Mississippi, state and federal relief efforts were slow and ineffective. Officials had not planned for massive evacuations and medical relief, despite ample warnings. In addition, poor engineering and maintenance and years of general underfunding and neglect had left much of New Orleans vulnerable to breeches in the essential levees intended to protect the city from high water. Under President Bill Clinton in the 1990s, the Federal Emergency Management Agency (FEMA) directorship had been raised to a cabinet-level position and had been held by an acknowledged expert in disaster management. Every major disaster in those years was handled deftly. Once President George W. Bush assumed control, he appointed as head of the agency former campaign staffers who had no training or experience in disaster relief. In addition, Bush moved FEMA out of the cabinet and into another new agency, the Department of Homeland Security. The failures of FEMA to help people stranded and left homeless were well documented and deeply troubling. Ultimately, 1,836 people lost their lives in the hurricane and subsequent floods. More than 60,000 people were stranded in New Orleans during the flooding. Bush publicly commended the director of FEMA for the job he was doing, even in the face of his obvious ineptitude. The public sector failed, and it failed by design.

In contrast, the American department store company Walmart managed to use its wealth, inventory, distribution networks, and logistical expertise to deliver water and supplies where FEMA could not. The American private sector in general greatly assisted many thousands of people by donating labor and funds to the relief and reconstruction effort, even though these efforts were often poorly coordinated. As a result, market fundamentalists used the designed failure of the public sector to argue that it should be structured to do less in future emergencies. Such arguments occur in other areas of public policy as well, as citizens in the United States witnessed during the efforts to pass an economic stimulus package and comprehensive health-care reform legislation in 2009. The very hint of government involvement was enough to disrupt rational debate over policy.

Public failure has had two perverse effects on politics and policy. First, it has corroded faith in state institutions, effectively precluding arguments for their extension or preservation (in the United States, anyway). For example, President Barack Obama apparently considered that proposing a Canadian-style, single-payer health-care system would be completely unpalatable to the American public and powerful health-care interests. So he quickly and publicly dismissed the idea early in 2009, reversing years of endorsing such a system's proven success in Canada and many other places. In the United States any suggestion of regulation or public investment must be couched in the language of the market if it is to be taken seriously.

The second pernicious result of public failure is the rise of assertions of "corporate responsibility." As the state has retreated from responsibility to protect common resources, ensure access to opportunities, enforce worker and environmental protection, and provide for the health and general welfare of citizens, private actors have rushed in to claim the moral high ground in the marketplace. So, for instance, instead of insisting that farms grow safe food under environmentally sound conditions, we satisfy our guilt and concerns by patronizing stores like Whole Foods and celebrating the wide availability of organic products. Thus food that keeps people healthy and the earth livable remains available only to the well informed and affluent.

Because market fundamentalism declares that consumers have "choice" in the market, doing little or no harm becomes just another tactic by which vendors exploit a niche market. Consumers have become depoliticized, unable to see that personal choices to buy Timberland shoes (not made in sweatshops by children) and Body Shop cosmetics (not tested on animals) make no difference at all to the children and animals that suffer supplying the bulk of similar, less sensitively manufactured products to the vast majority of the world's consumers. Feeling good about our own choices is enough. And instead of organizing, lobbying, and campaigning for better rules and regulations to ensure safe toys and cars for people everywhere, we rely on expressions of disgruntlement as a weak proxy for real political action. Starting or joining a Facebook protest group suffices for many as political action.

Since the 1980s, firms in the United States and Western Europe have found it useful to represent themselves as socially responsible. As states have retreated from their roles as protectors of the commons and mitigators of market failures, firms have found that trumpeting certain policies and positions puts them at an advantage in competitive markets, especially for consumer goods and services.

The problem however, is that corporate responsibility is toothless. Corporations do-and should do-what is in the interests of their shareholders, and nothing more. We become aware of the voluntary benevolence of certain firms only when it is in their interest to make that benevolence known.

The principal reason why the idea of corporate responsibility appeals to us is that for thirty years, we have retreated from any sense of public responsibility-any willingness to talk about, identify, and pursue the public good. In the absence of the political will to employ state power to push all firms toward responsible behavior, the purported responsibility of one firm is quickly neutralized by the irresponsibility of the rest. Because we have failed at politics, we now rely on marketing to make our world better. That reliance is the height of collective civic irresponsibility. It's a meaningless pose.

Google has taken advantage of both of these externalities. It has stepped into voids better filled by the public sector, which can forge consensus and protect long-term public interests instead of immediate commercial interests. The Google Book Search project, as I show in chapter 5, is the best example of this tendency. Google has used such undertakings to its advantage by generating a tremendous amount of goodwill and pushing a strong ethic of corporate responsibility. This in turn retards efforts to propose even mild and modest regulations on the firm to protect users' privacy and ensure competition in the Web advertising world. After all, if you can't trust Google to do something well and ethically, whom can you trust?

Who's Regulating Whom?

The ways we talk about markets and regulation have become impoverished in recent decades. In June 2009, the radio journalist Brian Lehrer asked Eric Schmidt about the potential for the regulation of Google. "I use Google all day every day like a lot of people in this room," Lehrer said to Schmidt after Schmidt had given a talk at the 2009 Aspen Ideas Festival. "But is there ever a point at which Google becomes so big that it's kind of scary and needs to be regulated as a public utility?" The room filled with laughter before Schmidt could respond. So Lehrer, a knowledgeable and experienced interviewer continued: "We kind of reached that with Microsoft in the '90s, some of the same discussions. When you're aggregating all of the contents of books, when Google News is the place that people go for news content instead of the sites-New York Times and everything else that you are aggregating-and you know some in traditional media are upset with you for that. Seriously, literally, is there a point where you need to be regulated as a public utility?"

"You'll be surprised that my answer is no," Schmidt responded. "Would you prefer to have the government running innovative companies or would you rather have the private sector running them? There are models and there are countries where in fact the government does try to do that, and I think the American model works better."

Lehrer interjected: "But Eric, if I could jump in, I would expect a more sophisticated answer from you. As we saw with the banks, it's not a question of Soviet-style communism or free-market capitalism. Banks needed smart regulation that they didn't have-as I think you were just saying. Is it possible that information is in the same boat?"

Schmidt started again:

Well, again. My answer would be no. Perhaps I should expand on my answer: Google plays an important role in information. And the reason you are asking that question is because information is important to all of us. We run Google based on a set of values and principles. And we work very, very hard to make sure people know what they are. ... Companies are defined by the values that they were founded with and that they operate with today. So if you are concerned about the need for regulation of Google's role, part of my answer would be that-independent of my leadership and the founders' leadership and so forth, the company's formed in a certain way. A thing that you should be worried about is that a combination of special interests plus unintended regulation could in fact prevent the kind of consumer benefits that we push so hard to do. Part of the other pushback that I would offer is that the things that we do are available to others. ... We haven't largely prevented people from doing their own thing.

Of course Google is regulated, and Schmidt knows it. Google spends millions of dollars every year ensuring it adheres to copyright, patent, antitrust, financial disclosure, and national security regulations. Google is promoting stronger regulations to keep the Internet "neutral," so that Internet service providers such as telecommunication companies cannot extort payments to deliver particular content at a more profitable rate. But we have become so allergic to the notion of regulation that we assume brilliant companies just arise because of the boldness and vision of investors and the talents of inventors. We actually think there is such a thing as a free market, and that we can liberate private firms and people from government influence. We forget that every modern corporation-especially every Internet business-was built on or with public resources. And every party that does business conforms to obvious policy restrictions. But Schmidt, who understands the state of political rhetoric in the United States, knew how to tease laughter out of the audience, and he understood that positing "regulation" as a choice of oppression over freedom would resonate with them.

Schmidt also knew that his best rejoinder to concerns about Google's enormous power was to remind people of Google's internal code of ethical conduct: "Don't be evil." Oddly, Schmidt asserts, without evidence or explanation, that this ethic would survive at the company regardless of who ran it and how far into the future we might look. Like so much else about Google's public image, this is a matter of faith. Last, Schmidt asserted that Google was careful to avoid locking in content or locking out competition through computer code or restrictive contracts: in other words, it does not behave like Microsoft. If market entry is open de jure, on paper, then that should satisfy doubters, Schmidt argued. It is easy to elide the fact that real competition in many of Google's successful areas of business such as search and advertising is almost impossible to imagine.

So if we push past the idealistic rhetoric of Google's officials, we can see that the proper question is whether Google-or the knowledge ecosystem in general-is appropriately regulated. In some areas, Google might be regulated too lightly. In others, it might be overly or improperly regulated. There is no general notion of regulation that can apply to such a complex company involved in so many different areas of life and commerce. Sadly, we seem incapable of holding a reasonable debate on this topic because raising the question seems to violate the current standards of polite political discourse.

Google's ventures can be arranged into three large categories of responsibility. By that I mean that Google has at least three ways of hosting content, each of which grants the company a different level of control over the content. Each category of responsibility demands a different level of regulation. The first category is what I call "scan and link." Google Web Search is the best example of this. Google does not host the relevant content. Content sits on servers around the world run and owned by others. Google merely sends its spiders (a small program that "crawls" around the Internet, following hyperlinks from one file to another) out to find and copy the content onto its own servers so that it can supply links to the original content via Web search. In this case, Google bears minimal responsibility for the content. If it links to illegal or controversial material, Google may remove the link , as in the standard "notice and takedown" process that governs much behavior on the Web, including copyright infringement in many places. In most areas of U.S. law, search companies are generally not held liable for the existence of the content on some third-party server. But in most other countries, including those in Western Europe, search engines are held at least minimally responsible for the links they provide. In France and Germany, for instance, Google must actively block anti-Semitic and other hate-filled sites. In less liberal countries such as Egypt, India, and Thailand, Google actively removes links to content that offend the state. But generally, Google has little responsibility for content hosted by others, and thus its search activities demand the lightest level of regulation.

The second category is what I call "host and serve." Blogger and YouTube are the best examples of this. In these cases, Google invites users to create and upload content to Google's own servers. As in the Viacom case, Google certainly bears some responsibility for the nature of the content it holds on its own servers. In February 2010 a court in Italy convicted three Google executives of failing to remove an offensive video that showed an autistic teenager being bullied by rowdy youths. Despite hundreds of comments on the page objecting to the content, Google was not made aware of its existence until two months after its posting, when Italian police requested its removal. Google has tried to argue that it should be held to the same level of responsibility for this content that it would have for a link to a third-party site. And there was much confusion in European law over what constitutes "notice." In early 2010 an Italian judge ruled in a manner out of step with most European understandings of how notice and regulation should work in matters of privacy violations. Relying on bizarre reasoning, Judge Oscar Magi concluded that Google's position as a profit-making venture limited its exemption from liability. Nonetheless, it's clear that in situations in which Google solicits and hosts content-as with YouTube-it bears a higher level of responsibility and is likely to attract more litigation and regulation as a result.

The areas in which Google has faced the strongest protest worldwide just happen to be those ventures in which Google has the greatest responsibility for content, what I call "scan and serve." In these activities, Google scours the real world, renders real things into digital form, and offers them as part of the Google experience. The two best examples are Google Book Search, which has generated objections and lawsuits from authors and publishers around the world, and Google Street View, which has sparked actual street protests and government actions. In Street View, Google staff takes cameras out around the globe to capture images of specific locations that can be used to enhance Google's services, such as its map feature. In doing so, Google's cameras also capture images of individuals and their property. In this case, Google bears great responsibility for creating the digital content as well as hosting and delivering it to Web users. And thus these actions justify the highest level of regulatory scrutiny.

Although its various services thus incur differing levels of responsibility, Google insists on being regulated at the lowest level, specifying a one-size-fits-all prescription to regulate its complex interactions with real human beings and their diverse needs. In response to every single complaint about its behavior, Google officials answer that they are happy to take down offensive or troublesome content if someone merely takes the initiative to inform the company. It does not want to be held responsible for policing its own collections, even those collections that would not exist at all if Google did not aggregate or create them. Through its remarkable cultural power, Google has managed to keep much regulatory action at bay around the world.

In fact, Google seems poised to try to mold regulations in its favor in several important areas. In the United States there are signs that the current government has established a close relationship with Google. During his presidential campaign in 2008, Barack Obama made it clear that he has strong ties with Google's leaders, employees, and technologies. Obama visited Google headquarters in the summer of 2004 and again in November 2007, when he announced his "innovation agenda." Most of Obama's campaign speeches were released on YouTube. Eric Schmidt endorsed Obama and traveled with him in the fall of 2008. Once elected, Obama's transition team continued to use YouTube as its video platform of choice for reaching a broad audience. This relationship raised many questions and criticisms by privacy and consumer advocates, because Obama seemed to favor the Google-sponsored platform over other commercial sites or open-source alternatives. All of this occurred just as Google came under intense scrutiny for its data-retention policies and the extent to which it controls the market in Web advertising. Having a close friend in the White house could make a difference if Google gets into trouble with either U.S. or European officials.

Another troubling example occurred in the summer of 2010, when Google abandoned its long-standing pledge to support open, nondiscriminatory, "neutral" digital communication networks in the United States. In July, the U.S. Federal Communication Commission failed to forge a compromise between Internet companies that support a "neutral" Internet and telecommunications companies, such as Comcast and ATT, that would like to control the speeds at which certain data flows over their segments of the networks. Google stepped in where regulators had stalled to forge an agreement with Verizon in hopes of establishing a template for policy-or at least a framework for private agreements among firms. The result was that Google continued to claim it stood for the public interest-and an open, "classic" Internet-while dealing away significant control over mobile data channels and many future areas of growth. Significantly, Google's agreement would bar the FCC from making new rules governing data flow over networks, thus effectively privatizing policy. All of these developments speak to the complex and changing relationship that Google, the chief regulator of the Web, has with the United States government, one of the chief regulators of commerce around the world.

Over and above these particular ways that Google dominates the nature and function of the World Wide Web, it has a greater, albeit more subtle governance effect. Mostly by example, the company manages to spread the "Google way" of doing things. It executes a sort of soft power over not just the content of the Web but also of users' expectations and habits when dealing with it. Google trains us to think as good Googlers, and it influences other companies to mimic or exceed the core techniques and values of Google. In addition, Google's success at doing what it does enhances and exploits a particular ideology: techno-fundamentalism. This soft-power mode of governance, one that depends so heavily on the blind faith we place in Google, is the subject of the next three chapters.