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Death Watch Begins for Google

By Rob Enderle
Sep 17, 2018 10:29 AM PT
the european union the united states and other governments could inflict massive fines on google

The European Union has been stretching its wings. In the shadow of Brexit, it apparently has decided it has the real enemy of the people in its sights: social media companies and Google.

France is even more aggressive than the EU overall, suggesting that the region's "right to be forgotten" law should apply worldwide. Given that it actually does fall within the legitimate purview of government, it is hard not to agree.

In the United States, the administration appears to be gearing up to go to war with these companies (Google in particular).

China has viewed Google as a threat to its government almost from the beginning.

Individually, the firms likely could survive an attack -- as long as the U.S. had their backs -- but the U.S. appears to be one of the attackers. What that suggests is that unless something changes, these firms are likely to go the way of Gawker (although, ironically, Gawker is on its way back). Oh, and Alphabet's CEO (Alphabet is the parent of Google) apparently has gone into hiding, which really can't be good.

I'll share some thoughts on why these movements may mean the death of search and social media as we know them, and I'll close with my product of the week: a new printer from HP that can print metal parts. You heard me, metal parts!

The Fall of Google

I'm going to focus mostly on Google because it is the firm most likely to be broken up, and its CEO apparently has gone into hiding. This isn't their first issue with a CEO, as Eric Schmidt was known to have a string of romantic liaisons, and it was rumored that was the primary reason he was asked to step down.

Given the coverage in the book Brotopia, his conduct was hardly unusual, but given the new spotlight on #MeToo, this kind of behavior could be viewed as problematic.

Google may have anticipated the potential for problems when it adopted its "don't be evil" motto. It seemed to ignore it, though, and with the creation of Alphabet it was dropped from the code of conduct. Perhaps, based on the behavior of its leaders, it was considered unachievable. Boy, talk about a red flag…

Google's problems likely started when it went to the European Commission, along with Sun and Oracle, and persuaded it to levy massive fines against Microsoft and compel the company to open its operating system to competing browsers.

The EC didn't care about tech until then, but the commission largely is funded by the fines it levies. Since then, Sun failed, and Oracle's purchase of Sun was hindered so effectively by the EC that there was almost nothing left when it finally got control.

Google currently faces a fine that is several times greater than Microsoft's penalty. Further, Google also faces a proposal that it be fined 5 percent of its total worldwide revenue for every terrorist message it fails to delete within 60 minutes.

Facebook and Twitter likely aren't very impressed with Google, given that they face the same potential fine. What this means is that it would take just 20 late deletions for Google to lose a year of revenue -- that's revenue, not profit -- and 100 misses would result in five years of revenue lost.

To put this in perspective, Google makes round US$50 billion a year, so 100 missed messages would cost the firm a quarter of a trillion dollars. For perspective, that would represent about 1.5 percent of the EU's total GDP and exceed by $50 billion the EU's total defense spending. That's effectively free money, making it likely that a lot of folks in the EU might try to force this fine rather than just let nature take its course.

Now Alphabet appears to have been created to help shield Google from fines that could consume it, but governments tend to be tenacious. I doubt that getting through Google to Alphabet's assets would be all that difficult for the EC. Also, keep in mind that this is just Google. If we add in Facebook and Twitter, the combined exposure easily could exceed the total value of all three firms.

Imagine what that would do to the U.S. tech market.

Typically, a U.S. company could look to the U.S. for defense against the EU, but the current administration isn't happy with Google either.

Google's massive support for the Obama administration (believed largely to relate to an effort to avoid antitrust challenges), coupled with what some see as a smoking gun regarding Google's bias against the current administration, represents a huge problem.

It appears that rather than defending Google and the social media companies, the U.S. is likely to levy its own fines or file charges against the firm(s) in an effort to see who can get all the money first. The Republicans would love a risk-free revenue source, and one that was closely tied to Democratis allies likely would be especially sweet.

Wrapping Up: How Do You Spell Screwed?

What fascinates me about this, particularly regarding Google, is the irony. Google participated in the attack on Microsoft. However, much of the damage to Microsoft was self-inflicted, because it initially thought it was too powerful to be bothered by any government, including its own.

Microsoft even basically told the attorney general at the time, publicly, that she could go to heck (it didn't mean "heck").

Instead of learning from Microsoft's mistake, Google appears to have tripled down on it, now facing fines that make Microsoft's look trivial in comparison, and even failing to send its top brass to a congressional hearing to discuss related problems.

By the way, when your CEO goes into hiding, that is generally a sign not only that your firm is in deep sh*t, but also that you likely are in desperate need of a new CEO with crisis management experience.

Despite Microsoft's arrogant behavior, the EU conflict didn't end well for the company. Still, it finally came around and became stronger for the experience. Google could have -- should have -- learned from Microsoft's mistake. Instead it now faces a going-out-of-business sale or government takeover scenario.

As a side comment, I still think the core problem is likely weak boards of directors who fail to do their jobs, because there is an impressive number of firms at high risk at the moment due to self-inflicted wounds. Alphabet, Facebook and Twitter join Intel, Uber and Tesla as companies either on or approaching death row, and it's not because of competitors, but because of avoidable stupid behavior.

Rob Enderle's Product of the Week

Given this thing costs nearly $400K, it isn't likely you will have one in your home any time soon. However, after releasing at scale the first industrial 3D printer that could be used for manufacturing, HP stepped up its game this week and released the first metal printer, the HP Metal Jet Printer, with similar capabilities.


HP Metal Jet Printer
HP Metal Jet Printer

The parts this thing produces are significantly lighter, and they can be produced faster and far more cheaply than with competing technologies.

What is particularly fascinating is how resistant the industry has been to the technology, because with every instance of saving in the high double digits (60 percent to 80 percent), the opportunity for a firm to use this technology to disrupt its own industry is massive.

Yet it is so different from what engineers are used to that more of them seem to be fighting the change instead of embracing it. This may have to do in part with the fact that HP really is the only big tech company that has begun playing aggressively at this end of manufacturing. However, it reminds me a bit of the stories about the folks who built cars initially badmouthing Ford and their assembly lines. Look how that turned out.

I was watching one of my favorite shows this week, Street Outlaws, and noticed one of the teams was using an HP laptop. I was once again reminded that maybe this is where a lot of the focus initially should be.

Race teams spend massively to cut weight. They often need incredibly expensive parts that are not available locally, and they are held up when they don't get them. More importantly, solutions developed for racing teams often make it into production cars, and automotive is one of HP's target markets.

Of course, seeing that laptop, I kind of wondered when HP would 3D print one of those puppies.

A new technology typically comes into the market high priced, and then folks work to figure out how to cost-reduce it, making it at least possible that we will have some version of this in our homes in around a decade or so. We'll see.

The HP Metal Jet represents just one of the massively disruptive advancements hitting the market this year, and it is my product of the week.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.


Rob Enderle has been an ECT News Network columnist since 2003. His areas of interest include AI, autonomous driving, drones, personal technology, emerging technology, regulation, litigation, M&E, and technology in politics. He has an MBA in human resources, marketing and computer science. He is also a certified management accountant. Enderle currently is president and principal analyst of the Enderle Group, a consultancy that serves the technology industry. He formerly served as a senior research fellow at Giga Information Group and Forrester. Email Rob.


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What best describes your attitude toward social networks and politics?
The value of engaging in serious political discourse outweighs the negatives.
Most of the political conversations seem overheated and ignorant.
Social networks provide a lot of very good political information from reliable sources.
Almost every political post I see is skewed or totally fake.
Political interactions on social networks simply mirror those in the real world.
Social networks remove inhibitions, bringing out the worst in people and politics.