Is Google Fighting the Right War?

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Two weeks ago, with the removal of Eric Schmidt as CEO of Google and his replacement by Larry Page, Ben Horowitz wrote a fascinating article comparing CEOs to Tom Hagen: there are wartime CEOs and peacetime CEOs; Schmidt was peacetime, but Google is entering the wartime phase in the world of social. By all accounts, Page is obsessed with catching up on social, and has even made it part of every employee's compensation plan. Google is fearful that Facebook and its ilk in the social network world are going to undercut its search business, or, at the very least, its expansion space.

I fear that Google is right on concept, but wrong on strategic targets. Google should be concerned only with threats to its core business, search, not with a general "well, people like social." People like pizza, too; pizza joints do not threaten Google's business. Search is about finding information, the value of which is directly proportional to the size of the dataset with the answer. In many ways, PageRank is built on that very concept (and was written up in James Surowiecki's book "The Wisdom of Crowds") - the more people (or pages) point to something the more valuable it is. In search, the reverse is also true: the more data points you can query, the more answers you can retrieve and the more likely correct and relevant answers. To provide a broad a dataset as possible, Google has invested untold billions creating massive infrastructure to scan and index broad swaths of the Internet. Competing with Google head-on is so hard because of the sheer cost in time and capital to replicate that amount of data.

The question, then, is if any competitor in social can get a similarly broad data set, but at dramatically lower cost.

Facebook is about sharing information with friends. If friends - however broad a circle - was all there was to search, Google never would have come to prominence in the first place. Facebook cannot replicate the massive amounts of relevant data, and so cannot provide significant amounts of search data except for those that people would already ask their friends, e.g. "where is the best local pizza joint?", but on a somewhat wider scale. Thus, Facebook does not directly threaten Google's search business.

The question, then, is who in the social world is getting massive amounts of data and links to, well, everything, and thus provides a real threat to Google, not just in terms of usage, but in its ability to get that data at a significantly lower price point, thus giving it greater scaling ability.

It is primitive, it does not provide structured results in the right way, but Twitter is gathering massive amounts of data on everything, assigning relevance based on tweets, retweets and follows, and is doing so by outsourcing its "cost of scan" to the end-user. If I were Larry Page, it would be Twitter that would keep me up at night.