Just Say No to Google's IPO
Press Action
Sunday, June 27, 2004
http://www.pressaction.com/news/weblog/full_article/googlewatch06272004/
Ten reasons why you should drop everything and go to your bank, withdraw all the money you saved for Google’s IPO, go home and stuff it under your mattress, and sit on it!
By Google Watch
1. There are thousands of geeky cultists who worship everything Google, and cannot wait to buy some shares. None of them has ever criticized Google for anything over the last five years. If average investors get a chance to buy in at a reasonable price, these geeks will quickly inflate the price beyond all reason.
2. Google is a self-contained little world in Silicon Valley. Their public relations department exhibits all the survival skills of a two-year-old wandering alone in the jungle. When push comes to shove, they cry or pout, or throw a tantrum, or they have no comment. That’s all they can do because they know little about the big world out there, which is full of social issues that cannot be reduced to mathematical algorithms.
3. Google owns thousands of cheap computers, and has produced software that ties them together in a vast distributed network. However, the barrier to entry for a new search engine is not that high these days. Hardware is still dropping in price, and in coming years the software for distributed computing on Linux boxes will be more generally available.
4. Yahoo is trying too hard to monetize their new search engine, but apart from this they’ve already shown that their technology is as good as Google’s. No longer is there anything special about Google’s secret sauce, if there ever was. PageRank, for example, is not even important to Google’s engineers these days.
5. Google has excellent brand recognition, but how much more saturation of the mass media can we expect before journalists get sick of it?
6. Google is ruled by a triumvirate—Larry, Sergey, and Eric. These three are very good at being geeks, and not good at much else. Meanwhile, venture capitalists on the board of directors want to get their money back from their Google investment. Into this mixture, add the suspicious hype from Wall Street over Google’s impending IPO.
7. Everyone agrees that Google’s search excellence, as defined by the quality of the results for search terms that produce links to commercial sites, has fallen considerably over the last twelve months.
8. Geek buzz says that personalized search is the Next Big Thing. The more an engine knows about you, the better it can guess what you consider to be relevant, and the more it can charge advertisers. Look at Google’s competition: Yahoo, Amazon, and soon Microsoft. All three know more about their customers than Google, because all three have many years of portal experience. And Microsoft owns your desktop. Can Google compete?
9. Google’s ad revenue is very impressive. By the end of May 2004, they will apparently have to stop showing gambling ads and rogue pharmacy ads, for legal reasons. What percentage of their ad revenue comes from these two categories? We don’t know, and Google isn’t likely to tell us. Under pressure, Google promised to stop ads from rogue pharmacies on December 1, 2003, after Yahoo, Microsoft, and AOL had already stopped them. Google could have stopped them within a few days of this announcement, but did nothing despite adverse publicity. It’s possible that Google planned it this way, so that their first quarter 2004 ad revenue would show high numbers on their S-1 filing (which it certainly does). The SEC should ask Google for ad revenue numbers for these two categories (we filed a complaint). Google’s ad policies and techniques also face challenges from trademark lawsuits pending in the U.S. and Europe, and a patent lawsuit from Overture.
10. You can bring your dog to work, you get free gourmet lunches, and Google offers an on-site doctor and dentist, massage and yoga, and on-site day care. They have a fleet of Segway scooters ($5000 each). Meanwhile, behind the big colored balls and bean bags, half of the workers are low-level contractors with access to none of this. Google’s motto is “Don’t be evil.”
Reprinted with permission of Google Watch, which recently launched a new website, Gmail Is Too Creepy, dedicated to providing information about Google’s new email service called Gmail.
