Why Google is Bad for Capitalism

I want to preface this post by quickly saying that I am not endorsing use of another Search Engine or any of the companies or products listed in this post. I am just simply offering an opinion.

On October 28th Google dropped a bomb-shell by announcing a new FREE turn-by-turn directions mapping application (covered well by engadget here:http://www.engadget.com/2009/10/28/google-adds-free-turn-by-turn-navigation-car-dock-ui-to-android/). Almost immediately the stock of both Tom-Tom and Garmin plummeted (http://www.engadget.com/2009/10/28/the-game-has-changed/). While I am not one to ignore free anything, I cannot help but worry about the long term ramifications for Google's developing business model.

Google makes their money off Search through Google.com and enterprise Search with businesses and it is INSANELY profitable. That is pretty much it. Google then leverages those profits to create a juggernaut of free applications. Android, their new mobile OS is free to phone manufacturers. Google apps on the iphone are free. Our gmail, gtalk, and other Google Labs projects are free. Google Docs is free. In a Capitalist Society how does one compete against a free (oh yeah, and generally well designed) product?

Lets look at mobile phones. Microsoft and Symbian both license their mobile operating systems to phone manufacturers. What happens when/if Android dominates the market place? It is arguably a very good OS and superior to both Symbian and Windows Mobile. If MS and Symbian can not develop new software that offers more advance features with a greater value proposition than Android, then why would a manufacturer pay a fee to license software when they can make more money selling phones that have no licensing fees? (The Blackberry and iPhone are a different case altogether since both companies produce both the hardware and software for their phones and do not, nor are likely to, license the software to other companies.)

So why is this bad for capitalism? How many jobs are lost if Microsoft or Symbian shut down mobile development? How many more jobs will be lost if Tom Tom or Garmin go out of business because of a free Google app? This current/maybe ending recession has reminded us that job losses breed more job losses as money leaves the system. Capitalism is about making money by offering products and services that compete with similar products and services. FREE is not competition. It destroys the competitive market place.

Now, I will admit, there are lots of free applications, products and services that we all tend to eschew in favor a paid or licensed version, but that is simply because the paid version has a much greater value proposition and feature set than the free version. Linux is a free and open operating system that will run on any personal computer. However it has been entirely unsuccssful as a consumer product because MS Windows and Apple OS/X offer significantly more value. They are easier for the average user to use, have more software, and are better integrated into our digital lives. The problem is that Google does a fantastic job designing new products and services that often compete 1:1 with their paid counterparts. Their free applications and services are not a half baked, feature light version of somthing that already exists in paid form, they are full functioning and feature complete.

So be careful, enjoy your gmail, gtalk, blogger.com, Android Phone, Google Docs, etc, but do not forget that our global society is built upon paying for what we use. The $100 you spent on your Garmin or Tom tom GPS device helps pay the wages and provides shareholder value to thousands of other people like you. Some off them probably take that paycheck and spend part of it on a product or service that you work to create, advertise, or manage. If they lose their jobs, then they can no longer buy your product or service and the cycle propagates. Sure, maybe you will spend that $100 on a different product or a nice dinner and a movie (lets not even get started on the pitfalls of a service economy.) Maybe you will do the responsible thing and save it or payoff some of that mounting credit card debit (see: www.consumerist.com.) Regardless, I look at it this way... If you work out a way for everything to be free, then no one works.

Me, I will continue to spend when and where I can, and support the products that and companies I love. Even if there is a free version of it out there somewhere.

The Real Search Warrior

PS. Yes I get that my blog is hosted on a site owned by Google and that I have ads on the page provided by Google. I am a capitalist... I want to make money.

The Importance of Auto Bid Management

Thanks to Mary Green with Position2 on the Linkedin SMX blog for bringing this to my attention. This is a great free webcast on the importance of both Auto Bid Management and how important it is for us as Search Engine Marketers to be open to new tools to enhance our clients' performance in recessionary times.

Disclaimer: It is a sales pitch so don't going running off to Position2 without speaking to me first.

Linkedin Discussion: http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=8909377&gid=38900&trk=EML_anet_qa_ttle-cThOon0JumNFomgJt7dBpSBA

Brighttalk Webcast (Free Registration Required): http://www.brighttalk.com/webcasts/6166/play