Wednesday, December 22, 2010

Gmail Creator Explains Why Google Is Still Awesome (GOOG, MSFT)

google flowers

A couple weeks ago, Gmail creator Paul Buchheit came out publicly against Google's Chrome OS, predicting that it would be merged with the far more popular Android OS within a year.

This created some uproar among Googlers and fans of the company, and Buchheit since backtracked a bit.

Today, he stepped back a bit farther and offered four reasons why Google is still "awesome": it takes big risks, invests in areas outside its core, competes in positive ways, and listens to criticism.

Shareholders might argue that the first two points are not particularly "awesome" ways to use their money, but the third point should rankle anybody who depends on intellectual property for their livelihood.

Buchheit argues that Google's willingness to open-source projects like Android help create value. They're not just competitive, but "good for the world."

But why is open source automatically good?

Competition takes many forms, and one time-honored tactic is to try and commoditize your competitors' most important businesses. Microsoft did it to IBM by licensing MS-DOS to a wide range of hardware makers who could then beat prices on IBM's PC hardware. IBM tried to return the favor in the 2000s by embracing Linux--a free product that competes against Microsoft's profit center, Windows.

Google is a canny competitor. It's happy to open source its non-core businesses like Android and Chrome, then throw them out to compete against revenue-generating products from other companies like Microsoft and Apple.

So when is Google going to open source its search algorithms and ad-serving technologies? Never. Nor should it be expected to.

As far as patent lawsuits go, it's true that Google hasn't filed them like Microsoft has. But Microsoft would argue that it's invested billions of dollars in its intellectual property, and it's not fair for newer competitors--like Google--to ride its coattails without paying. Twenty or thirty years down the road, Google will probably be in the same position. When that happens, it would be a breach of its duty to shareholders not to sue companies for violating its intellectual property.

It's fine to argue that Google is an innovative and interesting company with a bright future. But equating a competitive tactic with moral goodness is not a good way to make the point.

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