Google’s Next Big Product? The City.
Why we should be worried about Alphabet’s urban ambitions
As tech giants have cemented their positions as some of the largest companies in the world, more people are coming to the conclusion that they’ve become far too large and powerful; there are even a growing number of elected officials — both in the United States and the European Union — calling for them to be reined in, if not broken up. But that hasn’t halted their expansion.
Apple is putting billions of dollars into creating its own entertainment and music content; Amazon made a big move into the grocery business with its $13.7-billion acquisition of Whole Foods and opened its first “no-checkout” store; Facebook seems poised to make a major push into video to further grow its portion of the digital ad market; and Google — or rather its sister companies within the Alphabet umbrella — is developing a range of new technologies for its new product: the city “built from the internet up.”
There’s good reason to be concerned about all of these expansions by four of the eight largest public companies in the world by market cap, but this article will focus on the Google, whose increasingly monopolistic tendencies should have people worried about the implications of giving the company the control it so desires over urban areas. Google is driven by an unending need to maximize profits and drive out competition; values which have no place in determining the path of development of major cities.
Flexing its Monopoly Muscle
Tech companies have been very successful in using flashy PR campaigns to make people overlook their dominance in the markets they target, but they are less and less able to disassociate themselves from the negative connotations that come with the word “monopoly.”
It wouldn’t exactly be accurate to say that tech giants are the only players in their respective markets, but the nature of the digital economy gives massive companies an advantage: the more data they control, the better a product or service they’re able to provide, which attracts more customers, who provide them with more data… and you know how the pattern continues from there.
So, let’s look at Google. The company controls about 92 percent of the global search engine market share, and 99 percent of Alphabet’s revenue comes from Google — about 71 percent from ads on Google properties, 16 percent from ads on its extended network, and 12 percent from the Play Store and cloud services. Google uses its profits to offer a wide array of “free” services — Search, Gmail, YouTube, Maps, Chrome, Photos, Calendar, Docs, etc. — from which it has amassed a plethora of data, allowing it to more effectively target ads than other providers. Google’s business relies on mass data collection, and its actions must be understood through that lens: the release of a new “free” digital product is not a benevolent move, but a means to extract more data.
Google’s business relies on mass data collection, and its actions must be understood through that lens
It’s exactly that data which has led Google and Facebook to dominate digital advertising; they have developed the best tools to extract data from billions of people and use it to effectively target ads. It’s incredibly difficult for another company to catch up, as Microsoft found with Bing. eMarketer predicted that Google and Facebook would respectively control 42.2 percent and 20.9 percent of the U.S. digital ad market in 2017, with no other company having more than a 5-percent share. Digital surpassed television in 2016 to become the largest segment of the U.S. ad market, with 36.7 percent of the total ad spend, and it will continue to see double-digit growth for years to come, of which Google and Facebook are expected to capture the lion’s share.
But such a dominant market position has been followed by an abuse of the resulting power. Last year, Barry Lynn and his Open Markets program, which called out the growing monopoly power of internet giants, were ejected from the New America think tank for criticizing Google. It was later reported that the think tank had bowed to pressure from Alphabet executive chairman Eric Schmidt because Alphabet and Schmidt had provided it with significant funding. Instead of silencing dissent, many other people familiar with Google’s ad business began to speak out about its unfair practices.
Among them was Josh Marshall, editor of Talking Points Memo, who wrote that because Google owns one of the ad-serving platforms which form the backbone of online advertising (DoubleClick), one of the largest ad-buying platforms (Adexchange), and has so much data on users from its own services, Google “own[s] the road. They make the rules for the road. They get special privileges on the road with every new iteration of rules.” Based on his experience, Marshall concludes that
Google’s monopoly control is almost comically great. It’s a monopoly at every conceivable turn and consistently uses that market power to deepen its hold and increase its profits. Just the interplay between DoubleClick and Adexchange is textbook anti-competitive practices.
Google may have dominance in the search market, the digital ad market, and several others, but it isn’t content to stop there. The growth of Google’s business depends on the acquisition of more data, and given that it already has many of the most popular digital services, its focus is moving away from the online world and into physical space; its all-seeing eye has become fixed on cities.
Moving into Urban Space
It should come as no surprise that, in its never-ending quest for data, Google has turned to the places where humans converge in large numbers and its sensors could turn all of their activity into new streams of data — but that doesn’t mean the tech giant should necessarily be welcome. There are many possible downsides that could result from the company’s actions.
Google is used to an environment where everything we do can be tracked and quantified, and there’s little to stop it from capturing those activities and feeding them into its server farms for storage and processing. However, the same rules do not apply in physical space. Not only are there concerns about privacy when a tech company wants to put sensors all around cities to — let’s be honest here — surveil us, but there are also considerations of fairness and democracy around how that data will be used, who will be able to access, and who will truly benefit.
We’ve been happy to trade our online and location data, our photos and videos, our search histories and emails in exchange for free services, but will that continue when the means of capturing the data becomes more overt?
These terminals form just one aspect of a much larger plan that Sidewalk hopes to develop on Toronto’s waterfront, where it’s currently helping to plan a 12-acre (4.9-hectare) site called Quayside, but there’s an important — and very instructive — change in their design. The terminals would still provide free wifi and an interface for people to access city services, but Sidewalk wants them to be the exclusive containers for wifi, LTE, and LoRa radios, presumably meaning that if any other company wanted to access them — say, a telecommunications company providing mobile phone service — they would need to sign a contract with Sidewalk because they wouldn’t be allowed to install their own.
Even though Sidewalk is the partner of a tri-government organization with a mandate to revitalize the waterfront, the proposal the company released was filled with instances where it would create markets for its own products and give itself a monopoly over many aspects of the site’s design. Sidewalk sees a big role for ride hailing and driverless vehicles in Quayside, and proposes that a pilot project be held using vehicles from Waymo, its sister company. It also plans for an urban platform through which people would access services and get information about the urban area, but it would be developed by Sidewalk, the data would be collected by sensors it’s already testing — possibly under the name of another of its sister companies, Nest — and it would be processed by Google’s Cloud Computing platform.
Those are just a couple of examples, but I think the point is clear: Google’s prime motivation is not to create an urban area with the public interest in mind, but one that best integrates its technologies, from which is can extract a maximum amount of data. But the company’s plan demands that we consider the role that private companies should play in our cities.
For example, if a company is co-planning a site, should it be allowed to build in support for its own technologies? And if it does, should it be able to charge for those technologies if they’re part of the very plan it created? That would essentially lock a local government into the technology, possibly requiring it to pay an ongoing licensing fee. How is that fair?
And what about all the data being collected? Should companies be allowed to place sensors in public spaces and capture all that data for themselves, or, as representatives of a city’s residents, should it belong to the local government, which could then make it available in a way that ensures it’s used to enhance the lives of residents? Local governments have already had trouble getting companies like Uber, Lyft, and Airbnb to share there data; why should they believe Google would be any more cooperative?
And what about profits? Should major companies be allowed to use cities as profit centers, making money off of our every action? Tech giants seem to be increasingly interested in pushing to take over the delivery of public services — health and transportation are just a couple of examples — which is a very worrying trend because of how it can negatively impact the equity of those services. As we’ve already established, corporations have different incentives that government because they’re driven first by profit, not the public good.
Corporations have different incentives that government because they’re driven first by profit, not the public good
And that’s the problem at the heart of Google’s push into cities. Google is not driven by a need to best serve residents, but to amass more data to increase its market power, drive profitability, and please its shareholders. There may be situations where working with tech companies makes sense for local governments, but giving them free reign to essentially turn a neighborhood into Google Town or Amazon Village is not the right approach.
These massive tech companies have already demonstrated what they’ll do when they’re allowed to use their market power for their own gain by building systems which give themselves an advantage and punshing those who dare challenge them. That is not that attitude we should be introducing into the governance of our urban areas; rather, the digitization of cities needs to be approached with the goal of empowering residents and giving them more control over their neighborhoods.
Google can certainly hire some of the best PR firms to give the impression that it’s friendly and benevolent, but what it wants from cities is far different from what residents want. There may be occasional overlaps, but when it’s planning to subsidize ride-hailing companies or allow tech workers to rent public spaces, Google will always be driven by a need to stifle competition and earn a profit. Technology can be a positive force for urban change, but that’s unlikely to be the outcome if it’s implemented to serve the business plan of a monopolizing tech giant. Toronto can do better.