From P2P Foundation
Discussion
Mark Choate's on Google's Competitive Advantage
Mark Choate:
Google’s success is dependent upon the assumption that a link from one site to another implied some level of endorsement such that a page with lots of links to it must be better in some way than a page with only a few links to it. Google’s PageRank algorithm (which is how the search results are prioritized) is based in part upon how many other sites link to a given page. If you have two separate pages, both with similar content (as ascertained by word count and position), favor is given to the page to whom more sites link than the other.
When a person participates in a transaction online, a residue is left behind that is meaningful. When one page links to another page, information is embedded in that link, and when a user makes a choice and clicks one link instead of another, there is information about the choice embedded in the action. There is no such residue on books, other than dog-eared pages, smudges and coffee stains, nothing that can compare with the usefulness that that can be gleaned from these fingerprints that are left online.
This has proven to be a remarkably effective strategy for Google, so effective that Google was able to enter the Internet market rather late in the game and very quickly become a leading online business. When Google was launched, Yahoo! was the leading search engine. History has demonstrated that Yahoo’s competitive advantage was not sustainable at all. Why is Google’s story different?
Every day Google learns more about the content that is distributed on the Internet. The knowledge is a consequence of the steady aggregation of knowledge in the form of links created by human beings. As a result, Google’s site makes it easier for me to find the information I am looking for. As Google aggregates this data, the search engine continues to improve. For this reason, it will be very difficult for a new entrant in the market to compete with Google. Even if they were able to reconstruct Google’s software and technical infrastructure, they would not have the years of aggregated data documenting user behavior and capturing those moments of human judgment that Google has already acquired and will continue to acquire.
But what is interesting about Google is that Google isn’t entirely transparent in the same way that Wikipedia is. In fact, Google’s core search algorithm is proprietary and proponents of the Enterprise 2.0 label often say that Enterprise 2.0 firms are moving away from proprietary technology in favor of open standards.
The source of Google’s success is Google’s masterful understanding of the value of the online transaction. They know the value of information and they have taken creative steps to find ways to measure those moments of information exchange that take place so frequently online. Google has not opened up its API to outside developers because of a belief in their part on some intrinsic value in openness. Quite the opposite. They have opened up their API because they have discovered that it is in their best interest to encourage as many transactions with Google as possible, so that Google and Google alone can sleuth through the evidence that is left behind.
Google also isn’t collaborative – at least not in the traditional sense of the word. Google really operates just like any other business. In exchange for a service (like receiving a list of search results), the user gives Google a little piece of information. Google aggregates that information and uses it to improve the search service as well as to create revenue through the sale of advertising. This isn’t collaboration; it’s capitalism.” (http://www.cutter.com/offers/enterprise2.html)
