Googleplex, Mountain View, California

Amazon tops the Reputation Institute’s 2011 survey of the most reputable American companies. Google leads the global survey.

In relation to the US study, the RI found that the excellent companies were:

• 2.5 times more likely to have the CEO set the strategy for their enterprise positioning
• 1.5 times more likely to include reputation metrics as part of their senior management “dashboard”
• 15 times more likely to manage corporate reputation across company functions
• 1.7 times more likely to use an outside partner to assist with corporate reputation management

There’s some interesting detail on how reputation affects consumers’buying decisions. The RI found that people take into account their whole impression of a company, not just their view of its products or services, when deciding whether to buy:

Reputation Institute’s analysis of the seven dimensions of corporate reputation shows that perceptions of the enterprise (Workplace, Governance, Citizenship, Financial Performance and Leadership) trump product perceptions (Products & Services plus Innovation) when it comes to driving behaviors. The five enterprise dimensions drive 61% of purchase consideration and 58% of recommendation/advocacy behavior with consumers. This provides further proof of what Reputation Institute calls the “reputation economy” – a place where people increasingly choose among competing products and services based on their impressions of how the companies behind them behave.

Apparently, Amazon’s success marks the first time an online company has come top of the US survey. Forbes provides a useful summary of the foundations of its reputation:

Amazon earned its No. 1 rank by providing value to users, staying ahead of the curve in technology and innovation and responding quickly and ethically to scandals. The Seattle-based company flourishes on transparency and trust. It offers customers a dependable online shopping experience with trustworthy third-party vendors. Users trust and value its product recommendation system, which suggests products based on one’s purchasing history.

The online retailer also capitalized on the success of its Kindle e-reader last year as e-book sales soared. That, combined with developments in cloud computing, an Android app store and digital movie streaming helped Amazon do especially well in the products and services and innovation dimensions.

Consumers also got a glimpse of the company’s values in November when it responded to thousands of outraged users by quickly removing a pedophilia book from its digital shelves.

While Amazon’s lead seems intuitively correct, Google’s position at the top of the global poll is more puzzling. The analysis seems to be that Google has won trust for the way it responded to revelations that elicited criticism of its business practices. Forbes again:

When the Mountain View, Calif., company pulled out of China to avoid showing censored search results to users there in late March, Google sent a message to the rest of the world that its values would be placed ahead of its profits. The decision resonated strongly in Central and Northern Europe, Central and South America and in North America, where consumers rated the company within the top five most-reputable businesses.

When privacy issues arise around its business, Google usually responds quickly: Recently the search giant said it would keep its Street View cars from picking up wireless networking data after Google revealed that these vehicles had collected content of users’Internet communications on open Wi-Fi networks.

My take is that these kind of incidents are more damaging than the RI’s survey is picking up. Google was widely criticised when it went into China and it pulled out only when it found that the profitability was not sufficient to justify the reputational flak, which extended to the compromising of its security when the Gmail accounts of Chinese dissidents were hacked. (See this analysis at the time by John Naughton.)

In the recent ruling on Google Books, Judge Denny Chin was highly critical of the way Google had gone about digitising books without the permission of copyright owners:

The ASA [Google's proposed agreement with publishers] would grant Google control over the digital commercialization of millions of books, including orphan books and other unclaimed works. And it would do so even though Google engaged in wholesale, blatant copying, without first obtaining copyright permissions. While its competitors went through the “painstaking” and “costly” process of obtaining permissions before scanning copyrighted books, “Google by comparison took a shortcut by copying anything and everything regardless of copyright status.” As one objector put it: “Google pursued its copyright project in calculated disregard of authors’rights. Its business plan was: ‘So, sue me.’”

Similarly, the US Federal Trade Commission found recently that Google violated its own privacy policy in the launch of Google Buzz and it identified other shortcomings in Google’s practices:

The FTC said “deceptive tactics” were used to populate the network with personal data gained from use of Gmail, and that when users were given the change to opt-out of Buzz, they were still enrolled in some of its features. For those that did decide to opt-in, the FTC says the implications of that were not made clear. “Google also offered a ‘Turn off Buzz’option that did not fully remove the user from the social network,” it said.

The remedies put in place in both these cases will go some way to assuring consumers and other stakeholders about the ethics and trustworthiness of Google’s business practices in future. With respect to Google books, it is likely that Google and publishers will agree a system whereby authors and copyright owners will opt-in to the digitisation of their work rather than having to opt out of it. And the outcome of the Google Buzz case is that the company will be subject to an annual privacy audit for 20 years.

However, the impression is created of a company that pushes the ethical boundaries until it is successfully held to account. Google makes fantastic products which offer innovation and ease of use at apparently negligible prices. These products are the foundation of Google’s positive reputation. But Google’s enterprise-wide story contains narratives which are problematic. In other words, it presents the inverse of the RI’s model for excellence and this can’t be encouraging for Google’s reputation in the long term.

Image courtesy Marcin Wichary.

Compelling reading on either platform

A couple of weeks ago in The Observer, John Naughton reviewed the state of battle between Apple and Microsoft and revisited Umberto Eco’s 1994 analogy with the Catholic and Protestant religions. Eco saw the Apple Mac as “cheerful, friendly, conciliatory; it tells the faithful how they must proceed step by step” while he said the PC “allows free interpretation of scripture, demands difficult personal decisions, imposes a subtle hermeneutics upon the user, and takes for granted the idea that not all can achieve salvation”.

Naughton argued the continuing relevance of the analogy. But I think the more interesting contest at the moment is that between Apple and Google. It’s a contest at which I’ve been enjoying a ringside seat in recent weeks, as I renewed my contract with T-Mobile and upgraded to their Google Android-powered G1 phone while my wife ditched her nine-year-old Sony Ericsson and signed up for the iPhone. The fast-growing market for 3G touchphones is the frontline of the consumer technology battle.

The motivations for our respective choices are instructive to explore. My wife contemplated the iPhone as a self-standing device. She was drawn to its drop-dead good looks and its intuitive ease of use. She liked the idea of a device which could serve as her diary and address book as well as her phone, but she wasn’t excited by the iPhone’s multimedia capabilities nor did she give much attention to the issues about syncing the phone to her computer (a PC).

I started from the presumption that I wanted a device that would fit my multi-platform life. For the past year, I have been working primarily on an Ubuntu-Linux computer, but also use the PC, and recently acquired an Asus netbook for when I’m out and about. The glue which integrates these various machines into a productive system is the cloud – more specifically, a suite of internet products which store my data online so that I can access it from any device.

I considered an iPhone but was drawn to the Google phone because it seemed specifically designed as the kind of internet appliance that would support my modus operandi. Since much of my life was already committed to Google products, setting up the G1 was a dream. Simply inputting my Google credentials the first time I switched on the phone was enough to populate it with all my diary appointments and contacts.

The iPhone, by contrast, demanded precisely the “difficult personal decisions” and “subtle hermeneutics” that Eco had ascribed to the Microsoft experience. There’s no simple, over-the-air approach to managing data between different devices. Apple offer their own cloud-based products such as calendar, contacts and email. But these come at a hefty annual price, are clunky compared with Google’s products, and lock you into Apple’s ‘me.com’email address. For the PC, the iPhone syncs with Microsoft Outlook but only by plugging in the device to the computer thereby foregoing the grab-and-go appeal of a 3G phone which automatically updates itself with the appointments you’ve added to your calendar before running out to a meeting. Ultimately, we found a way to sync the iPhone over the air with Google Calendar and Contacts using a product called NuevaSync so, barring a few occasional hiccups, it behaves pretty much like a Google phone.

For sheer joy, though, the iPhone wins hands down. It identifies your location with unnerving precision in a matter of seconds which is great if you’re out and about and need to pull up a map to find your way somewhere. It is pleasing to the eye and to handle, sports elegant icons and offers a host of additional applications which you can install and which just work. The G1 steps up with all the style of a 1970s trimphone and it’s too early yet for an attractive ecology of applications to be available. In time, though, I would expect the Google Android platform to pull ahead in relation to applications. For the great strength of Android is that it is an open source operating system, indeed a variant of Linux. This means that anyone can design software for Android phones and get their products to market, whereas Apple inserts itself between the development community and end users.

A final thought concerns how Google seems to have drawn both my wife and me further into its fold as a result of our phone choices. The G1 prompted me to switch my email to GMail and, when I’m at the PC, the Windows-only Google Chrome browser is my default choice for the way it turns my web calendar, contacts and tasks into fast desktop applications.  My wife’s adoption of Google Calendar has enabled us to share our respective calendars and encouraged us to dispense with the paper family calendar that we have always maintained hitherto.

I’ve written in the past about the risks to privacy of entrusting so much of one’s life to one company. The dimensions of this risk become ever more apparent, as Mark Rotenberg of the Electronic Privacy Information Center pointed out when Google demonstrated its ability to predict flu epidemics. His concerns were reported by The Register:

Google’s Trends service has long used aggregated search data to track the habits of the world’s web users. But health-related data is a particularly touchy subject, and Rotenberg sees Flu Trends as a chance to broaden the public debate over data aggregation – and finally put some meaning into these anonymization claims.

The problem, Rotenberg says, is that data aggregation calls attention to specific data stored on Google’s servers, making it that much more vulnerable to, say, a subpoena or a national security letter. “Let’s say that instead of Flu Trends, Google’s doing SARS Trends – tracking a very serious communicable disease,” he explains. “If there’s a big SARS upsurge somewhere, the government would be at Google’s door asking where did that data come from.”

And that’s just one example. “You can imagine any number of different scenarios where people would be interested in finding who the individuals are making those searches.”

Internet companies are beginning to identify marketing advantage in being responsive to privacy concerns. Yahoo! has upped the ante, setting a maximum period of three months for storing much of the data it keeps on users. If Yahoo! survives as an entity, it seems likely that Google and others may eventually follow suit.

In addition to privacy concerns, though, I’m now beginning to worry about excessive dependence on one company. Andrew Nusca, on ZD Net, is thinking along similar lines – warning that we are creating Google monoculture which may cause systemic problems if it were to collapse. I think this risk may be a little over-stated since Google operates in competitive markets for many of its products and I personally would have little difficulty switching if Google disappeared overnight. I chat to my friends through Google Chat, but they’re also in Linked In and Facebook. I’m a heavy user of Google Maps but Open Street Map or even this would serve me just as well.

The moral? The smartphone revolution is driving us to consolidate our data in fewer and fewer places. But it’s important to have a backup strategy. Your data should always be accessible whatever the agents to whom you entrust it might do.

Google Streetview car

Why do we love Google?  A question prompted by its tenth anniversary and the launch of the game-changing Google Chrome browser.  I’m in a love-hate relationship with Google – delighted by its products, worried about its encroachment into my life.  The dark side to Google’s brand foretells difficulties in the years to come.

Google’s products are not just good.  They’re elegant.  And free.  Each, individually, is relatively harmless.  It’s the all-embracing appeal of Google’s toys that makes me uneasy.  Every time it seduces me into adopting one of its services, Google deepens and broadens the picture it can paint of my life.  It knows what I want to know (Google Search).  It knows who I plan to see (Google Calendar); what I intend to do (seamless integration into my calendar of my tasks from Remember the Milk); where I am and where I’m going (Google Maps on my mobile); my prejudices and hobby-horses (Google Reader).  If I was a GMail user, it would know the contact details of all my friends and clients and what I was saying to them.

By rights, Google should enjoy the same kind of relationship with the public that Microsoft does – grudgingly accepted by the majority as a dominant force in our lives, but subject to opprobrium by a significant core of refuseniks who keep us alert to the dangers of its domination.  The risks presented by Google strike me as more worrying than those associated with Microsoft, broader in scope than the ID database being developed by the Government, yet we continue to love it.

Normally, consumers fall out of love with a company when a gap opens up between its values and it practices.  Google has already crossed this threshold with little discernible impact.  Its values are expressed in the words “Don’t be evil.”  Google’s code of conduct says:

Googlers generally apply those words to how we serve our users. But “Don’t be evil” is much more than that. Yes, it’s about providing our users unbiased access to information, focusing on their needs and giving them the best products and services that we can. But it’s also about doing the right thing more generally – following the law, acting honorably and treating each other with respect.

But in 2006, Google disgusted human rights campaigners by agreeing to do the bidding of the censors in China.  Perhaps this issue was too remote from people’s daily experience to influence their feelings towards Google.  Or perhaps they gave Google the benefit of the doubt, agreeing with its contention that it was better to provided censored information than to provide no information at all.

Perhaps we love Google because the threat it poses remains potential rather than realised.  Last year, Privacy International – a human rights group which monitors surveillance and invasions of privacy – named Google as the worst among internet firms for privacy.  According to BBC News:

Privacy International placed Google at the bottom of its ranking because of the sheer amount of data it gathers about users and their activities; because its privacy policies are incomplete and for its poor record of responding to complaints.

“While a number of companies share some of these negative elements, none comes close to achieving status as an endemic threat to privacy,” read the report.

Google responded that it aggressively protects users’privacy.  But the company displays a complacency about its values similar to that of the broadcasters, who claimed to uphold truth only to find that their programme makers were systematically manufacturing falsehoods. One of the risks in Google’s massive user database is that the potential it creates to enable evil spreads beyond the company itself.  In July this year, a US court ordered Google to divulge to the media company Viacom the details of every user who had ever watched a video on YouTube – more than 100 million of them.  It subsequently won the right to anonymise the data.  But the episode demonstrates that Google’s database renders vulnerable the privacy of its users, regardless of Google’s intentions.

There are risks in this for Google.  Sooner or later, the public will become sensitive to the implications of the data that Google holds on them – quite possibly through some event which will do lasting damage to Google’s reputation.  At present, the company is structurally incapable of containing this risk.

Google’s mission – “to organise the world’s information and make it universally accessible and useful” – may have begun as a consumer-facing value proposition.  But the logic of its business model compels it aggressively to push back the frontiers of privacy – both by bringing more and more private information (such as the contents of your living room) into the public domain, and by devising free and seductive ways to bring you online to disclose data about yourself.  As Nicholas Carr (via Chris Anderson) puts it:

For Google, literally everything that happens on the Internet is a complement to its main business. The more things that people and companies do online, the more ads they see and the more money Google makes. In addition, as Internet activity increases, Google collects more data on consumers’ needs and behavior and can tailor its ads more precisely, strengthening its competitive advantage and further increasing its income. As more and more products and services are delivered digitally over computer networks — entertainment, news, software programs, financial transactions — Google’s range of complements expands into ever more industry sectors. That’s why cute little Google has morphed into The Omnigoogle…

Because the marginal cost of producing and distributing a new copy of a purely digital product is close to zero, Google not only has the desire to give away informational products; it has the economic leeway to actually do it. Those two facts — the vast breadth of Google’s complements, and the company’s ability to push the price of those complements toward zero — are what really set the company apart from other firms. Google faces far less risk in product development than the usual business does. It routinely introduces half-finished products and services as online “betas” because it knows that, even if the offerings fail to win a big share of the market, they will still tend to produce attractive returns by generating advertising revenue and producing valuable data on customer behavior. For most companies, a failed launch of a new product is very costly. For Google, in general, it’s not. Failure is cheap.

Google has been able to develop a culture which displays much lower risk aversion to product development than is typical elsewhere, a risk aversion that spills over into brushing aside long-standing societal values such as privacy.  Its business model incentivises this behaviour – a trend described by the analyst Scott Cleland as publicacy.

Cleland is by no means alone in expressing misgivings.  One of the most level-headed of internet commentators, John Naughton, said of Google’s mission to organise the world’s information:

What we perhaps haven’t fully realised is that these guys really mean it. Their ambition is at least as megalomaniacal as Bill Gates’s vision of a computer on every desk running Microsoft software. So it’s time we started thinking about what a world dominated by Google would be like.

As Google moves into its second decade, it is solidifying the foundations for that world domination with a new kind of browser which will make its cloud computing model – online applications replacing desktop ones – much more sustainable.  But the contradictory forces will be increasingly hard to contain.  The massive database on Google’s billions of users contains an accident waiting to happen.  The fondness with which we greeted Google’s tenth anniversary won’t be replicated in ten years’time.

Image courtesy Byrion.