RIPTIDE
`
`VVhat really happened to the news business
`
`CHAPTER12
`
`EXPLORE INTERVIEWS 0 Q
`
`Google, The Second
`Coming
`
`Google's Larry Page and Sergey Brin, before the company's I PO, 2004. (AP/Ben Margot)
`
`As one of the fastest growing, most
`valuable companies on the planet, millions of
`words have been spilled on the subject of Google,
`EXHIBIT 2064
`Facebook, Inc. et al.
`v.
`Software Rights Archive, LLC
`CASE IPR2013-00480
`
`
`
`VVhat really happened to the news business
`
`CHAPTER12
`
`EXPLORE INTERVIEWS 0 Q
`
`Google, The Second
`Coming
`
`Google's Larry Page and Sergey Brin, before the company's I PO, 2004. (AP/Ben Margot)
`
`As one of the fastest growing, most
`valuable companies on the planet, millions of
`words have been spilled on the subject of Google,
`EXHIBIT 2064
`Facebook, Inc. et al.
`v.
`Software Rights Archive, LLC
`CASE IPR2013-00480
`
`
`
`5/15/2014
`Chapter 12: Google, The Second Coming - Riptide
`and we do not intend to reprise that history here,
`except to advance understanding of what has
`happened to the news business. But we refer you
`to three informative books on the subject,
`including Googled: The End of the World as We
`Know It by Ken Auletta, The Search: How Google
`and Its Rivals Rewrote the Rules of Business and
`Transformed Our Culture by the very same John
`Battelle, and .!Y.!!: .. ~.t .. w._~.Y.!.~ .... QQ.~fl.?.~ ... !.!..Q.~ by Jeff
`Jarvis.
`
`Battelle begins his book with the following quote
`
`from~!:':~~~.~.~.!:':.~.~~~' founder of the .!.~~.~!..!!.~!
`A:!.~!!!Y.~.: "The library of Alexandria was the first
`time humanity attempted to bring the sum total of
`human knowledge together in one place at one
`time. Our latest attempt? Google."
`
`Indeed, what turns out to have been the
`extraordinary ambition ofGoogle- and its ability
`to deliver on that ambition - ends up coloring
`much of what happened to the news business
`between the Web Winter and today. That era can
`just as easily be called the Age of Go ogle as
`anything.
`
`There is one fact that is now indisputable in the
`history of what happened when the news business,
`and countless others, collided with the Internet.
`And that fact is simply this: Go ogle changed
`
`liTh ere was
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`2/11
`
`
`
`an enormous
`fear that we
`were selling
`out to the
`demons, that
`this service
`on the
`Internet was
`going to be
`perverted
`and spiral
`downhill into
`the clammy
`hands of the
`capita I ists."
`
`Chapter 12: Google, The Second Coming - Riptide
`5/15/2014
`everything. Like the dawn ot" every other era in this
`epic saga, the Google era actually began during the
`height of the previous era, in this case Web 1.0. It
`started in 1998, when -yet again- two Stanford
`graduate students, Sergey Brin and Larry Page,
`founded their little search engine company with(cid:173)
`yet again -another silly name, in the two(cid:173)
`bedroom graduate housing apartment they shared
`with another student.
`
`Google began with a decidedlyun-media company
`idea, creating a search algorithm that would
`"purify'' the quest to find whatever you were
`looking for on the Internet without applying
`individual human judgment. Yet Go ogle quickly
`evolved into the ultimate media company and has
`proved to be the ultimate disruptive innovator (so
`far) of a multitude ofbusinesses. But above all else,
`it completely turned the advertising business on
`its head, beginning with the notion that Google
`didn't want you to come to its site and stay there;
`it just wanted you to go through it to get
`everywhere else. And then it wanted to charge
`marketers for the privilege of following you where
`you were going, and knowing what you went there
`for, and then selling them the ability to advertise
`to you.
`
`"Paid search" is the understated name given to its
`main business concept, which Google didn't invent
`but worked hard to optimize. Then again, that's a
`bit like saying that Sam Walton didn't invent
`discount retailing, but merely made the most of it
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`3/11
`
`
`
`Chapter 12: Google, The Second Coming - Riptide
`5/15/2014
`with a modest chain of stores. Go ogle wasn't the
`first search site to present paid results: that was
`invented during the dot-com boom by an
`entrepreneur named .!'!~~ .. 9.:!:':~.~-~-' who created a
`sponsored search engine called goto.com that
`eventually became Overture and was later bought
`by Yahoo. But Yahoo wasn't able to swim fast
`enough to catch Go ogle, and Google rapidly gained
`market dominance after it got started. Google
`called its service Adwords, which are those small
`text ads that showup next to the search results
`you're looking for whenever you type something
`into a Google search box and click "enter."
`
`Google CEO Eric Schmidt has a pretty simple
`explanation for what actually makes his fairly
`complicated company click, and it's the same thing
`that used to make all those news companies so
`profitable: a river of advertising dollars.
`
`ERIC SCHMIDT
`
`Google today is pretty much the same as it has
`been since I've been here. Since 2001, the
`majority- 97%, 98%- of our revenue
`comes from ads of one kind or another. These
`little ads that come along with our search
`results, which are targeted to what you were
`looking for, people auction and people click on
`them, and we make a lot of money from that,
`and we do it globally, and it works extremely
`well. That's not changed very much, and I
`don't think it will change very much in the
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`4/11
`
`
`
`next while.
`
`MARTIN SORRELL on the creation
`of so-called "native advertising."
`
`Today, with digital advertising revenues
`in excess of $40 billion annually,
`Go ogle's share of the digital advertising
`market dwarfs all others. Sir Martin
`Sorrell, CEO of global advertising giant
`WPP, says that Google has become his
`firm's number-one spending
`destination. The search company
`supplanted leader News Corp. and its
`global empire of media brands,
`everything from The Wall Street
`Journal to Fox News and The New York Post to
`American Idol. It was Sorrell who first referred to
`Go ogle as his "frenemy'': at once, both friend and
`enemy. The same word is now often applied in a
`news context, as Google is a vital provider of traffic
`and revenue to news sites, while at the same time
`it systematically and voraciously feeds on their
`revenue streams. And while Google may want to
`be known for its "Don't be evil" credo, Sorrell
`captured well the business impact of what they
`really do:
`
`MARTIN SORRELL
`
`But if you thought about what was their
`principal operating principle, it would be
`disintermediation of established business
`models and providing you and I as consumer
`
`
`
`5/15/2014
`
`Chapter 12: Google, The Second Coming - Riptide
`with a cheaper alternative, a better-value
`alternative ... In a way, I think this is an
`industrial revolution that probably, for legacy
`companies, is very difficult to deal with.
`
`Google annual revenue, 2001 to 2012 (in billions}
`
`$60B
`
`2001 2002
`
`2003 2004
`
`2005
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`2011 2012
`Source: Google
`
`Google's annual revenue has climbed at the same time
`newspapers' has plunged. Source: Google.
`
`As he had in the early days ofYahoo, Mike Moritz
`of Sequoia became an early backer of Google.
`
`MIKE MORITZ
`
`The Google investment wasn't centered
`around media. It wasn't centered around
`news and information. It was centered around
`technology. The obvious point that the power
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`6/11
`
`
`
`5/15/2014
`
`Chapter 12: Google, The Second Coming - Riptide
`ot the search technology that the tounders ot
`Google and their close friends had worked on
`[was] superior to everything else that was
`around.
`
`JOHN HUEY
`
`But you saw it early on as an advertising play,
`right? Or not?
`
`MIKE MORITZ
`
`Initially, Google was going to be a licensing
`company to ...
`
`MARTIN NISENHOL TZ
`
`It was. It was licensing to Yahoo.
`
`MIKE MORITZ
`
`That was part of the way that Sequoia got
`involved with Google. Google was licensing its
`search technology to Yahoo for Yahoo to
`distribute.
`
`JOHN HUEY
`
`When and how does the advertising light bulb
`go off? Is Sequoia involved in that?
`
`MIKE MORITZ
`
`The advertising light bulb went off very early
`in a tiny way at Yahoo. The first
`advertisement, I think, was a tiny,
`inconspicuous Visa advertisement, which
`provoked all manner of hand wringing within
`Yahoo .... There was an enormous fear that we
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`7/11
`
`
`
`5/15/2014
`
`Chapter 12: Google, The Second Coming - Riptide
`were selling out to the demons, that this
`service on the Internet was going to be
`perverted and spiral downhill into the clammy
`hands of the capitalists. There were all these
`outraged emails from the devoted that there
`was this little Visa advertisement.
`
`Of course, it played out that Yahoo got over its
`squeamishness about running online ads pretty
`quickly and became the dominant Internet media
`company of its moment- but then lost its lead to
`Go ogle and has been playing from behind ever
`since.
`
`ART KERN
`
`... It's simple mathematics. If you got the best
`algorithms, you wring most of the cost out of
`the aggregation business that you're in. Here's
`Yahoo, clunking along with all those human
`beings, trying to aggregate information, and
`here's Google.
`
`Google's architecture, the way they launched
`anything new, was stunning. We didn't know
`it quite at the time, but it didn't take us long to
`figure it out. They set up the company with a
`vision that everything we do, we can do, if we
`press one button here in [Silicon] Valley, it
`can roll out worldwide, instantaneously. Think
`of what kind of architecture it would take to
`do that. Among other things, they had
`strapped together these very cheap servers
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`8/11
`
`
`
`5/15/2014
`
`Chapter 12: Google, The Second Coming - Riptide
`by the hundreds ot thousands, literally. It's the
`software that interconnected them that was
`brilliant. People forget that the architecture ...
`of how the data flows, really matters.
`
`Again, back to the point about speed. Like [at]
`Yahoo we'd have a [new product, take, for
`example] Yahoo Answers. We'd have a
`product developed by a small team in Taiwan
`or Korea.
`
`MARTIN NISENHOL TZ
`[AJ successfu I product, by the way.
`
`ART KERN
`
`Yeah, fine. But first of all, look how long it took
`just to get headquarters to understand that it
`was successful, much less roll it out
`anywhere. Versus Google, who could have
`taken something like that and rolled it out
`instantaneously. I remember asking one of our
`engineers, uwhen we're doing testing, how
`many servers do we dedicate to that task?"
`Proudly, he said, "5,000." I said, "How many
`does Google use?" He said, ,.At least 100,000.
`Maybe 150,000." Think of an exponential
`curve, and think about our line versus theirs
`and how long it would take for them to zoom
`past us. Back to search, everything that they
`did was architected for speed and simplicity.
`They made it look simple, but they had the
`best algorithms, by far. That meant that they
`would be more accurate, they'd be more
`timely. In making the advertising case, it's the
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`9/11
`
`
`
`5/15/2014
`
`Chapter 12: Google, The Second Coming - Riptide
`
`
`
`Tweet
`
`1
`
`Like
`
`1
`
`1
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`10/11
`
`
`
`5/15/2014
`
`Chapter 12: Google, The Second Coming - Riptide
`
`http://www.niemanlab.org/riptide/chapter-12-google-the-second-coming/
`
`11/11
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
