Webware

In general, most New Year's resolutions tend to last as long as the NFL playoffs. But those who enter the year working for the world's most ambitious technology company won't have that luxury.

Google enters its 12th year as an information and financial powerhouse, holding claim to perhaps the most enviable position on the Internet and worming its way into all sorts of businesses that Internet companies have traditionally avoided. The company shows little sign of slowing down its innovation engine, but as a result of that pace faces competitive threats like never before from other giants of the technology and media worlds.

What should Google leaders Eric Schmidt, Sergey Brin, and Larry Page focus on in 2010? Here are five suggestions:

1. Don't forget where you came from
Search remains Google's cash machine. It ended the year with around 65 percent of the U.S. search market, according to ComScore, and does not appear to be losing any momentum. Microsoft's well-received reinvention of its search efforts in the form of Bing seems to have the main effect of taking business away from Yahoo, its pending search partner, rather than denting Google's advantage.

But the nature of search is changing as the nature of information produced for the Internet changes. Real-time results are now seen as important, and Google has much work to do in order to prove its real-time strategy unveiled in December will produce the same types of relevant results that its main search engine did in rising to the top. Social-networking sites are host to an enormous amount of relevant content that Google can't necessarily find.

Google does not face as many competitive threats in search at the moment as its antitrust defense lawyers would like you to believe. But that doesn't mean that it's not vulnerable to the same sort of scrappy start-up that it once was, operating under the radar with a fresh take on the world. As Schmidt well knows, having imposed a strategy of focusing 70 percent of Google's attention on search, keeping the gravy train running is job No. 1 at Google.

2. Get control of the engineers
This is undoubtedly a controversial notion inside of Google. But the tech history books are raft with giants that slowly grew arrogant and haughty with their success, from IBM to Microsoft. Google knows it needs to avoid traveling down a similar path while catering to an engineering culture that has almost never taken no for an answer.

Simply put, Google's engineers do things because they can. And at some point, that's no longer going to fly as Google enters more and more markets. That's because while much of Google's self-image revolves around avoiding evil, that mindset only applies to users of its products. It doesn't apply to competitors or partners, who have the ability to cry foul if they believe they are the victims of unfair competition (regardless of whether or not it's actually true).

If at some point the government deems Google to have a monopoly in search advertising, expect Google's march into other markets to slow. Engineers may scoff at such restraints, truly believing in the quality and usefulness of their work. But regulators are not engineers, and those folks might arguably hold more power over Google in 2010 than any other force.

3. Get HTML5 standards finalized
Much of Google's strategy for ushering computing into the 21st century revolves around the notion that the browser can be the dominant platform for applications. There are numerous benefits to this approach in theory; software can be much more lightweight and suitable to mobile devices if run over the Internet, malware can't knock out a personal computer that doesn't allow things to be installed locally, and, of course, users who spend their lives on the Internet are more likely to search for information.

But in order to make that vision happen without being labeled as a usurper, Google's representatives on the W3C Working Group for HTML5 must make sure that the various components of the HTML5 technologies are approved in concert with the community of other browser vendors, so that Google is not seen as having a distinct advantage. The company appears to take this very seriously, and the sooner the process can be brought to fruition, the easier it will be for projects like Chrome OS to develop without being seen as an attempt to corner the personal computing market.

4. Live up to the promise of Google Books
Perhaps the biggest albatross around Google's neck in 2009 was its settlement with authors and publishers over Google Book search, a process in which Google managed to turn lemonade into lemons. Its attempt to create a digital library for the ages was vehemently protested by authors, privacy advocates, and copyright experts angry over Google's scan-first ask-later approach to building that database.

Few doubt the value of an open digital library that unlocks access to books stored on musty shelves at exclusive universities. But many are distrustful of Google's intentions when it comes to Google Books, and putting their fears to bay could go a long way toward ending the acrimony over the settlement. A final hearing is scheduled for February, and while Google has already made concessions in response to criticism from the Department of Justice, lining up an independent partner to be a second source of this digital material would take the wind out of much of the opposition's argument.

5. Clarify your mobile strategy
We may get a sense of this one extremely soon, as Google is scheduled to host an Android event Tuesday that most believe will mark the debut of its first Android phone sold directly to the general public.

Google is walking a fine line at the moment, should it really intend to sell its own branded phone. One of the primary reasons that the iPhone took off was that Apple dictated the experience that iPhone users and developers would see, locking the hardware specs and controlling the distribution of software for the platform. Of course, that approach has all kinds of side effects, which appeared to be the primary motivation behind Android: a modern mobile software platform free of such restrictions and available to anyone who wants to make a phone.

However, Google's partners--even if they knew about the Nexus One months ago--are likely to be perplexed by its decision to make its own phone. Will Google developers reserve key Android features for Google devices? Will they cut back on their promotional resources for Open Handset Alliance partners in order to promote their own phone? And why should they trust Google in the future, given that the company has said numerous times that it had no interest in making its own phone?

The beauty of the mobile computing market is that it is truly up for grabs, and that no one company appears ready to dominate in the same manner that Microsoft came to own the PC. But Google will have crossed a line if it really does plan to sell its own phone: it will have leaned on the efforts of others to create a viable market for Android only to swoop in once the software has grown popular with a device of its own.

That means other companies could think twice about partnering with Google in the future.

Google has announced an Android related press conference for January 5, the same day that earlier reports indicated would see the launch of the Google Phone.

Invitations were sent to various members of the media Tuesday promoting the event at Google's headquarters, to be held just as the annual CES gadget fest gets under way in Las Vegas. Expectations are high that Google will use the occasion to announce the launch of the Nexus One phone as its first phone sold directly to consumers.

It also seems Google is finally ready to address the questions that have risen about its Android strategy following reports that it planned to sell this particular phone directly to consumers through its Web site. Google has invested a lot of time and money during 2009 promoting the Android phones of its partners--namely Motorola and Verizon--and could be about to complicate the work of those partners with its own device.

In any event, Google's announcement will likely kick off a crowded week for the technology industry and could perhaps overshadow any news to emerge from CES later in the week.

The ethereal Google Phone could arrive as early as January 5 on T-Mobile's network, according to a report.

Google could start selling the Nexus One directly to consumers on January 5, according to a new report.

(Credit: Cory O'Brien via Twitter)

That's according to TmoNews, a blog that obsessively tracks the movements of T-Mobile. It says it has obtained an internal training document that mentions the Google Phone, thought to be the Nexus One phone distributed to Google employees earlier this month.

In the document, T-Mobile informs its employees that "the Google Android phone will be sold solely by Google via the Web," backing up other reports that Google is about to make a radical departure from its previous phone strategy and "compete with its customers," something Google Android chief Andy Rubin had said the company was not interested in doing.

The document makes no mention of timing, but TmoNews said its sources believe the phone will launch on January 5 at 9 a.m., just before the major CES trade show gets underway in Las Vegas (we presume that's 9 a.m. Pacific time, but the document didn't stipulate the time zone). Engadget reported a similar launch date last week.

We still don't know what the Nexus One/Google Android phone will cost, or even whether sales of the phone will be limited to a small number of registered developers, as Google as done with two previous phones. However, it's hard to believe that T-Mobile would need to gear up for the launch of a phone sold in very limited qualities.

Ever since Google said it had no plans to sell its own phone directly to consumers in October, it has refused to comment on its Android strategy as reports it was about to do just that have built. A Google representative did not return an e-mail seeking comment on Tuesday.

Consumer groups are worried that Google's proposed AdMob buy would give it too much mobile power.

(Credit: Google)

Two consumer groups have added their objections to Google's proposed acquisition of mobile advertising network AdMob, saying the deal would be anticompetitive and cause privacy concerns.

The Federal Trade Commission has already signaled that it wants to take a closer look at the $750 million deal, which was announced in November. AdMob runs an ad network across mobile sites and applications, and critics such as Consumer Watchdog and the Center for Digital Democracy are concerned that the company will give Google a big advantage in extending its dominant share of the search advertising market into the fast-growing mobile space.

"The mobile sector is the next frontier of the digital revolution. Without vigorous competition and strong privacy guarantees this vital and growing segment of the online economy will be stifled," said John Simpson of Consumer Watchdog and Jeffery Chester of the Center for Digital Democracy, in a letter sent to the FTC Monday (click for PDF).

It's not clear exactly what the FTC is examining during its current review of the deal, but Google said last week that the receipt of a "second notice" would push back the expected completion of the deal by a few months. This is getting to be the new normal for Google, which is coming off a year during which it faced more government scrutiny of its growing online power than ever before.

A Chinese author plans to sue Google for scanning one of her books into the Google Books database without her permission, according to a report.

Mian Mian intends to file suit this week against Google, claiming copyright infringement after discovering that her third book, "Acid Lovers," was scanned by Google as part of its book digitization project, according to AFP. The suit would be the first filed against Google in China over the Google Books project, which itself is no stranger to the courtroom.

Legal battles over Google's U.S. settlement with authors and publishers will stretch into 2010, nearly 15 months after Google first reached an agreement with those groups to allow it to continue scanning out-of-print but copyright-protected works. Google is the only organization with explicit permission to scan that type of book, which it has been doing since 2005 while claiming that fair-use laws permit such activity. (The rules governing its ability to display to that kind of book in Google Books are more convoluted.)

That settlement, however, applies only to the U.S. and a few other English-speaking countries. Reports surfaced a few months ago that Chinese authors were thinking about ganging up on Google, which is apparently in talks with representatives of those groups but has yet to reach a formal agreement.

The U.S. settlement is still on track for a February hearing to decide whether the revised settlement--completed under the Department of Justice's watch--should be approved.

Earlier this month, a French court ordered Google to pay 300,000 euros ($430,000) in damages and interest to French company La Martiniere, which had sued the tech giant for copyright infringement for scanning book excerpts to include in its Google Book search results.

The Federal Trade Commission has asked Google to provide more information about its pending acquisition of AdMob before giving that deal final approval.

Google disclosed the "second request" in a blog post Wednesday afternoon, saying "while this means we won't be closing right away, we're confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes. And we'll be working closely and cooperatively with them as they continue their review."

When Google first disclosed plans in early November to acquire AdMob, a leading provider of mobile advertising services, for $750 million, it said that it expected the federal government to take a closer look at the deal. Google even prepared a special Web page for the media and regulators explaining why it believed the deal did not pose any competitive threats, which is becoming standard practice at Google as it deals with increasing scrutiny from the government.

However, the second request could push back Google's initial expectation that the deal could close "in the next several months," although that's a statement with an awful lot of wiggle room. Google is also facing a delay with its proposed acquisition of On2 Technologies, which seems to be having trouble gaining the necessary number of shareholder votes in favor of the deal.

As a year winds down in which criticism of Google was perhaps never louder, the company used a quiet preholiday afternoon to post a manifesto on what it means to be "open."

Google's Jonathan Rosenberg

(Credit: Google)

Jonathan Rosenberg, senior vice president of product management, originally wrote the "The meaning of open" as a memo to employees, but posted it on Google's official blog Monday. In the essay, Rosenberg lays out Google's belief that the use of open technologies and open information are two of Google's most important core values, although reasonable people can disagree on the meaning of "open" in various contexts.

"This [disagreement] is happening often enough for me to conclude that we need to lay out our definition of open in clear terms that we can all understand and support," Rosenberg wrote. "What follows is that definition based on my experiences at Google and the input of several colleagues. We run the company and make our product decisions based on these principles, so I encourage you to carefully read, review, and debate them," he told Google employees in the memo.

Much of what Rosenberg has to say should not be new to anyone who follows Google. The company believes in open-source projects and use of open standards on the technology side of its operation, although that still doesn't mean it plans to open-source the famous search algorithm any time soon, as "opening up these systems would allow people to 'game' our algorithms to manipulate search and ads quality rankings, reducing our quality for everyone," he wrote.

Most of the backlash against Google in recent years has come as the company has amassed a treasure trove of data on those who use its services. That means Google has to be open about what type of information it stores, how users can delete it, and whether or not gathering that information truly adds value to the product, Rosenberg wrote.

Google's supporters and detractors will likely find something in the memo with which to make their case either in favor of or against the company. For example, Rosenberg argues that those concerned about how big Google has become in such a short period of time should pay equal attention to how much Google has contributed to the world with things like Street View, Gmail, and Android.

"We can do these things because they are information problems and we have the computer scientists, technology, and computational power to solve them. When we do, we make numerous platforms--video, maps, mobile, PCs, voice, enterprise--better, more competitive, and more innovative. We are often attacked for being too big, but sometimes being bigger allows us to take on the impossible," Rosenberg wrote.

But just earlier, he perhaps unwittingly described why Google's love of open information makes so many people so nervous.

"On the Web, the new form of commerce is the exchange of personal information for something of value. This is a transaction that millions of us participate in every day, and it has potentially great benefits. An auto insurer could monitor a customer's driving habits in real time and give a discount for good driving--or charge a premium for speeding--powered by information (GPS tracking) that wasn't available only a few years ago," Rosenberg wrote.

It's safe to say that a sizable contingent of people do not share his belief that allowing real-time tracking of your movements by private companies--especially ones who sell a product that almost all U.S. residents who drive a car are legally obligated to purchase--is a good idea.

The memo makes it clear that Google--one of the largest technology companies on the planet--still sees itself as a force for good in the world, one that must continually fight off the old guard's desire to keep things just the way they are.

"There are forces aligned against the open Internet--governments who control access, companies who fight in their own self-interests to preserve the status quo. They are powerful, and if they succeed we will find ourselves inhabiting an Internet of fragmentation, stagnation, higher prices, and less competition," Rosenberg wrote.

His words are not likely to change anyone's impression of Google, but they do show how Google continues to experience growing pains as it navigates the tricky transition from plucky start-up to global megacorporation.

Google doesn't ever want to give up on its belief of itself as an exceptional company. But should it ever stop producing financial returns that give it cover from investors, it might be putting itself in an impossible position between those investors who demand returns and users who demand privacy and transparency.

This one's a surprise. Twitter will have turned a profit in 2009, a BusinessWeek report claims, citing sources. What happened? Search deals with Google and Microsoft brought in a nice chunk of cash for the company, which has raised well over $100 million in venture capital and has a paper valuation floating somewhere around $1 billion.

Considering the company has not yet put forth a long-term revenue strategy, this would be one of those Christmas miracles along the lines of a neurotic mom getting home to her stranded 8-year-old by fortuitously hitching a ride with a polka band fronted by John Candy.

So let's look at the details. Sources told BusinessWeek's Spencer Ante that Twitter's search deals with Google and Microsoft's Bing brought in $15 million and $10 million respectively, and that Twitter has managed to cut some of the high costs related to text-message functionality. (These costs were so exorbitant that Twitter temporarily had to restrict some international SMS codes.) OK, cool. Those numbers are decently plausible, and Twitter's strategic hire of a mobile business-development dude early this year likely had something to do with it. And Ante's article makes it clear that while sources have told him that Twitter will end 2009 on a profitable note, that doesn't mean it's going to be profitable next year.

But there's a difference between being cash-flow positive and being profitable, and it's also not totally clear as to what Twitter's other expenses are, or what they will be next year.

Ante writes:

Now that Twitter has become so popular, it has gained bargaining power with telecom companies and has managed to renegotiate so many deals with carriers that the company pays far less for the services. "Those used to be the biggest line item," says one source. "Generally speaking, those costs have gone away. Now people are the biggest line item."

People. Yes. Like the new office space they just moved into, and their still-expanding payroll, and stuff like that. Also: hardware, and other forms of defensive weaponry against evil whale attacks. The company also sometimes buys stuff, and continues to develop new features--like the current test of "contributors" accounts that it may end up charging for. So even with costs cut via a savvier mobile strategy, there are plenty of other costs that could be escalating simultaneously.

What's good news for Twitter is that getting $25 million out of search deals (if that's indeed true) shows that the company could expand that into a stronger long-term revenue strategy. Critics have been lukewarm on the possibility of Twitter attempting to support itself with advertisements or paid accounts, and nobody's really gone into depth on the question of whether the businesses currently raving about Twitter's power of "conversation" will cough up for more in-depth analytics.

Maybe they read the Yelp review that says Google's headquarters is infested with skunks and raccoons.

Just a few days after reporting that Google was about 80 percent likely to be acquiring business reviews site Yelp for a totally sweet $500 million, TechCrunch has backtracked. Late Sunday, TechCrunch reported that Yelp CEO Jeremy Stoppelman personally walked away from the deal and that company representatives informed Google over the weekend they aren't selling.

Or it might have been the skunks.

(Credit: CC Out at Bob's/Flickr)

That's odd. People seemed to think it was generally a good deal. TechCrunch isn't exactly sure what went wrong but speculates that Yelp may have gotten a better offer for a potential acquisition or strategic partnership that caused it to bail.

What could also have something to do with it: Google does a lot of things very, very well, but one thing it's never nailed is community. (Knol most certainly didn't kill Wikipedia, Orkut was big in Brazil but then faded in the wake of Facebook's growth, and YouTube's commenters seem to come from a very special place somewhere between the sixth and seventh circles of hell.) That's evident from looking at what Yelpers had to say about the potential deal last week. Proudly opinionated and devoted to the Yelp brand, many Yelpers were concerned that a Google buyout would degrade the site's sense of community--something that could, effectively, kill it.

Perhaps Yelp's execs thought the same and figured that strategic partnerships might be a better route for now.