The great debate: Google vs Murdoch

On Monday morning Murdoch claimed on Sky that he would take all of his content off Google. That afternoon, Google announced the purchase of AdMob. Fascinating to phrase the question that way – one man against a billion-dollar company. The phrasing of the question alone highlighs Murdoch’s power. And it’s fascinating that Microsoft is not mentioned.  Gordon Brown in GQ this month says that Murdoch – or The Sun – is trying to be a political party. But I chose to frame the question around three points:

1. Who has the closest relationship to the consumer? Always the place to be.2. Who makes the most money? That can be indicative of strength – but it can also be a short-term position.3. Who can you avoid? Ubiquity and monopolistic power are at play here. So Murdoch’s strength today is that he is closer to the consumer. And he is rightly trying to win in the paid-content battle. Today, everything in business has a fundamental “network orientation”, which goes far beyond Facebook.  The winners are those companies who align the economics of their ecosystem. That can be a startup hellbent on destruction or an established player with vision. Remember: Google’s innovation was its business model, not its search technology. Alta Vista was the better search engine, and Yahoo the more dominant one. But it was Google who stole the business model. That twist of fate gave it a clever ruse to gain control, to establish massive network effects by organising the economics of the world’s information.

That’s why it is winning. But when the consumer wakes up to understand the value of their personal information [that they give away through the process of browsing and searching the web], then they too – like every artist or any creator of content – will want a cut of the value of the transaction or they will shift to a new paradigm which gives them their fair share of the value, and in doing so, protects the privacy of that information. There will be many failed attempts but eventually there will a breakthrough, some guy who by design, stumbling or theft, will see that next paradigm. We laugh to think of Google fearing cannibalisation of its status quo but, like everything under the sun, it has an Achilles’ Heel. If it doesn’t move fast, someone else will.

Short-term, you can’t avoid Google. Long-term, bet on the entrepreneur and the on-going process of innovation.

Julie Meyer is CEO of Ariadne Capital, founder of Entrepreneur Country and a BBC online dragon.

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