Google’s Recklessness could be Its Undoing

by Jeff Wiener on December 10, 2013

There is one recurring theme in the business world, that big companies, those unmatched and unchallenged in their respective fields, almost always seem to find a way to destroy themselves. It’s not difficult to discover why this happens: successful companies, those who dominate their markets, start to become arrogant, thinking that since no competitor can touch them that they can start to dictate the way things are. Such arrogance then leads to risk taking and customer abuse, which in turn leads to consumer revolt, and that’s enough to topple even the sturdiest of giants.

As noted tech analyst Rob Enderle explains, it wasn’t that long ago that we saw this exact scenario played out at tech giants IBM and Microsoft, two companies that thought their market dominance was inexorable, who took stupid risks, who took their customers for granted, and ended up as just one of the pack. Two prime examples, but one’s completely eclipsed by what Google is trying to do.

In fact, it truly seems that Google is working overtime, truly “hell-bent on destroying its nearly invulnerable market position” by abusing its customers and thinking it’s completely above the law. This behaviour, Enderle warns, will do something Google’s competitors have never been able to do: destroy the company.

The more dominant a company’s market position is, Enderle’s theory suggests, the more secure it feels. The more secure it feels, the more arrogant it will become. The more arrogant it becomes, the more foolish decisions it will make that could ultimately be its undoing. Simply put, “The more unchallenged power a firm has, the more likely it is to make a massive mistake because it feels that rules that apply to other firms don’t apply to it.”

Consider just a few key examples from history. As Enderle notes, Standard Oil used to be the most powerful company of its time, holding an entire nation in the grip of its oil resources, knowing full well that people wanted oil-fuelled technology; they’d have to come to Standard Oil. The American government disagreed, of course, and Standard Oil’s ironclad monopoly was broken.

The tech industry itself has innumerable tales of such domination gone awry. Consider RCA, a company that monopolized the early electronics market, controlled radio and TV sales, and controlled almost allAmerica’s electronic content. It was similarly dismantled and now exists as a middling member of the pack. That in addition to the aforementioned blunders of IBM and Microsoft, both of whom ignored competition and mined their customers until people simply went looking for other options. Neither company has regained its dominance.

So now we have Google, a company looking to replace millions of manufacturing jobs with its new robotic initiative, a company looking to covertly create a comprehensive picture of its users to sell to advertisers, a company looking to bend society to its whims, breaking the rules where necessary and flexing its uncontested dominance at every turn. Its such recklessness, Enderle argues, that will be Google’s undoing, it’s just a matter of when.

In the end, while the old adage says, “power corrupts, and absolute power corrupts absolutely,” I tend to think it just makes people stupid. But that’s not a bad thing, in fact stupidity seems to be the most welcome by-product of unchecked dominance, nature’s way of letting people and companies know they’ve become too big for their britches.

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December 30, 2013 at 5:31 am

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