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George Gilder: Why Does Google Seem To Be Having a Corporate Nervous Breakdown?

Gilder tells Forbes that its whole culture is “kind of self-defeating and wrong.”

Recently, Steve Forbes, Chairman and Editor-in-Chief of Forbes Media, interviewed George Gilder, tech philosopher and author of Life after Google: The Fall of Big Data and the Rise of the Blockchain Economy. Of his guest, Forbes says, “Few men or women in modern times have been so consistently farsighted in fathoming the future of high technology as George Gilder has been,” noting that he predicted the rise of the smartphone. Experts dismissed Gilder as delusional, except for Steve Jobs who “read what Gilder wrote and took it to heart.”

In the podcast, The Creativity of Capitalism And The Post-Google Era, they discuss key current issues: why entrepreneurship cannot just be automated, what’s with Google’s corporate “nervous breakdown” (below), and why student debt should simply be wiped out.

In the second part [at 14:37], Forbes and Gilder examined whether Google’s recently publicized problems arise from its business model. Recent “Google in the News” issues have featured the company branching out into politics, collecting data on masses of schoolkids, facing employee rebellion over questionably cozy arrangements with China—in particular powering China’s official snoop culture— and in general, an overall weirdness that has inspired at least one satirical novel by an ex-employee. The overall direction leaves many wondering whether the company thinks it is Google.com or Google.gov, the “gov” part, in this case, being more like that of China than that of America.

Forbes noted that Gilder had recently completed a whirlwind tour of China (“forty visits in nine days, which is phenomenal”) and asked about key differences in business model between social media companies in China and America.

Gilder: I have just come back from China where I saw Ten Cent and Ali Baba and Bai Du and all these fairly new companies that followed on the Google model but which actually know how to collect money from their customers. These Chinese companies collect only 10-15% of their revenues from advertising. Eighty-five to 90% is all collected by various ingenious ways of micropayments and automatic payment mechanisms that are quite brilliant and give them actual customers who are paying them regularly for the goods and services that they provide.

Google meanwhile collects 95% of its revenues from advertisers, producing advertisements that, most of the time, nobody wants to see. And it’s just fundamentally a model that won’t prevail, and Facebook is following.

This whole business of aggregating people by giving them free stuff, avoiding price signals and the obligation to really provide rigorous security everywhere—in order to collect data from customers in order to provide guidance for advertisers—it’s just a circuitous means of a business plan that I don’t think will finally prevail.

Forbes: Now, you said about Google, you said they’re having a nervous breakdown, they’re facing impossible business problems, misunderstanding computer science, contradictions in strategy…

Gilder: It’s a great company now. For the last ten years, twelve years, it’s been a great company. However, it’s plighted its troth to giant data centers next to windmills and glaciers and big rivers to take away the heat. And it just is not an advanced model. Sky computing is an alternative model that is emerging today with the help of the cryptocosm. That is blockchain but also a variety of models are emerging that represent distributed computation.

Forbes: Before we get to that, one more, two more things on Google: Why their seeming lax attitude about security, where they say, “That’s up to you, not us?”

Gilder: Well, they have been saying that because they are in the business of collecting your information and giving you free goods and services.

Google does have a security model and it’s a centralized security model. It’s to take all your data ands hide it behind firewalls and intrusion detection schemes and SWAT teams to descend on hackers, who nonetheless manage to penetrate the defenses. It’s an obsolete security model.

Centralization is not safe. If you classify, you tell the spy exactly what’s the most important data, the most classified data. And you know where it is because it’s in those big centralized data centers where governments hide stuff.

Forbes: One other thing on Google: Why their attitude toward national security? They disdain the Pentagon but they embrace China.

Gilder: I think it’s ridiculous that they are so intimidated by small groups. They have hundreds of thousands of employees. And 5000 scientists sign some paper about not conniving with the evil Pentagon AI programs.

And I just think they’re having a nervous breakdown. I mean, they really are. Their whole culture is kind of self-defeating and wrong. And so they’re constantly doing inexplicable things, as people having nervous breakdowns seem to do.

Next: Why student debt should simply be wiped out (in Gilder’s view, universities are preparing students to resent rather than join the new economy that is taking shape).

Previous: Why entrepreneurship can’t just be automated

Further reading: George Gilder: Google does not believe in life after Google He offers chilling insights into the ultimate visions of technocrats

George Gilder talks tech at World News Daily In a three-part interview, he elaborates on why he thinks Google is doomed.


Imagining Life after Google A compendium of comments from reviews of Life after Google

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George Gilder: Why Does Google Seem To Be Having a Corporate Nervous Breakdown?