Is Google (the disrupter) getting disrupted?

Google prides itself of being a disruptive force that causes the rise and fall of businesses and industries. But on September 16 2015, it will remembered as the watershed moment when Google the disrupter became the disrupted.

On that day, Apple released iOS 9, which introduced ad-blocking to the mainstream. In iOS 9, third-party app developers can create content filtering apps that works hand-in-glove with Apple's Safari web browser. This feature empowers users to selectively strip out online advertisements, privacy-violating trackers and malware from websites they visit.

iOS 9's content filtering feature came at the right time.

Online ads are a simmering problem for everyone. Over the years, they are getting increasingly obnoxious, interruptive and annoying. They slow down the web considerably and gobble up precious Internet data downloads. Worse still, the visible parts of online ads are just the tip of the iceberg. Underneath most of them are disproportionately much larger edifices of unwanted code infrastructure that spy, track, collect information and tail unsuspecting users from website to website. Recently, an even more disturbing trend emerged. Hackers are distributing their malware through online ads even on supposedly reputable websites.

As more and more people (1) got fed up with online ads, (2) became alarmed at losing their privacy and (3) noticed that their computers are becoming infected with malware, they begin to take matters into their own hands by employing content filters that strip out those unwanted elements of websites. These content filters are known as “ad-blockers”. For many years, ad-blockers usage were limited to more technically inclined users on desktop computers. But recently, it seems that a tipping point had been reached as the growth in usage becomes exponential. To put it simply, online advertisers had crossed the line where they are no longer welcome and are being regarded as parasites. With iOS 9, ad-blockers had made its first crossover from desktop computers to mobile devices.

Why has online advertisements degenerate into such a sorry state in the first place? As I explained more in depth in my book, The Google Trap: How Internet Aggregators Enrich the 1%, Impoverish Creative People and Threaten to Decimate the Middle-Class, the insufficiency of advertisement revenue and ad-blindness forces the hand of the online advertisement industry to produce increasingly annoying ads. As I predicted in my book early last year,

Can you imagine what future advertisements will be like when the projected growth in the online advertisement market becomes reality? It does not take a genius to see that sooner or later, a tsunami of consumer backlash will happen.

Today, the backlash has happened. Actually, the online advertisement industry knew a backlash will eventually come. To preempt such a backlash, they tried to make online advertisements 'useful', which made it necessary to violate our privacy. As I wrote in my book,

Something has to be done before [backlash] happens!

Somehow, advertisers have to figure out a way to make their advertisements much more discriminate than what they are right now. In their fantasy world, advertisements will be so precisely discriminate that they will present to you products that you really need or want just at the right place and time. If they can achieve that, then advertisements feel more like welcomed assistances rather than irritating and unwelcomed interruptions. If they can achieve this Holy Grail, it will be nirvana for advertisers!

Is that possible?

Well, the only way for it to be possible is for advertisers…

By now, you should realise that in such an advertiser’s nirvana, you will have zero privacy.

That explains why the visible part of online ads is just the tip of the ice-berg. The invisible privacy-violating parts of online ads form the bulk of the iceberg underneath the surface of the water. Unfortunately, the online advertisement industry stuffed up. The backlash that they anticipated happened earlier than expected.

Make no mistake, ad-blockers usage will continue to grow. Those who use them have noticed speed differences as great as between night and day. Ad-blockers have reportedly made some websites load as much as 90 percent faster! Those who discovered the 'magic' of ad-blockers will talk about it. And with high-profile news report about iOS 9's ad-blocking features and doom and gloom talk about the end of the online advertisement industry, interest and discovery about ad-blockers will continue to grow.

Is this game over for online advertisements?

Curiously, amid the fear, uncertainty and doubt among businesses and industries that rely on online ads to survive, an elephant in the room is silent- Google. Given that 90 percent of Google's revenue comes from online advertisements, fear, alarm and consternation must be rife in their boardrooms even though they are not showing it. Obviously, the more ad-blockers are employed, the greater the loss of revenue. But this is just the first round of impact. The second and third round of impacts will have wider ramifications on the Internet landscape and the future of Google.

To understand the second and third round impacts of ad-blockers on the future of Google, we must go to my book, The Google Trap: How Internet Aggregators Enrich the 1%, Impoverish Creative People and Threaten to Decimate the Middle-Class:

To understand exactly what Google is selling, here is a crucial point to understand: in Google’s ideal universe, information (collectively) is free and abundant, but consumers’ attention (for each individual information provider) is scarce. Each feed of one another in a positive feedback loop—to attract the attention of consumers, businesses are forced to give more and more information away, which in turn causes information to be more abundant (collectively), which in turn makes consumers’ attention even scarcer (for each individual businesses), which forces businesses to give yet even more information away.

And here is the crux of Google‘s business model—it sells access to consumers’ attention. By using Google’s free products, your attention is captured by Google. Then it sells your attention to businesses in the form of advertisements

If everyone uses ad-blockers, Google cannot sell attention in the form of online ads- this is the first round of impact.

In the second round of impact, some web publishers who rely on online advertisements to stay financially afloat will go out of business. This will result in information becoming less abundant, as websites disappear from the Internet. With less abundance of information, economic law of supply and demand dictates that the value of information goes up. As my book explained, it also implies that the value of attention goes down because there is less of the attention pie to be divided. Thus, the value of what Google sells (attention) goes down. Hence, even if it can somehow sell attention in other forms (other than online ads), the value of attention will never be the same again.

Those who can find another way to survive have basically these two options:

  1. Put up a pay-wall (e.g. web-based pay-wall like the Wall Street Journal, turn their website into apps in mobile devices).
  2. Migrate their content to where advertisements cannot be blocked (e.g. Apple News).

When web publishers do that en masse, it will be death knell of search engines. Search engines rely on websites that are open. When web content goes behind pay-walls or migrate into closed system like the Apple News app, they become inaccessible to search engines. For Google, since its search engine constitute a major part of its business, shutting a large part of the web from it is like chopping off Google's limbs. This is the third round of impact for Google. With its search engine severely disabled, it can no longer attract attention it once did.

In summary, the first round of impact is the initial financial hit to Google. The second rounds of impact reduces the value of its product. The third round of impact crimps the quantity of product it can sell.

It's time Google reinvent itself.

 

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