Google's chess move -- and why it's brilliant

Changes to the company's privacy policy promise to exchange value for information.

By Motley Fool Pick of the Day Feb 1, 2012 4:23PM

By Tim Beyers

 

Skeptics and cheerleaders alike have long wondered when Google (GOOG) would become Big Brother. Mark Jan. 27 as the day it happened.

 

Four days ago, the Big G announced changes to its privacy policy that, in effect, allow all of its distinct products to actively share and act upon data comprehensively. You can look at this in one of two ways:

  1. Google is keeping the equivalent of an FBI file on you and using the aggregated information to boost profits.
  2. Google is tracking every service you use and how you use it in an effort to raise the value it's providing you. And, yeah, boost profits by collecting more relevant data for advertising.

No matter what Google says, privacy advocates and competitors will eventually argue that the company has gone too far because it already has a history of doing so. Unauthorized Wi-Fi mapping, for example. Facebook attempted to capitalize on Google's history of snooping gaffes with an unseemly stealth smear campaign that, thankfully, went nowhere.

 

Trouble in the clouds
The social network may have gone too far, but Microsoft (MSFT) chief executive Steve Ballmer already has a history of sticking it to Google in public statements, at one point saying that "no one uses" its Apps suite. What do you want to bet Ballmer will trash Google's new privacy policy the first time he's asked about it?

 

He'll get cheers if he does. Privacy advocates tend to express doubts about anything that exists primarily as a Web service because of the distance between data and user. Store information in far-flung servers and it becomes more vulnerable, the thinking goes, largely because of high-profile hacking stories.

 

Last year's takedown of Sony's PlayStation Network highlights the danger. Holes in Amazon.com's (AMZN) Web Services platform were thought to be partially to blame, a scary proposition, given the huge number of businesses that use the e-tailer for hosting support.

 

Help for your brain
Which leads us to the question that matters most now that a more integrated Google experience is forthcoming: Is the trade-off worth it? Would you or any of us be OK were our accounts hacked and data exposed? What would the consequences be?

 

Frankly, it's a tough question to answer, but I'd probably feel no different than if I'd have suffered any other form of identity theft. I use Google's services frequently for the value created when they act in sync. The Big G knows it, too, and provided an example in the FAQ explaining the benefits of its privacy changes:

A more consistent user experience across Google might mean that we give you more accurate spelling suggestions because you've typed them before. Or maybe we can tell you that you'll be late for a meeting based on your location, your calendar, and the local traffic conditions. Google users still have to do too much heavy lifting, and we want to do a better job of helping them.

Making the call: Buy
We don't yet know how all this will play out over the long term. But integrated services are easy to imagine, and we already know from public statements that the Google+ social network is positioning to become a sort of communications flashpoint similar to what Microsoft has created with the People Hub embedded in Windows Phone. Privacy-policy changes are the first step to making this dream real, and I think that's worth enough to make an "outperform" call on the stock.

 

Agree? Disagree? Let me know in the comments below.

 

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Google at the time of publication. The Motley Fool owns shares of Google, Amazon.com, and Microsoft. Motley Fool newsletter services have recommended buying shares of Google, Microsoft, and Amazon.com and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

 

4Comments
Feb 1, 2012 5:40PM
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Google can try to put all the ads in front of me that they want.   I don't buy based on web advertising. If I look up a recipe for cookies, I'm not going to buy the shiny cookie can or the Martha Stewart rolling pin that pops up.
Feb 2, 2012 10:45AM
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Thank goodness I never built a Google account!   Now I never will.  Reason?  I do not need or want "A more consistent user experience" that will result in even more intrusive ads and "suggestions".  I know what I want from their search engine and can already ignore their "sponsored" results.  If they had only made it an opt-in choice for those with accounts I would not be so intensely opposed to this.  It seems that companies and their advertisers are desperate to "learn" as much as possible about my personal life so that they can tailor their "messages" to me (that I already ignore) in a futile effort to increase revenue.  Others may wish to become sheep to be told what they want (which is the bread-and-butter of the ad industry), but there are still people out here with an independent mind.
Feb 1, 2012 5:03PM
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OMGOOGLE! Well I guess the hype has really gone to the heads of Googledom.What on earth are they thinking?? That we will willingly let them trash us? They had  the opportunity to show some  backbone  in China on these surveillance issues but then of course caved to the Chinese Government so they could keep spying on their citizenship. And now behold! GOOGLE  think this spying idea is absolutely spiffy too(- and why not make tons of money  with it to boot) SLIMY!!

SLIMY!!, SLIMY!!!! The saying goes,' you know the price of everything,but the value of nothing'-so what dollar amount do you put on freedom and independance??? The cracks in Gooledom's foundations are showing, and they may well sink all the way down into the murkey moat of  corporate greed-but not with ME!

Feb 2, 2012 11:53AM
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What ever happened to "don't be evil"?
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