Google and the Petro Curse

The Google graveyard of services is a familiar Internet trope that describes Google’s habit of sunsetting popular services. It’s infuriating. Seemingly everyone has a story of some app they depended on that Google killed. The smart money no longer adopts new Google services, fearing that if they do, the hammer will fall as soon as they come to depend on it.

David Heinemeier Hansson has an interesting post on why this happens. He says that Google is like those countries that are oil rich and build their economy on the oil industry. The result is that this distorts and corrupts their economy. As Hansson says, why invest in other industries when riches are literally gushing out of the ground?

Google has its own version of petro riches: advertising. Hansson says that 30% of online advertising flows to Google and brings it 40 billion dollars a year. The problem is that whatever else Google does is just noise as far as income is concerned so they have no incentive to stay the course with anything that doesn’t directly benefit advertising. If it doesn’t contribute to the mining and sale of users’ data, Google eventually loses interest.

I found Hansson’s argument persuasive. It explains Google’s behavior in a simple and convincing way. Not everyone agrees. Some of the reddit comments on the post are supportive but others take exception. The two basic arguments contra Hansson are that (1) Google is not isomorphic to a Petro State so the whole argument fails, and (2) Hansson is evil/stupid/something-else-I-don’t-like so anything he says must be false. The first objection fails to understand the concept of analogy. The second is a common fallacy that imagines truth is dependent on who speaks it.

Happily, you get to make up your own mind. The only other argument I’ve heard is that Google closes down apps because they’re evil. That’s an emotionally satisfying explanation but probably has little to do with reality.

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