Google: Are You the Customer … or the Product?

You know a company is big-time when its name is an actual verb. Have you “Googled” anything today?

Not so long ago, Google was a second-tier search engine. A few years before that, no one even knew what a “search engine” was or why they might need one.

Now Google is a household word. You probably use one or more of their products every day.

Google is also a $910 stock whose ticker is GOOG. Well, it was before it released its quarterly earnings report this afternoon. It’s since dropped below $875 (down 4%) in after-hours trading.

The typical earnings dance is in play here. Revenues were up almost 20% over last year but they fell just shy of the Street’s expectations. You know how it goes.

Like every stock, GOOG has positive and negative aspects. Today’s I’ll highlight some of them for you. Then I’ll tell you about another company with a Google-like tool you may want to try … and a good reason why.

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Most people think Google is just a way to search for information. Many use it for e-mail, blogging and video sharing. All these services fit into the company’s overall strategy.

But make no mistake, Google is actually one giant advertising channel.

After all, do you pay Google? Most people don’t, unless they buy extra megabytes to store e-mail.

You are not a Google customer. You are a Google product. Advertisers are the customers. They pay Google for access to your eyeballs.

Google’s competitors are not other websites. They compete against traditional ad-driven media: newspapers, magazines, TV networks.

It’s winning, too.

The company has even-bigger plans. Its Android operating system powers millions of phones and mobile devices. Chrome is on its way to replacing Web browsers like Internet Explorer — and maybe Windows itself. Microsoft (MSFT) is struggling to resist the threat.

Now Google is thinking even bigger, rolling out ultra-high-speed internet in a few cities. Google blimps float in the sky over New Zealand, testing ways to connect remote areas. Google Glass is a wearable device whose little screen will be in front of you — everywhere you look.

If Google has its way, no one on the planet will escape. You will see ads from Google wherever and whoever you are.

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Can anyone resist this juggernaut? Maybe. Apple (AAPL) is definitely trying. The iPhone/iPad ecosystem is Google’s greatest obstacle for now. Android devices are pulling ahead in the war for your eyes and ears, but Apple isn’t out of the game.

Google stumbles sometimes. Their Motorola acquisition, intended to bring hardware manufacturing in-house, has yielded nothing but losses so far.

The company’s famed “Don’t Be Evil” ethic is also wearing thin for some investors. Legal challenges are forcing a stock split later this year — but the new structure will create a controversial new share class.

If they get their way, Google CEO Larry Page and company co-founder Sergey Brin will keep voting control of Google while owning only about 15% of the company’s stock. Not surprisingly, some other shareholders are not pleased.

Google’s greatest long-term challenge may lie in its own success.

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NSA whistleblower Edward Snowden revealed Google and others cooperate with U.S. intelligence agencies far more than anyone knew.

Google was already drawing fire for its aggressive user tracking and information collection. Their fine-tuned systems allow the company to serve advertisements that catch your interest — and give advertisers more bang for their buck.

Few people realize how much Google really knows about them. It really is shocking. Now one company is offering an alternative.

Duck Duck Go is an Internet search engine similar to Google. You type in a few words and it gives you a list of matching websites from its giant index.

Unlike Google, Duck Duck Go doesn’t try to “personalize” its search results for you. It doesn’t even know who you are. Nor does it follow you around the Web and learn your habits. Founder Gabriel Weinberg designed the service specifically to avoid intrusive online tracking.

Why would you want something like this? Maybe you don’t. Millions of people use Google every day and appreciate having the Web customized to suit their tastes.

Even so, I highly suggest you look at click here and view a quick explanation of Google’s tracking practices. Fair warning: You may be in for a shock.

And in case you’re wondering … I have nothing against Google nor any business relationship with Duck Duck Go. I just know that many of you value your privacy, both online and off, and I think everyone should know the facts and make informed choices.

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More from today’s news …

  • Breaking news: Detroit made history today, filing the largest-ever municipal bankruptcy in our country’s history. It joins four other cities that have filed this year. Bond-holders, city employees and retirees are bracing to feel the brunt of this action. Has a public-sector bankruptcy directly affected you? Tell me about it here.
  • The S&P 500 benchmark hit yet another all-time high today. Good employment data, no surprises from the Fed and a few earnings surprises combined to drive stocks higher.
  • The weekly jobless claims report wasn’t especially great, but added more evidence to the notion economic recovery is only a matter of time.
  • Answering questions from senators, Ben Bernanke said higher long-term interest rates are a sign that excessively risky investments are getting squeezed out of the markets.
  • Several key stocks rose today after beating Wall Street estimates. Morgan Stanley (MS) jumped 4.37%, UnitedHealth (UNH) rose 6.52% and Bank of America (BAC) was up 3.14%.
  • Not all the corporate news was good. Intel (INTC) lost 3.75% and American Express (AXP) was off 3.63% as both posted disappointing numbers.

Good luck and happy investing,

Brad Hoppman

Publisher

Uncommon Wisdom Daily