Why Are You So Afraid of Google?

Everyone's afraid of Google (Nasdaq: GOOG  ) .

Look at the iTunes App Store. Thanks to thumb-suckers at AT&T (NYSE: T  ) and Apple (Nasdaq: AAPL  ) , iPhone owners won't be given access to Google Voice -- a worthless and apparently arbitrary gesture, since Skype for iPhone is still alive and well. (And one of my favorite and most-used applications.)

At least Microsoft (Nasdaq: MSFT  ) and Yahoo! (Nasdaq: YHOO  ) have good reason to be afraid. For years, they've been lagging The Big G in search and search advertising. Now, they're teaming up.

That's smart business, even if it's driven by fear. But other critics, such as Advertising Age columnist Simon Dumenco, are hysterical about Google's efforts to be Microsoft for the Web via cloud computing, and dominate digital advertising in the process.

"What happens when 10% or 20% (or, heck, 75%) of, say, all U.S. small businesses come to depend on Google Apps and there's an outage of two hours or six hours or eight hours?" Dumenco wrote. "What happens when 10% or 20% or 75% of U.S. small businesses effectively have an entire workday wiped out, thanks to Google cloud downtime? Cascading ... flop sweat. Tears. Screaming. Desperation. Apocalypse."

Apocalypse? To the batphone! Get the president on the line! The digital world as we know it is about to explode! Gaaaaaaahhhhh!

I love the smell of rainy clouds in the morning
My apologies to Dumenco for poking fun like this -- he's a terrific columnist, really -- but his armageddon-esque view of the Google's increasing might in cloud computing just doesn't make sense.

Why? First, the technology is too early in its development. Second, there are still too many competitors and cloud-computing specialists, including Amazon.com (Nasdaq: AMZN  ) . And third, cloud computing is nothing more than a daydream without broadband Internet adoption. We still have a long way to go in this area. Just ask the president.

And that's the just beginning. Here are 3 more reasons Google isn't about to take over the digital world.

1. Google Voice doesn't save you that much.
For those crying foul over my comparing Skype to Google Voice, let's get one thing straight: Yes, I know Skype for iPhone doesn't offer SMS messaging, and Google Voice does. The point of both services is to save callers money by cutting out the middleman -- AT&T, in this case.

Google Voice does this via free messaging; Skype does it via free calls over Wi-Fi. We could argue over which costs more, but it wouldn't change the simple truth that Google Voice eats minutes every time it rings your mobile to activate a call. Skype has little to fear from this service.

2. The cloud doesn't lock easily.
Advocates such as the World Privacy Forum have long been suspicious of putting data into the cloud, considering it more vulnerable than the average network. A recent hack of Twitter's internal network, which depends on Google Apps, confirmed their fears.

To be fair, all networks have multiple nodes -- servers, PCs, etc. -- and every node, whether it's connected to the cloud or not, is a potential break point for a hacker to exploit. Hackers have been cracking networks for decades.

Single sign-in services common to the cloud could exacerbate this problem, as appears to have been the case with the Twitter hack, but in the end, this is still a cat-and-mouse game. Hackers (i.e., the cat) claw at digital locks till they open, while IT experts (i.e., the mice) find better places to hide data. If companies choose not to play this game in the cloud, if they decide it isn't worth trying to secure, Google would suffer.

3. On a global basis, Google is still a bit player with a spotty record in advertising.
The global ad market was $440 billion last year, according to GroupM. The Big G was responsible for $22 billion, or 5%, of that. And that's only part of the story. Baidu (Nasdaq: BIDU  ) beats Google in China. The Big G has failed in print advertising, and it's still working on a plan to monetize YouTube. You call that dominant?

Even clouds bring storms
Google is a great business, with a strong position in search advertising and an emerging cloud-computing business. I've invested in it. I've recommended our Motley Fool Rule Breakers subscribers buy shares. But I'm not about to pretend that Google is some all-powerful juggernaut that's already the King of Cloud Computing.

Neither should you.

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Fool contributor Tim Beyers had stock and options positions in Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy fears no other disclosure policy.


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