Google a utility? Not the way we thought

Exhaust system, Port Authority Parking GarageI asked the following question more than a little while back in connection with the Kinderstart lawsuit against Google, which asserted a supposed right to a certain “objective” Google ranking (I’ve made slight non-substantive touchups):

Is Google a Utility?

[O]nce a company becomes a sort of common carrier — I am pushing this here — is there really no point at which all purchasers of its services should be treated equally? …  Avoiding a ruling that in any way characterizes Google search results as commodities is also evidently on the mind of the Google attorney who’s insisting, despite the obvious risk of doing so, that Google results, in some cases, are subjective, not objective.

And what is that risk? A ruling, or a suggestion (I don’t know enough about the case to know if this is a claim) that, far from a commodity like potatoes, electric power or fake Vuitton bags, Google results are commodities’ evil twin, a service so unique to Google, and so very, very central to the “market” (definition of which is the heart and sould of the matter) that Google has a — dare we say it? A monopoly! For let’s not kid ourselves: If it were 1966, not 2006, this search advertising business — with both Google and Yahoo at the table — would already be negotiating a consent decree with the government, and not the kind Google is looking for. . . .

But we digress. Add this to the story from last week involving an advertiser’s complaint that Yahoo! buying search terms on Google to redirect users searching for a third website that competes with Yahoo!, and what do you have? New dimensions, or at least invitations by lawyers to open new ones, in unfair competition, antitrust, tortious interference and other traditional areas of law.

Will judges build on the existing doctrines of law and merely apply them to new industries and new technologies? Or will they do as they have done in trademark, and invent new bases for recovery to “fix up” perceived injustices that those pokey legislatures haven’t gotten to? We’ll keep watching.

Turns out there was nothing to watch; no there there — it was a dumb idea, it was recognized as dumb early on, and Google, so far, is not a utility.

Except that Google is a utility, after all!  Not quite the way I meant when I raised the issue in 2006, however, according to the website Quartz:

You probably won’t be receiving a utility bill from Google anytime soon, but the search giant is slowly but surely morphing into a literal power broker. Yesterday (Sept. 17), for instance, Google announced that it would buy all the electricity generated by the 240-megawatt Happy Hereford wind farm to be built near Amarillo, Texas.

Google’s main goal is to make itself greener. Google Energy, the company’s power subsidiary, which has a US government license to buy and sell energy like any utility, will sell the electricity from Happy Hereford into the wholesale market in Oklahoma where one of Google’s massive data centers is located. The data center can’t take the power directly from Happy Hereford; it buys electricity from its local utility, which may buy it from the wholesale market. But by selling green power to the grid, Google gets to deduct emissions from its carbon footprint as if it had used the renewable energy itself. . . .

If Google Energy starts to become a major buyer in a market, the utilities might have to start offering power producers higher prices in order to compete with it.

That assumes, of course, that Google Energy will keep paying a premium for green energy as it has in the past. Google spokeswoman Kate Hurowitz told Quartz the company would not disclose the financial terms of the Happy Hereford deal. She said in an e-mail that the power purchase agreements are a “a means to an end” of promoting renewable energy and powering the company’s operations with carbon-free electricity. Google, she noted, has no designs on becoming a quasi-utility.

Google says it has no designs on becoming a “quasi-utility,” yet the article is entitled, “Google is on the way to quietly becoming an electric utility.”  On the other hand, the reporter, Todd Woody, believes takes Google at its word when it says, “Google’s main goal is to make itself greener.”

Well, okay, actually that probably is credible.  But not in the sense of “make itself greener” that Todd necessarily meant it.  Google, of course, has always been interested in the green, and that’s why it does everything it does.  And Google has a tremendous energy consumption footprint, as anyone with the slightest familiarity with the power needs of even pedestrian data centers will readily understand.  It is rational for it to seek predictability in terms of supply and cost, and would be quite irrational for it not to do so.  Evidently it’s doing a pretty good job.

If even a subsidiary part of that policy is to enhance sustainability and perhaps — through its own market-driven goals — to find ways to generate power better, faster and cleaner, what’s not to like?  In this respect, Google is certainly not acting like a utility, in the economic sense.  Which is a very good thing.



Author:Ron Coleman

I write this blog.

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