1. "We know what you did last summer."
Google, the giant search-engine company, has looked unusually vulnerable lately: It rattled financial markets on Thursday when it announced a 20% drop in third-quarter profits -- and it accidentally released the results prematurely, to boot.
Yet despite the flap, Google.com's dominance in search is unrivaled. And it owes that dominance not only to the way it dispenses information to consumers, but also to the surprising amount of data it collects from them.
Google privacy rules have come under scrutiny in the U.S. too. In August, the Federal Trade Commission fined Google $22.5 million to settle charges that the company had bypassed privacy settings in Apple's Safari browser on mobile and desktop devices in order to track users with "cookies" -- little pieces of code -- and target them with advertising. Google did not admit that any law had been violated and it removed the cookies from Apple's browsers. A spokesman says it aggregates data and doesn't sell it to third parties.
But the beef privacy experts have with Google extends to the real world as well: In the race to improve mapping technology, Google has been developing a 3-D feature that uses small planes to photograph major cities. Indeed, Google plans to cover metropolitan areas populated by 300 million people in multiple countries, by the end of the year. Trouble is, those individuals aren't being consulted -- and may not want high resolution pictures of their homes on the Internet. Nick Pickles, director of U.K.-based civil-liberties group Big Brother Watch, for one, says he thinks Google should ask permission before using pictures of people's homes in its mapping systems, even though it isn't required to by law. "This 3-D surveillance takes the cameras over the garden fence," he says.
For its part, Google says its imagery is acquired using commonly available commercial airplanes, adding that it doesn't currently need to blur aerial imagery, because the resolution isn't sharp enough for it to be a concern.
2. "Apple Maps may not be as bad as they say."
When the iPhone 5, and the new iOS 6 operating system, was released in September, Apple customers were up in arms over the loss of Google Maps -- which has come preinstalled on the home screen of iPhones and iPads since the first iPhone came out in 2007. In its place is Apple Maps -- a product that even Apple CEO Tim Cook has acknowledged can't compare with Google Maps. Reviewers have so far given Apple Maps two thumbs down, criticizing its accuracy and its lack of public transit support, but analysts say the real battle for map supremacy has only just begun.
"Google got a quick moral victory when Apple released Apple Maps," says Cameron Yuill, CEO and founder of AdGent Digital, a digital media and technology company. But Apple won't suffer for its mistake for long: Already, over 100 million Apple devices are using Apple Maps. Google Maps is reportedly working on creating an app for iOS 6. ("They'd be crazy not to," says Greg Sterling, senior analyst at Opus Research in San Francisco.) But in the meantime, iOS users can only access Google's maps through their browser. That's an inconvenience that could lead some Google Maps fans to find a new favorite app. And as if losing consumer eyeballs weren't bad enough: Losing the Google Maps for iPhone contract could potentially mean the loss of hundreds of millions of dollars in revenue for the company in the years ahead, experts say. The mobile maps market alone accounts for an estimated $625 million in annual sales, according to Opus Research.
On the upside for Google, Apple exercised a lot of veto power about the number of ads appearing in Google Maps, Sterling says. Now, assuming Apple approves its new app, Google will be able to put "whatever ads it wants onto that," Sterling says. (Google declined to comment.) Even though Apple's mapping app, meanwhile, is currently subpar, insiders expect it to introduce a more detailed maps app in the months ahead. Ultimately, Sterling says, consumers will get more choice.
3. "Your online reputation isn't our problem."
Bad news for those who don't like what they read about themselves on the most popular search engine on the planet: There's not much you can do about it. "Being able to remove [anything] from Google's results is challenging at best, unless you take legal action," says Josh King, general counsel and vice president of development at Avvo.com, an online forum that gives legal advice. Google doesn't own the Internet, he says, but its algorithms are designed to give priority to relevant mentions on blogs -- despite their varying quality -- and on online resources like Wikipedia. Needless to say, search results can put a person's job or business in jeopardy. Plastic surgeon Guidotti Russo, for one, has been trying to remove a reference to an alleged botched breast enhancement for 20 years. (Russo did not respond to requests for comment but previously told The Wall Street Journal he had been cleared of a reckless endangerment charge stemming from the incident.)
Taking legal action against a website or Google -- or complaining online -- comes with its own risks though and should be a last resort, King says. "Otherwise, you're going to bring more attention about the negative feedback that you wouldn't have brought to it otherwise," he says.
Google says it will remove results only for legal or copyright reasons. "We don't take action in 'he said, she said' disputes," a representative for Google says. Google's online-reputation-management policy recommends that consumers and businesses create a Google+ profile, because such a profile will rank high in the search results. The policy also suggests contacting the owner of an offending site to request removal of statements or images. In a 2010 interview with The Wall Street Journal, however, Google's former CEO, Eric Schmidt, (perhaps jokingly) offered a more novel solution for young people targeted online by disgruntled exes: Change your name. In most cases, King says, that at least is possible -- especially for those operating small businesses.
4. "Our tablet is no match for the iPad."
Finding a niche in an already crowded tablet market presents serious challenges, even for Google, analysts say. While there are hundreds of devices powered by Android, the Linux-based operating system Google developed, Google's first tablet designed and developed in-house (in partnership with Asus), the Nexus 7, hit store shelves only in July. And while it has been well received by critics and has seen respectable sales, analysts say it's a long way from becoming a breakout star: Its panoply of rivals ranges from the 9.7-inch iPad to smaller 7-inch tablets like Amazon's Kindle Fire.
Apple's own 7.87-inch Mini tablet is expected to be released in November -- just in time for the holiday shopping season. "It's going to be a serious, serious challenge to the Nexus 7," says Bob O'Donnell, program vice president for clients and displays at research firm IDC.
Even before the release of the iPad Mini, Apple's tablet share (by units shipped) had risen to 68% in the second quarter, from 62% in the first quarter (Samsung had 9.6% of the market, Amazon's Kindle had 5% and Nexus 7 manufacturer Asus had 3.4%). The Android tablet category, as a whole, probably won't even crack 30% of the market over the next five years, says O'Donnell. Furthermore, the Nexus 7 is expected to sell just 3 million tablets in the quarter ended Sept. 30, versus 17 million iPads sold in the quarter ended June 30, says O'Donnell.
Among the reasons Apple's tablets are beating the Nexus and other Android tablets, say insiders: The operating system and quality of the materials. Apple uses aluminum cases for its tablets, while the Nexus 7 uses plastic. "You can feel the difference," says Yung Trang, president of deal aggregator TechBargains.com. In an otherwise mostly positive review, Wall Street Journal tech columnist Walt Mossberg noted that the Nexus 7 lacks the iPad's "dazzling" screen resolution.
Of course, some consumers could be turned off by the Apple Mini's expected price of $299 or more. In those cases, there are still a few other threats to the Nexus's ascendance: Amazon recently launched the Kindle Fire HD, and Barnes & Noble introduced the Nook HD 7-inch tablet. Each is priced at $199 -- just like the Nexus 7.
5. "Good luck downloading our latest mobile operating system."
Although consumers have hundreds of smartphones and tablets to choose from on Android, tech pros say that doesn't bode well for those who want to download the latest version of the software. "It requires a lot of development by a manufacturer to customize the Android software to each smartphone or tablet model," says Jonathan Rick, a digital communications consultant based in Washington, D.C.
Google's operating system has undergone 10 iterations since Android 1.0 debuted in September 2008 (excluding various minor upgrades), released under a series of whimsical, sweet-sounding names: Cupcake, Donut, Eclair, Froyo, Gingerbread, Honeycomb, Ice Cream Sandwich and the current version, Jelly Bean, released in July. Each version brings improvements in picture quality and speed, and may fix bugs that plagued previous versions. Of course, Google's competitors are just as likely to issue regular upgrades. Its major rival Apple has had six versions of its iOS operating system but -- in sharp contrast -- Apple has only released five iPhones since 2007. As Apple owns the software and the hardware, Rick points out, it's easier for that company to make its latest software -- iOS 6 -- available across phone versions.
Some Android devices, like Samsung's Galaxy SIII smartphone, released in the U.S. in June, have come preinstalled with the latest software, but experts say the quality and speed of software upgrades vary across other Android devices. A spokeswoman for Google says it operates an "open platform," meaning it's up to the device makers and the carriers to bring the latest version of Android to their devices. Google must also tread carefully when balancing the needs of all companies that make Android phones. "If it's seen giving priority to one manufacturer, other Android partners will scream favoritism," says MG Siegler, general partner at venture capital firm CrunchFund.
Google says it makes the latest software available to manufacturers and chip set makers and it's up to those third parties to adapt the software to their phone in a timely manner, a spokeswoman says. But it's a slow process. The Android 2.3 Gingerbread operating system -- launched in December 2010 -- is still the most popular version, working on nearly 24% of active Android devices, according to Google data, but the latest Android 4.1 Jelly Bean is only installed on 1.8% of devices.
6. "Don't forget to load up on antivirus."
The gold rush to get apps onto the Android market has led to piracy -- rogue apps with potentially malicious malware -- which increases the risk of viruses, studies say. Earlier this year, fake software disguised as the popular games app Angry Birds, which was available through third-party stores for Android phones, infiltrated many smartphones. The rogue app quietly sent out a text in order to receive a string of premium-rate messages, costing victims around $8 per text. This led Rovio -- the maker of the real Angry Birds app -- to issue a warning about rogue Android apps.
In fact, around one-third of app developers say that app piracy is a "huge problem," according to a 2011 study by the Yankee Group. The number of malicious Android apps that can be downloaded through various third-party stores has already hit over 50,000 from January through September 2012 alone, up from just 1,000 in 2011, according to a recent survey by Sophos, an Internet security firm. Cheap technology that allows rogue developers to package malware in different guises has contributed to the surges, says Chester Wisniewski, senior security adviser at Sophos. "After the early adopters figured out a reliable way to scam people, the lazier and less-clever criminals followed suit," he says.
Of course, Windows-based PCs and (to a lesser extent) Macs have always been a target for malicious programmers and need antivirus software. But insiders say that many consumers don't adequately product their phones. In fact, only 36% of Android smartphone users actually have antivirus software, a recent survey by online security firm Kaspersky found.
"Android is the wild west of apps," says Nick Holland, an analyst at Yankee Group, a Boston-based research firm. "Historically, it has been the most problematic in terms of malware and rogue apps." In an effort to clamp down, Google earlier this year introduced a new feature, Bouncer, to scan apps for malware. A spokesman says Google Play, Google's answer to the Apple Store, is the more secure place to download applications. Google does operate an open platform, he says, but customers must change their default settings to open their Android devices to those third-party stores that are primarily to blame for rogue apps.
7. "We're not running a mall here."
When Nicky Woodgates-Piper, a mother of three who lives in Warren, R.I., goes shopping, she goes straight to Amazon.com. "I will always go there first for books and toys, mainly because of the reviews and recommendations," she says. Google has critic and customer reviews, too, but Woodgates says there are usually more to pick through on Amazon. For instance, she says, reader reviews of "The Hunger Games," by Suzanne Collins, are more comprehensive on Amazon.com than on Google.
She's not alone. Nearly one-third of consumers began their last search for online purchases on Amazon, more than double the 13% who started shopping via Google, while the rest visited websites of individual stores and manufacturers, according to a report http://bit.ly/MJ6DmI by Forrester Research released last July. That's a turnaround from two years ago, when 24% of shoppers started their searches at Google and 18% began their search at Amazon. (A spokeswoman for Google says the company doesn't comment on third-party surveys.)
"Amazon doesn't allow everyone in, so they curate their site better," says Trang, of TechBargains.com. "There is more quality control." To help change this, Google recently started charging e-commerce companies to list in order to improve the quality of results. In a blog post last month, Google said that having a commercial relationship with merchants will encourage them to keep their product information fresh and up-to-date: "Higher quality data -- whether it's accurate prices, the latest offers or product availability -- should mean better shopping results for users." But that model has drawn criticism as well, with some industry watchers derisively referring to the new Google Shopping as a "paid listings service."
8. "Our virtual books are gathering dust."
Google Books, originally launched in 2010 as Google Print, has achieved scant market share, studies say. Of the four major players in book retailing to develop an integrated store-device-platform (Amazon, Barnes & Noble, Apple and Google), "Google has been by far the weakest," says Peter Hildick-Smith, president of market researcher Codex Group.
People seldom use Google to discover new books, according to a recent survey by Codex Group, and few people actually buy books from Google itself. Although 68% of book buyers use Google Search in a typical week, only about 1.5% of new books bought in a typical month were discovered through Google Search, and only 0.5% of books sold in August were bought through Google.
Amazon, in contrast, accounts for nearly one-third (32.5%) of all books sold in August, with Amazon's Kindle store alone accounting for 13% that month, 26 times more than Google Books. (A Google spokeswoman says the company doesn't comment on surveys.) One explanation: Amazon started out as a bookstore nearly two decades ago, so people are accustomed to going there to buy books, Hildick-Smith says, while Google, known to most people as a search engine, is still trying to get the word out that it's in the e-book-selling business.
9. "Why won't people ditch their wallets already?"
Google has ambitious plans for Google Wallet, a mobile-based payments service exclusive to Android phones that has the ability to receive real-time offers and coupons from nearby stores. Google Wallet product managers say the app, which launched in September 2011, will eventually be more than just a wallet: It will provide I.D. verification so people can check in for a flight, download virtual boarding passes, and even keep their driver's licenses on their phones. Google declined to say when these features would become available.
But few people appear willing to give up their cash and credit cards anytime soon. Nick Holland, the Yankee Group analyst, says that "there is near zero demand from consumers." (Google, for its part, doesn't release details on how many people have shown interest in the wallet.) Consumers don't need mobile wallet services, argues Anuj Nayar, senior director of global communications at PayPal, the online-payment unit of eBay, and a competitor in the mobile-payments space. "Mobile wallets don't solve any customer pain points by themselves," he says. "They don't offer intrinsic advantages over swiping a credit card or heaven forbid, paying cash."
Currently, Google Wallet is supported by just 25 national retailers nationwide to make payments and apply coupons but, according to a Google spokeswoman, it also works in 200,000 "points of purchase" terminals nationwide.
10. "Hip offices are a trap for workers."
Googleplex, the company's 47,000-square-meter global headquarters in Mountain View, Calif., hosts one-third of the company's 54,600-plus employees and has a volleyball court, bowling alley and organic herb and vegetable garden. In Zurich and London, the two largest offices in Europe, workers get the same VIP treatment. In Zurich, they can lounge in renovated gondolas while they conduct meetings. In London, one library is decked out with white semicircular sofa smothered in multicolored cushions; another space has a double-decker bus. A spokeswoman for Google says the offices are designed "to maximize creativity, innovation and well-being."
But not everyone believes such palatial work environments are a sign of corporate altruism. The experience is designed so employees stay at work longer, says Bob Sutton, professor of management science and engineering at Stanford University and author of "Good Boss, Bad Boss." "All Silicon Valley firms require huge chunks of an employee's time," he says. Many campuses of tech companies border on what sociologist Erving Goffman called "total institutions" like sanitariums, he says -- that is, places designed for people to spend nearly all their time. In a humorous nod to the modern workday, Google's London office even has a conference room in the guise of a green padded cell.
Of course, many people envy Google's work policies. The company pays its average employee $158,000 a year, or 23% more than the average IT wage, according to a 2011 survey by PayScale, a Seattle-based compensation-data company. Many office workers trapped in tiny cubicles would relish that kind of Googleplex luxury, says Eric Sundstrom, a professor at the University of Tennessee and author of "Work Places: The Psychology of the Physical Environment in Offices and Factories." It makes sense for the company too, Sundstrom says: "If I can use a fabulous gym at Google rather than pay a fortune down the street, why wouldn't I?" Some Americans spend more than $600 (here's the link for the survey): a year on gym memberships, according to a recent survey by CouponCabin.com. Google has nearly $50 billion in cash, so investing in the work environment is smart, Sundstrom says. "Even if it is manipulative," he says, "lead me to it."