The Invisible Hand of Google

Google’s “Don’t Be Evil” philosophy to avoid exploiting users has resulted in it missing out on profitable opportunities and seems counter-intuitive to what a company should be doing. For example, Google recently chose to cancel its translation API in order to preserve the possibility of good translations in the future. Some say Google has this policy because it is a good company that puts its consumers ahead of profits. I think they are making these decisions not because they care more about customers, but because having a good image directly affects profits (due to the unique nature of the search market). Having a good reputation is important to Google's business.

While this course of action costs Google money in the immediate future, it is more profitable in the long-term for an internet business to have a consistent philosophy. The short-term gains are not worth the costs of breaking users' trust, as stated on their website.

The product Google "sells" — access to a search database with advertisements — is in an undifferentiated market. All of the products in this market (Google, Bing, and Yahoo) are very similar to one another. Because of the market’s unique features, competing for users is fierce. Since there are not many inherent advantages to using one product over the other, improving services does not provide much gain. The only way companies gain an edge is to find alternative ways of providing their services.

Internet companies have the tendency to be more responsive to public opinion than those outside the tech sector; they are almost always service-type businesses that directly interact with the public. This makes them more accountable to the public as opposed to companies that only sell products to other businesses.

Decisions that are in a company’s best interest are oftentimes in the public’s best interest. Google’s "Don’t Be Evil" philosophy is not an example of a company being good for its own sake; it is an example of Adam Smith’s invisible hand guiding the market.

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