Google and
Facebook love to talk about the cutting-edge stuff
that they’re working on. Metaverse! Driverless cars! Cloud! Artificial
intelligence!
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The reality, though, is that these tech companies are rich and
powerful because they are the biggest sellers of advertising in the world. They
do essentially the same thing that William Randolph Hearst did a century ago:
They draw our attention to try to sell us yoga pants. (OK, Hearst’s newspapers
probably didn’t have ads for leggings.)
There’s a vigorous public debate about the benefits and serious
trade-offs of the digital worlds that Google and Facebook created. It’s less
jazzy to think about digital advertising that these tech titans have popularized.
But like everything else about these companies, it’s complicated and important.
Alphabet, the corporate entity that includes Google, made about
80 percent of its revenue this year from the ads that we see when searching the
web, watching YouTube videos, checking out Google Maps and more. Facebook
generated 98 percent of its revenue from ads.
It’s not breaking news that Google and Facebook are souped-up
versions of old-school advertising mediums like newspapers or radio. I am
stressing the point for two reasons. First, zeroing in on their essence helps
demystify those tech superpowers. Google and Facebook seem less mythical and
imposing when you know that their empires are built on selling us more socks.
Second, I want us to think more about the warts-and-all effects
of the Google and Facebook advertising powerhouses. The methods of advertising
that the companies helped popularize — highly automated; based on information
about who we are, what we do online and where we go; and at a scale unlike
anything before — has changed the world around us in both good and harmful
ways, without most of us really noticing.
Sure, some of the benefits are easy to see. Google and Facebook
offer (arguably) helpful products and services at no cost to us, because
advertising pays the bills. Ads also make stuff that we use outside Google and
Facebook cheaper. Or possibly more expensive, which I’ll get to in a minute.
If you type “Miami vacations” into Google, that’s a blaring
signal that you might be interested in booking a hotel room. If a hotel can pay
an average of $1 per new customer for its website to show up prominently in
those Google search results — versus spending $2 for each customer if it buys a
television commercial — those hotel rooms might be cheaper for us.
That example is radically oversimplified, but you get the point.
Even if you say that you hate ads or never use Facebook, the ads on these sites
have beneficial ripple effects.
But there are also major drawbacks. To sell ads, Google and
Facebook normalized the data arms race to collect as much information about us
as possible, and now the bank, grocery store and weather apps are grubbing
every detail they can to sell their own ads. Digital advertising also has a
persistent problem with fraud and overpromises that essentially impose a tax on
everything that we buy.
The last thing I’ll mention is the perpetual motion machine of
bigness. Google and Facebook are the biggest advertising sellers in the world
largely because they are the largest gatherings of humans in the world. More
people translate into more spots to sell ads.
That has created ripple effects for entertainment companies,
newspapers and internet properties to try to merge or do anything they can to
get bigger. I wonder if we would have a healthier economy and internet life if
Comcast, TikTok and nearly every other company weren’t trying to amass the
biggest audience of humans possible — partly to compete with Google and
Facebook and sell more ads.
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