Much has been made of Google’s moves against crypto and – for a global tech giant – its relative silence on blockchain. Does Google hate crypto? Or otherwise, why does it sometimes seem that Google is hostile towards the cryptocurrencies? Let’s find out.
In 2018, Google announced a ban on all cryptocurrency related ads and prohibited Chrome extensions that mine cryptocurrencies. Many took those moves as meaning that the company had ulterior motives. Pundits and venture capital investors alike weighed in:
“It’s just a little bit too convenient for my taste to see a platform ban an entire ecosystem, or an entire market segment, just because they don’t want to spend the time figuring out who the bad actors are,” David Pakman, partner at the venture capital firm Venrock, told Fortune.
Another investment firm CEO Phillip Nunn of Blackmore Group, speculated to The Independent: “I suspect the ban has been implemented to fit in with potential plans to introduce their own cryptocurrency to the market in the near future and therefore removing other crypto adverts allows them to do it on their own terms.”
Google’s Director of Sustainable Ads Scott Spencer, for his part, insisted the move was consistent with Google’s policies, telling CNBC at the time, “We’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution.”
Around the same time, a tongue in cheek ad produced by Google for an unrelated product, poked fun at crypto while emphasizing the oft-repeated claim that Proof of Work driven coins like Bitcoin are environmentally unsustainable. This fueled the conspiracy theories, many of which have gained traction because it makes sense that Google – and indeed all the currently dominant Internet players – would oppose crypto. After all, crypto offers an alternative to the status quo’s data collection model, and by extension, their advertising hegemony.
Proponents of this theory point to the wider tech industry trend to ban crypto. In addition to Google, Facebook, Alibaba subsidiary Taobao, and Twitter all blacklisted cryptocurrency-promoting advertisements on their platforms in 2018. Even MailChimp, a purveyor of email newsletters, announced a wide-ranging ban on crypto promoters.
The established Internet giants, of course, have the most to lose from the advent of decentralized technologies and platforms – and the fact that they can unilaterally ban an entire market from advertising underlines the need for alternative structures and platforms.
Google, Facebook, and now Alibaba are market monopolies for advertising, together accounting for 61.2% of the total global digital ad market, according to a September report from eMarketer, which predicts global digital ad spending to rise 17.1% to 327.28 billion USD in 2019. Advertising is by far the main source of revenue for Google, whose parent company Alphabet earns roughly 86 percent of its total revenue from advertising, according to CBNC.
Cracks showing in the status quo advertising model
Advertisers are getting frustrated with increasing advertising costs / the decreasing effectiveness of ads placed on the big three platforms. Consumers, facing advertising fatigue have increasingly become immune to ads, or outright blocked them.
According to an IAB report on ad blockers, 26% of respondents said they use ad blockers, with younger users more likely to browse with ad blocking extensions or software. Another digital advertising trends report by Proxima suggested that more than half of online ads aren’t seen by humans (but rather are counted as bot views), and concluded that up to 60% of digital ad marketing spend is wasted.
The world’s biggest advertiser, Proctor & Gamble, meanwhile has long expressed its distaste with the status quo. In early 2017, P&G’s CEO Marc Pritchard issued an ultimatum to the digital advertising behemoths, telling them P&G doesn’t “want to waste time and money on a crappy media supply chain.”
P&G followed up by cutting, according to the Wall Street Journal, 200 million USD from their digital ad spend through 2017. Pritchard explained his rationale: “We bombard consumers with thousands of ads a day, subject them to endless ad load times, interrupt them with pop-ups and overpopulate their screens and feeds. And with ad blockers growing 40% and fraud as high as 20%, who knows if they’re even seeing our ads,” as reported in the Wall Street Journal.
Blockchain’s alternative digital advertising model
With alternative models on the horizon, advertisers in search of more favorable prices may soon give preference to blockchain-based ad networks. Meanwhile, how could it be that Google and the other tech giants don’t see the writing on the wall? After all, in the past decade – from AI to augmented reality – there’s hardly been a technology that Google didn’t experiment with.
Did Google miss the boat?
President of Google parent company Alphabet, Sergey Brin, claimed that Google simply missed the boat when it comes to crypto, stating as much at a blockchain conference in Morocco in July when he said, “We probably already failed to be on the bleeding edge, I’ll be honest,” as reported by CNBC. Brin – whose son had according to Brin mined Ethereum for “one or two” years previously – suggested that blockchain is within the wheelhouse of X, the company’s semi-secret research division.
In an interview with Swiss business newspaper Handelszeitung, Executive Director of the Hyperledger Project and, according to the New York Times, a top 10 most influential leader in blockchain, Brian Behlendorf, said that the established tech giants, “have a blind spot when it comes to blockchain.”
Numbers tell a different story
In fact, according to research by CBInsights, Google was the second-most active corporate investor into blockchain companies between 2012 and 2017, falling second only to SBI Holdings (which in July launched the first bank-owned cryptocurrency exchange in Japan).
Google’s involvement in blockchain was more than just hands-off investments. In 2016, Google started a trial for developers testing blockchain services on its cloud. In early 2018 there were rumors published in Bloomberg that Google was working on blockchain-related technology to support its cloud business and head off competition from emerging startups. Other rumors included that Vitalik Buterin was being pursued by Google, after the Ethereum founder briefly tweeted a live poll asking his followers if he should take an offer from Google, posting what appeared to be a screenshot of the offer. Smart contract platform Cardano was reportedly tapped for an information session with Google, a transcript of which is published on its blog. That led to rumors of a partnership between the Ethereum alternative and Google.
Google finally officially entered the blockchain space only in mid-2018 when it announced on its blog that it is partnering with two blockchain startups to bring them to the Google Cloud Platform. For cloud businesses, Google wants to use the blockchain to record user transactions and improve data security and Alphabet plans to offer a license for customers to run their own versions of the blockchain on their own servers.
As for blockchain-related patents, Google is not a dominant player, but its activity is far from indicating it is dismissive of the tech. Research published in Sept 2018 by iPR Daily, a Chinese media outlet specializing in intellectual property, shows that Chinese Internet giant Alibaba tops the list for blockchain-related patents, with a total of 90 patents focused on the tech. IBM comes a close second with 89 patent applications. Google, ranked at number 30 (below British Telecom), has made 22 blockchain-related patent applications.
One of them, patent US20170177898A1 made in June 2018 and granted in July of the same year, aims to stamp out data tampering:
“A system, method or computer readable storage medium configured for storing encrypted data on a blockchain. To write additional data in a blockchain, a request is received at a computing node.”
In other words, Google wants to safeguard the integrity of data by using a blockchain system to verify any data stored on its database.
Profitable blockchain business models vs the disruption of digital advertising
When Hyperledger Executive Director Brian Behlendorf said the established tech giants, “have a blind spot when it comes to blockchain,” he also predicted: “Tech giants such as Google, Amazon, or Facebook will undoubtedly pick up blockchain and generate business models from it. However, I think that the core of Blockchain — as a decentralized technology — will diminish [their] market power,” as reported by Cointelegraph.
Google’s investments in blockchain companies and development of blockchain tech indicate that, as predicted by Behlendorf, the tech giant is searching for profitable business models, despite, on the face of it, appearing dismissive of the tech.
Whatever profitable blockchain business models Google does come up with, it seems highly unlikely that the world’s biggest advertising platform will disrupt its own advertising monopoly. Instead, it will be up to blockchain startups like Ubex and Brave to take a big enough piece of the digital advertising pie to attract the tech giant’s attention. If and when that happens, the resulting battle may determine the future of a multi-hundred billion dollar industry and no less than the consumer-level experience of the Internet itself.