“Don’t be evil:” How Google became world’s most valuable brand

It doesn’t sell anything you could pick up and put in your pocket. We never pay it any money directly.

Yet this month, Google’s parent company Alphabet overtook Apple to become the world’s most valuable brand.

In the latest annual ranking from Brand Finance, the top slot was given to Google because it grew its brand value and “remains largely unchallenged in its core search business, which is the mainstay of its advertising income”.

The report’s authors add that Apple was bumped down to second place because it “failed to maintain its technological advantage and has repeatedly disillusioned its advocates with tweaks when material changes were expected”.

In the beginning

Brand Finance further noted that the tech giant has “over-exploited the goodwill” of its customers because it hasn’t generated significant revenues from products like the Apple Watch, and its inability to “demonstrate that genuinely innovative technologies desired by consumers are in the pipeline.”

So how does Google do what it does?

Google’s success originated in one simple insight from its founders, Larry Page and Sergey Brin. They realised in the late 1990s that the sprawling, chaotic mass of material that was cascading onto the world wide web could be tamed by ranking search results according to their popularity.

They haven’t looked back, making millions of dollars from online advertising and embracing some of the most challenging new ideas in the world of technology.

And most of us use it day in, day out: to check out the weather before you book a holiday; to email the boss you won’t be in; to help your child with homework.

And yet with success has come doubts: over whether Google’s dominance of the market is fair to other players; whether its growing influence allows it, along with other multinational giants, to pay less tax than many feel is warranted; whether the information it holds about us grants it too much power.

Pulling together $1 million (Sh103.6 million at current exchange rates) from family, friends and other investors, Larry and Sergey launched their company on September 7, 1998.

Known in a previous incarnation as ‘Backrub’, the new company name was a play on the large number Googol (1 followed by 100 zeroes).

Since then, the company has grown steadily to dominate online search worldwide, and with that taking a substantial share of online advertising revenues.

“Scale begets scale,” says Brian Wieser, an analyst at Pivotal Research Group.

While Google did come up with the best search engine on the market, he suggests, it was its early success that provided it with the experience and, crucially, the data to allow it to improve quickly.

“The more you know about what people mean when they search, the more you are able to deliver accurate results ... There are a lot of costs associated with that, processing, the data centres to support that. So there is a natural monopoly,” says Brian.

Alongside nurturing the growth of the search engine, Larry and Sergey were always eager to explore new ground.

Google’s famous ‘20 per cent time’ – allowing employees to take one day a week for some blue sky thinking on original projects – has produced some innovations, such as Google News and the virtual reality Google Cardboard fold-out viewers.

Some mistakes

But that wasn’t enough for Google’s founders.

Over the last few years they’ve been on a spending spree, bringing dozens of companies under the Google – now Alphabet – umbrella.

“Google’s executives are driven by wanting to have start-ups ... they want to have a portfolio of start-ups,” says Mark Bergen of online technology publication Recode.

In August 2015, the company announced it was creating the parent company, Alphabet, and leaving the Google moniker off the more outlandish ‘moonshot’ businesses, such as extending human life, drone deliveries and Internet provision via high altitude balloons.

Mark puts the creation of Alphabet down in part to them wanting to seem less all encompassing and less menacing. But not everything has worked.

“Google Glass was a fairly expensive investment,” says Mark. “They clearly made some mistakes.”

And the company has notably been unable to match its rival Facebook in the social media sphere.

So has Google abused its dominant position?

Its sheer size has given it access to politicians in capital cities around the world. Now some are arguing that the company has ‘captured’ governments’ thinking and is being given an easier ride on tax. Google, like many large companies, doesn’t disclose how much tax it pays in each jurisdiction that it operates.

Just yesterday, the European Union’s anti-trust regulator slapped the tech giant with a record fine of Sh280 billion. The EU accused Google of manipulating search results by giving its own online shopping services top priority to the detriment of other price comparison services. Google is considering an appeal.

In the long run

Famously, Google originally had a slogan: “Don’t be evil” for which it has sometimes been mocked.

“That was always pretty silly,” says Brian Wieser. “It betrayed a sense of idealism.”

But he does think there are people within the company who genuinely believe in the motto and that that has stopped Google from abusing its dominant position.

“As bad as some observers think Google’s behaviour has been, it could have been far, far worse,” he says.

He says he can’t see any way that consumers have been directly harmed by Google’s dominance, though advertisers may be more justified in complaining.

So could anyone challenge Google’s dominance?

Brian thinks yes: “It’s not that hard to build a search engine and there are plenty of them out there.”

He says consumers could switch relatively easily to a new search engine if a better one came along.

“These things aren’t that hard to do any more. If there’s a chink in the armour it can be attacked.”

But Mark thinks in 10 or 20 years’ time, Google will still be a big player, if only because it’s being so ambitious now: “They have so many irons in the fire, at least one of them will pay off.”