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by Murrel Bland
About 1,000 persons were gathered in the Wyandotte High School auditorium the morning of March 29, 2012, for what public relations folks touted as a “very major announcement.” I wondered if they were going to tell of the second coming of the Messiah.
What those of us who attended found out was that Kansas City, Kan., was the first in the nation to get Google’s high-speed residential Internet service. It was a very highly sought designation with more than 1,000 cities in the running. Topeka even changed its name to “Google” for a day in an effort to attract the designation. Welcoming Google were Joe Reardon, then mayor; Cindy Cash, then president of the Chamber of Commerce; and Cindy Lane, the superintendent of schools for the Kansas City, Kan., School District.
Fast-forward to Friday, Aug. 7, at a meeting of the Kansas City, Kan., Area Chamber of Commerce at the Village West Apartments. Rachel Hack Merlo, the community impact manager for Google, talked to about 50 persons about Google’s new effort to bring its high-speed digital service to small business for $100 a month.
Google is quite the success story. Larry Page and Sergey Brin met at Stanford University in Palo Alto, Calif., in 1995; they started an Internet search engine called “BackRub” in 1997. Google was launched in 1998. Since then Google has acquired more than 170 companies including Motorola, Nest labs, DoubleClick and YouTube. Most of these acquired firms are complementary to Google.
Google is also in other areas besides media. Self-driven cars are being tested in California and Texas. Google claims such an effort could reduce accidents substantially.
Google makes most of its money selling advertising. And, according to analysts who understand Google, it is far ahead of its nearest competitor. It is estimated that it will have more than 15 percent of the $200 billion total media advertising market in 2016. Its gross earnings for 2014 were more than $45 billion.
Google isn’t without its critics. A very large portion of its revenue does come from advertising — money that has been diverted from traditional media such as newspapers.
Newspaper companies have suffered in recent years. The Kansas City Star, which is owned by McClatchy Company, continues to lose its share of advertising and subscription revenue as it tries to move to a digital model. McClatchy stock was trading for about 56 cents a share on Aug. 10. Google stock on the same day was trading for $332 a share. Those looking at the market explain that newspapers must change with market conditions if they are to survive.
Google’s other direct competitors, such as Time Warner and ATT, weren’t too happy with Google’s triumphant welcome into the community, although they wouldn’t admit it publicly. Privately, they pointed to their substantial investment in the communities and their track record of being good corporate citizens.
To Google’s credit, it has been involved in civic efforts, in cooperation with the Greater Kansas City Foundation, to offer digital fellowships. And Google works with community nonprofit organizations in an effort to bring its service to areas that would not otherwise be served. It also works with schools in encouraging students to go into science, technology, engineering and mathematics.
Because Google is in the Kansas City market, it has caused other providers to sharpen their pencils and offer better deals to customers. Google provides the basic Internet service to residential customers for only a $300 installation fee; that is good for seven years.
According to a recent report in The Star, Google has attracted only about 30,000 residential subscribers. And, Merlo said that although the business service is available, she cautioned that it will take awhile for it to be installed.
Although Google has been very successful, it hasn’t been without its challenges. According to a recent article in The Wall Street Journal, European Union regulators have alleged that Google, because of its strong presence, is being unfair to its customers.
And then there are those who criticize Google for moving its money to Bermuda and Ireland, according to an article in Bloomberg News. Google licensed the European rights to its search engine and advertising business to Google Ireland Holdings and has a management center in Bermuda. This is perfectly legal, and has saved Google considerable taxes. Google said it is no different than what other global companies do.
Locally, those who are familiar with installation efforts say that Google subcontractors are not always the most careful.
Murrel Bland is the former editor of The Wyandotte West and The Piper Press. He is executive director of Business West.