In a cutthroat world, some Web giants thrive by cooperating
Saturday, February 19, 2011; 4:46 PM
In a hard-knuckled, free-market economy built on competition, the most successful Internet companies put a high stake in another value: cooperation.
They haven't lost a step in Wall Street's cutthroat business culture. And in fact, they may well be transforming ideas of work in America.
Take Google, which gives away much of its most valuable information, yet made $29 billion in revenue last year. Or Facebook, which manages employees through consensus. Or Twitter, which maintains a small-business feel even as its growth has spurred speculation it could raise $10 billion in an initial public stock offering.
The allure of cooperative economics is that it might not just be good for individual businesses but also build industries and even economic communities. Friendly competition is the explanation often given for the unique success of Silicon Valley, the birthplace of Google, Twitter and Facebook.
But it's rooted in something much less friendly: lawsuits. During the '90s tech boom, California courts refused to uphold noncompete agreements commonly used on the East Coast to keep former employees from working for competitors. Such rulings produced a lucrative revolving door of local talent. Combined with the start-up culture of constantly opening and closing new ventures, Silicon Valley developed a tight-knit sense of community, according to AnnaLee Saxenian, dean of the School of Information at the University of California at Berkeley.
Across the Internet industry, the most successful organizations compete by cooperating. It's a modern strategy based on two assumptions. First, innovation is collaborative. Second, the rapidly expanding market of online products is limitless. Businesses that focus on the process of free-wheeling creation - rather than squashing the competition - gain dominance and profit.
Google this: cooperation
Search giant Google dedicates a team of engineers to help users "move their data in and out of Google products," as the company puts it, free of charge and in a format that can be easily uploaded to competitors' Web sites.
The Data Liberation Front, as the team is called, adorns its products with an insignia of a clenched red fist breaking shackles. Outgoing Google chief executive Eric Schmidt writes on the project's site: "How do you be big without being evil? We don't trap end users. So if you don't like Google, if for whatever reason we do a bad job for you, we make it easy for you to move to our competitor."
Google is, first and foremost, an advertising company, with most of its revenue coming from clickable ads. As user demand expanded from searches to e-mail, online documentation, shopping and social networking, Google built applications such as Gmail and Google Maps that gave prime real estate to its own advertisements. Under the principle of cutthroat competition, then, Google should attempt to lock users into using its products. It doesn't.
"All of us benefit when Facebook or Twitter get more users because it means people are spending more time online," Schmidt said in an article in Wired UK.
Other firms do, of course, see Google as competition. And not everyone trusts its intentions. Firebrand technology author Michael Arrington writes, "Make no mistake, the touchy-feely talk about user experience is little more than a coat of paint on top of a monumental hatred of Microsoft."
Microsoft's Internet Explorer has long dominated the browser market. Google, with aggressive advertising of its Web browser, Chrome, has steadily eaten away roughly 10 points of Explorer's 56 percent market share since its launch three years ago, according to the analytics firm Net Applications.