Google Loses Some Of Its Strategic Opacity

Web 2.0 is all about openness, right? At least that’s the ideology. But as to the BUSINESS of Web 2.0, the most successful money-making machine of the Web 2.0 era, Google AdWords, derives huge strategic advantage from opacity.

Today, Google lost some of that advantage when upstart Quigo forced Google to open the kimono on its contextual ad network or risk losing more high-profile publishers to Quigo’s transparent model.

From a customer perspective, competition is a great thing. Publishers that use AdSense had a good day today. Quigo’s transparent model had a good day, but only because they offered an alternative to Google’s monopoly (and Yahoo’s me-too complicity). But Google, who profited from the opacity that their monopoly enabled, had a bad day today.

I think it’s a good think that Quigo’s transparent model won out. Transparency make me feel good. It feels like the right thing to do. But if I were a Google shareholder (which I’m not), it really wouldn’t make me feel good.

I’m still amazed by the degree to which traditional media companies are assailed on a daily basis for not embracing openness, for not “getting it” (in the Web 2.0 politically correct sense), yet with so little hard evidence of how openness can drive profits and create new scalable business models. I’m not saying it won’t. I’m just staying we’re not there yet.