If we factor Google geospatial applications + its unique data processing infrastructure + Android tracking, etc., we’re seeing the potential for absolute power over the economy.
Large utility companies worry about Google. Why? Unlike those who mock Google for being a “one-trick pony”, with 99% of its revenue coming from Adwords, they connect the dots. Right before our eyes, the search giant is weaving a web of services and applications aimed at collecting more and more data about everyone and every activity. This accumulation of exabytes (and the ability to process such almost unconceivable volumes) is bound to impact sectors ranging from power generation, transportation, and telecommunications.
Consider the following trends. At every level, Western countries are crumbling under their debt load. Nations, states, counties, municipalities become unable to support the investment necessary to modernize — sometimes even to maintain — critical infrastructures. Globally, tax-raising capabilities are diminishing.
In a report about infrastructure in 2030 (500 pages PDF here), the OECD makes the following predictions (emphasis mine):
Through to 2030, annual infrastructure investment requirements for electricity, road and rail transport, telecommunications and water are likely to average around 3.5% of world gross domestic product (GDP).
For OECD countries as a whole, investment requirements in electricity transmission and distribution are expected to more than double through to 2025/30, in road construction almost to double, and to increase by almost 50% in the water supply and treatment sector. (…)
At present, governments are not well placed to meet these growing, increasingly complex challenges. The traditional sources of finance, i.e. government budgets, will come under significant pressure over the coming decades in most OECD countries – due to aging populations, growing demands for social expenditures, security, etc. – and so too will their financing through general and local taxation, as electorates become increasingly reluctant to pay higher taxes.
What’s the solution? The private sector will play a growing role through Public-Private-Partneships (PPPs). In these arrangements, a private company (or, more likely, a consortium of such) builds a bridge, a motorway, a railroad for a city, region or state, at no expense to the taxpayer. It will then reimburse itself from the project’s cash-flow. Examples abound. In France the elegant €320m ($413m) viaduct of Millau was built — and financed — by Eiffage, a €14 billion revenue construction group. In exchange for financing the viaduct, Eiffage was granted a 78-year toll concession with an expected internal rate of return ranging from 9.2% 17.3%. Across the world, a growing number of projects are built using this type of mechanism.
How can a company commit hundreds of millions of euros, dollars, pounds with an acceptable level of risk over several decades? The answer lies in data-analysis and predictive models. Companies engineer credible cash-flow projections using reams of data on operations, usages patterns and components life cycles.
What does all this have to do with Google?
Take a transportation company building and managing networks of buses, subways or commuter trains in large metropolitan areas. Over the years, tickets or passes analysis will yield tons of data on customer flows, timings, train loads, etc. This is of the essence when assessing the market’s potential for a new project.
Now consider how Google aggregates the data it collects today — and what it will collect in the future. It’s a known fact that cellphones send back to Mountain View (or Cupertino) geolocalization data. Bouncing from one cell tower to another, catching the signal of a geolocalized wifi transmitter, even if the GPS function is turned off, Android phone users are likely to be tracked in realtime. Bring this (compounded and anonymized) dataset on information-rich maps, including indoor ones, and you will get very high definition of profiles for who goes or stays where, anytime.
Let’s push it a bit further. Imagine a big city such as London, operating 500,000 security cameras, which represent the bulk of the 1.85 million CCTVs deployed in the UK — one for every 32 citizens. 20,000 of them are in the subway system. The London Tube is the perfect candidate for partial or total privatization as it bleeds money and screams for renovations. In fact, as several people working at the intersection of geo applications and big data project told me, Google would be well placed to provide the most helpful datasets. In addition to the circulation data coming from cellphones, Google would use facial recognition technology. As these algorithms are already able to differentiate a woman from a man, they will soon be able to identify (anonymously) ethnicities, ages, etc. Am I exaggerating ? Probably not. Mercedes-Benz already has a database of 1.5 million visual representations of pedestrians to be fed into the software of its future self-driving cars. This is a type of applications in which, by the way, Google possesses a strong lead with its fleets of driverless Prius crisscrossing Northern California and Nevada.
Coming back to the London Tube and its unhappy travelers, we have traffic data, to some degree broken down into demographics clusters; why not then add shopping data (also geo-tagged) derived from search and ads patterns, Street View-related informations… Why not also supplement all of the above with smart electrical grid analysis that could refine predictive models even further (every fraction of percentage points counts…)
The value of such models is much greater than the sum of their parts. While public transportation operators or utility companies are already good at collecting and analyzing their own data, Google will soon be in the best position to provide powerful predictive models that aggregate and connect many layers of information. In addition, its unparalleled infrastructure and proprietary algorithms provide a unique ability to process these ever-growing datasets. That’s why many large companies over the world are concerned about Google’s ability to soon insert itself into their business.
– frederic.filloux@mondaynote.com
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8 Comments
I like a lot your analysis in the first part.
The question about Google should be extended to the broad politics because it tries to do better than their competitors on a “free” choice which is the best, even of the least bad democracy.
Google has already antagonized governments the world around with its data collection. Individuals I know are becoming increasingly incensed by the amount of data Google collects about them. There is a potentially large backlash coming its way.
Google is essentially becoming a central intelligence agency for the world and I submit that people will eventually demand some protection from its invasive data mining. Facebook and Twitter will eventually be painted with the same brush. Who needs this?
Excellent piece. Google’s strategy is sometimes difficult to read, maybe even to themselves! But they are quietly, brick after brick, building a big picture and you have helped us figure it out.
@Rick Raphael, I think you overestimate how incensed people will get. We’ve already seen a number of privacy storms blow over with minimal affect on Google. Some governments will reign Google in but if what M Filloux hypothesizes is correct then the value of their data collection, to governments, outweighs it’s risk to their constituency.
Also, as long as Google keeps it’s head down and data collection missteps to a minimum, too few people will care to have an impact on Google.
The trouble with the inability of all kinds of traffic management systems to cope with the ever-increasing volumes is that there are simply too many people in the world.
In view of the fact that most of the developed economies are on their knees there is little scope for the undoubted value of refined and targeted information about consumers, their locations and their spending habits. It is a large dog running around in ever-decreasing circles chasing an ever-diminshing tail.
This is a good article but whether we are talking about infrastructure spending or consumer spending patterns, the whole of the western world is in a cautious, risk-averse mindset – with governments only approving projects on a crisis- management basis and consumers only reaching for their credit cards for Christmas-management, birthdays and the like. For everything else, discretionary spending is, and will remain, at a minimum. Just count the number of business failures and shop closures.
“The value of such models is much greater than the sum of their parts…. That’s why many large companies over the world are concerned about Google’s ability to soon insert itself into their business.”
Google has shown this tendency to insert itself into diverse business fields. Your article explains their central logic in such business decisions. But you have astutely pointed to future directions they could take. If only we could trust them to do no evil.
I disagree with your analysis that governments’ tax revenue generation is falling. I would place the blame squarely on the selfsame companies like Google which pays a tiny fraction of its tax burden. Of course this will lead to governments being unable to support continued investment in infrastructure.
Unfortunately, private companies are rarely thebest cchoice to run public utilities, purely because they have a priority that profit, not the well-being of their customers. The UK underground operator has been ‘investing’ in the infrastructure for years and there has been little improvement, a lot of industrial action and price raises 3-5% above the rate of inflation
Does your site have a contact page? I’m having problems locating it but, I’d like to shoot you
an e-mail. I’ve got some ideas for your blog you might be interested in hearing. Either way, great site and I look forward to seeing it develop over time.
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