Internet users – myself included – have got used to relying on free online services which rely heavily on either online advertising or investors being willing to put up large pots of money even when there isn’t a clear way of turning users into income.
Many of the services have become such a key part of their users’ lives that their failure is often unthinkable to people. What would happen if you woke up tomorrow and discovered Facebook or Flickr or Twitter or Google or one of a score of other major free services had gone bust?
Well, you’d probably have more time on your hands to get away from the computer and enjoy a bit of walking in the fresh air … but it would also cause widespread disruption and angst.
Looking at the current economic outlook, it’s hard to see how we can get through the next 18 months without some dramatic fall out.*
There is a double-squeeze building up for internet firms. The credit crunch has not yet had much of an impact in restricting the availability of funds for the high-tech sector, but as it continues to bite and financial institutions look to rebuild their balance sheets, it is easy to see how the flow of new finance could dry up.
Second, there is no reason to think that internet advertising will be immune to general economic slowdowns. In previous recessions the fallout for the advertising industry has been quite vicious in many sectors; for example, a good rule of thumb for local and regional newspaper advertising has been that in downturns you lose 50% of your ad revenue in the first year, and a further 50% the next year for example. The length of time since the last serious advertising recession, combined with the youthfulness of many internet firms and their staff, means it would be no surprise if we find out that several have financial models which are essentially based on the assumption that the bad times are no more.
If a major free internet service faces going bust, it may be bailed out by another firm, but there’s no guarantee – and no certainty that everyone’s data will be seamlessly moved over to any new, merged, ongoing service. So in the meantime – an extra backup or two may be a wise move.
* Note: please bookmark this post and in 18 months time come back to it and either say, “Why, that Mark was a damn fine sage, wasn’t he?” or “Someone must have really disliked Mark to hack into the website and plant such a daft story as that in his name.”
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13 Comments
If you bail out AIG because so many businesses depend on it – and because its collapse could cause a massive number of unexpected consequences – how could you not fund Google?
But whilst the notion of state support for the web is not new, the idea of nationalisation is a complete antithesis.
Google is unlikely to go bust, they may be dependent upon advertising but have quite a hold on the market.
They may be forced to scale back massively (no more free meals for employees? Less work on blue sky projects?).
What may happen though is when things start to get better new entrants to the market start picking up the new business (but that’s no bad thing IMO).
I should back up my gmail account just in case though…
Sensible. In many internet services there is a hidden chain of suppliers on whom the service depends. If one goes down or gets temporarily paralysed, Yo uwill be glad of your back-up – and it is low-cost.
Wasn’t one of the reasons behind the idea of a Google-Yahoo merger to ensure that neither would go bust?
I can’t see any of the big hitters going under. Facebook and MySpace have big money backers. Smaller players like Twitter, not so sure. Starting to charge for SMS updates may have been a sign of something
Using “cloud” or online services to both store and manage large parts of your data is not the wisest of things to do.
Given how we as a party are placing a big emphasis (and rightly so) on liberty and opposition to the big brother state, I would have thought many (most) of us would be wary of such online services.
Privacy policies notwithstanding I’m very reluctant to give so much of my personal and sometimes confidential details over to a third party where I have no realistic control over what they do with my data, nor, as has been pointed out, if that data would still be available when things go wrong.
It’s worse once you add in such twists as secret FBI subpoenas with gag orders, let alone when much of the data might be on servers in jurisdictions with considerably less privacy safeguards than those we have here; yahoo! and google have already delivered human rights activists into the jaws of oppressive governments. Individuals who trusted those companies with their data.
With emails, calendar information, todo lists, contacts (friends), pictures and even documents/spreadsheets stored on remote servers it’s very easy to build up a complete picture of someone’s life without ever having to go near them or enter their house or place of work. Add that most of the data is not even protected by UK privacy and data protection laws and you have a disaster waiting to happen.
While no system is safe from compromise, some systems, as Sarah Palin discovered, are much easier to bypass than others, especially those open to everyone.
I hope that LibDem members and activists are wise enough not to use google docs, email or other such online services for sensitive/confidential party (or even private) correspondence or documents.
The various services on offer are great and convenient, and I use most of them myself, but I’m also careful to only use them for those things that I don’t consider confidential or private; always keeping any important information on systems I directly control (my own computers) and more critical systems (email) with companies based in the UK (like your ISP) that have to follow our laws and where if something goes wrong I’ve actually got a chance (however slim) of sorting things out or seeking redress.
David:
This is very true, when hosting company 365main in SanFrancisco went down earlier this year, several services went out, many of which I depend on fairly regularly. Sure, many of them were 6Apart services, but Technorati and a few others I didn’t expect also suffered.
But that’s not the case with Google, which has made owning its own server farms with colocation facilities all over the world part of its business model.
Martin made some good points about privacy concerns, although personally I’m less worried about most of it, I’m happy to use Gmail for pretty much all of my email, I’d prefer not to use my current ISP, and keeping the same email address in perpetuity has advantages as long as you have decent spam protection, whcih Gmail certainly has. But the data protection issue is significant, they are at least making progress there. However,
I’m very much aware of the case in China with Yahoo!, but have no knowledge whatsoever of a similar case involving Google, I would normally hear of such cases but may have missed it? Google is very careful to ensure it operates legally within each jurisdiction but requires court orders, etc to pass over data—can you give me a link?
Of the two, I’d rather trust Google over Yahoo anyday, their overseas policies, especially in China, have been particularly favourable in comparison to all other operators.
Mark, I reckon some smaller services will fall, the successful ones likely to be gobbled by one of the big three (five?), but a lot of the time services can continue on a reduced model, or with subscriptions—depends on who they are and what they do, I have a paid Livejournal account, for example, and that is an alternate model that firms could choose to follow.
I don’t think they will fail because of technology,
I think there is enough spare capacity technically – even if Google vanished there are other options. The major disruption would not be caused by the loss of low-integration services such as email (we all have multiple services, surely?), or Twitter, but what about something like Flickr vanishing.
Financial failure would be more …
interesting.
Smaller services would be easier to replace. Until quite recently, Twitter – for example – was running on what amounted to a single server. There the threat would be fragmentation.
>I hope that LibDem members and activists are wise enough not to use google docs, email or other such online services for sensitive/confidential party (or even private) correspondence or documents.
Personally, I tend to use gmail as it is one of the more secure services (https) without the extreme of going to hushmail.
Obviously we all keep multiple local and offsite copies of everything (don’t we?).
Rgds
Matt
My mistake, Google never did that. It’s made worrying decisions in other instances though (see here).
The point to make though is that Yahoo! essentially received a court order (or it’s Chinese equivalent) and handed over the data. From your own statement Google would do the same if asked.
I see nothing from stopping someone making up a bogus charge, bribing a judge in some third world dictatorship and demanding data from google, which it would be legally obliged to hand over. You can’t really expect google not to, it’s not really google’s job to judge whether the laws/institutions in one country or another are fit for purpose or morally valid.
HTTPS does not make your account secure, it merely prevents eavesdropping on your connection (if you remember to turn it on). Who knows how the data is stored at the other end and who can gain access. How secure is your password and the password reset facility? Google indexes (or at least scans) every single one of your email’s contents to provide the ads, just how/where is that stored and what does google retain?
To ensure I can keep the same email address (no matter the ISP or email service I happen to be with) I pay £10 every two years for my own domain. Much nicer than public email accounts that automatically get higher scores from spam detectors simply because they are publicly available.
I think the many free services (especially google’s) are excellent. The problem is that most people that use them are never aware of the potential problems they might cause them.
>I see nothing from stopping someone making up a bogus charge, bribing a judge in some third world dictatorship and demanding data from google, which it would be legally obliged to hand over. You can’t really expect google not to, it’s not really google’s job to judge whether the laws/institutions in one country or another are fit for purpose or morally valid.
I actually think that parts of that *are* Google’s job if they are an ethical business – and I expect them at least to ascertain the facts of the case and resist unreasonable demands.
In many aspects I am a Google-sceptic – mainly monopoly concerns, but they have a pretty good track record for leaving blogs in place that have been pulled by other hosting services simply because of allegations without evidence from M’Learned Friends.
A “dodgy legal regime being used to demand or suppress data” is a pretty good description of the situation in the UK these days. Having emails abroad on a hosted setup (or own domain) – at least as well as locally – is arguably a positive step.
>HTTPS does not make your account secure, it merely prevents eavesdropping on your connection
Indeed; nonetheless GMail remains the recommendation of Reporters without Borders alongside Hushmail due to better instrinsic security than Yahoo etc.
(if you remember to turn it on).
Of course I turned it on!
>Who knows how the data is stored at the other end and who can gain access.
Precisely the same goes for any mailbox hosted by your isp.
>How secure is your password and the password reset facility?
Anybody who’s password is not “strong”, and ideally randomised, is an idiot.
>Google indexes (or at least scans) every single one of your email’s contents to provide the ads, just how/where is that stored and what does google retain?
That depends on the integrity of the organisation – are you aware just how much data is retained in the UK under RIPA, and just how much *more* data they are proposing to retain under the new Super-RIPA . IIRC it was slipped out just before recess.
>To ensure I can keep the same email address (no matter the ISP or email service I happen to be with) I pay £10 every two years for my own domain.
Currently I have around 40 domains. I hope you aren’t on a .co.uk domain that can be closed down by a UK court order (or a UK DNS that can be disrupted by it).
>Much nicer than public email accounts that automatically get higher scores from spam detectors simply because they are publicly available.
Fair point.
>I think the many free services (especially google’s) are excellent. The problem is that most people that use them are never aware of the potential problems they might cause them.
Indeed. But there’s a different set of vulnerabilites for self-hosted accounts.
Rgds
Matt
PS Of course the other glaring vulnerability is your own PC setup, and any auto-login passwords left on it.
The whole shebang can be seized almost out of hand as part of any police investigation, and if your passwords are on it, then:
a) Anything you’ve got online can “vanish” (is it backed up?), and you can lose control of all your own infrastructure.
b) You lose your publishing voice – another good reason to make damn sure that you have web-based backup available, and a warm-start backup blog site ready to do (and preferably a network of people who will give you rapid Google-profile).
c) I’m currently looking at how I can make sure that key passwords are only in my memory, and I can make sure that I am fully back online in 24 hours regardless of someone confiscating/stealing everything.
I think it is now a criminal offence to refuse to handover passwords in certain circumstances.
Matt
Sorry – just spotted something else.
> You can’t really expect google not to, it’s not really google’s job to judge whether the laws/institutions in one country or another are fit for purpose or morally valid.
I say it is precisely their job.
Unless you take the position that you expect businesses to make moral and ethical judgements, you have destroyed any rationale beyond pragmatic concerns for protesting against Third World Child Labour.
Or – for that matter – any rationale for complaining about businesses bankrolling Mugabe.
Matt
All are fair points, and in truth I’m starting to trust google more than the UK government.
I wonder at which point all the people with money will start leaving to go to more free countries. I don’t think our government’s oppression will stop until they upset big business. Joe public just doesn’t seem to care enough.
There’s a 2 year prison sentence for refusing to give up a password. Probably one of the most stupid laws I’ve ever heard of. Any serious criminal (terrorist etc) will take the 2 years instead of the 25 for the information the police might find if he hands it over.
Given how evil and stasi-like the UK government is becoming I’ve been seriously considering fully encrypting my PCs, mostly just to spite them.
I recommend TrueCrypt for protecting stuff. Great tool.
>I wonder at which point all the people with money will start leaving to go to more free countries.
My impression was that a hell of a lot have already gone with general government aggro being a significant cause, albeit bits of that are tactical posturing on top of leaving for other reasons.
See the Cory Doctorow thread last weekend (did I pick it up from here?). Some ranting but also serious points.
http://www.boingboing.net/2008/09/26/britain-will-make-fo.html
I’ll look at going myself if we get the full ID cards or a complete DNA database. And (can we be rude on here, ed?) I’ll come back to p*ss on Tony Blair’s grave.
Get the traffic up and I can be non-partisan Guido Fawkes with a writing team. Maybe :-).
On general aggro, my parents have been informed by letter this morning that their monthly income has not been paid because “your supplier approval relating to the Race Relations Act questionnaire you completed back in 2004 has expired”.
Who are they? A retired couple in their 70s who rent two student houses to a University as a pension, one of whom has just had 8 weeks in intensive care.
Who are their customers? The university.
Who manages the houses? The university.
What is the annual amount involved? About the same as a decent pension.
What would have happened if they had been visiting relations in another country for 6 months?
WTF?
Perhaps we *do* need another Gunpowder Plot.