Why do we call businesses like Google, Facebook and Twitter “tech” companies when most of what they do—and the source of most of their revenue—is advertising, sociologist Darwin Bondgraham asks in The Washington Spectator.
“With Google, and many other firms among the new breed of ‘tech’ companies, the computer has become more than a mere brochure,” writes Bondgraham. “The computer is an incredibly sophisticated and persuasive salesman. Brochures are inert documents a shopper flips through. The computer as salesman is an agent, watching us closely, collecting data about our wants, and subtly implanting desires in our consumer minds.”
“Google is the best case in point,” the sociologist continues. “Google has never been a ‘tech’ company, whatever tech is supposed to mean anyway. Google is an advertising company, and it makes most of its revenues from selling advertisements. Many of the fastest growing so-called tech companies are just like Google. The core of what they do, and how they make money, isn’t about the math and science of building things. Rather, these tech companies acquire, process, and sell information for the singular purpose of steering potential consumers toward a purchase.”
Google’s financial filings make this clear. As the company’s executives state in Part 1, Item 1 of their latest annual report to shareholders: “We generate revenue primarily by delivering relevant, cost-effective online advertising.”
Interesting argument. These companies did involve technological advancement – in Google’s case, a new algorithm for searching – but perhaps this technology is most effective for selling targeted advertisements. Instead of having to apply a scattershot approach through mass media outlets, advertisers can now easily find their target demographic. At the same time, there is still a long ways to go to truly make big money off this kind of advertising, especially for Facebook and Twitter. What is the best way to provide a good experience with users while enticing users to see and click on advertisements?