Google’s economist says paranoia an ‘inevitable’ trait for top companies

Google chief economist Hal Varian said this week that companies that
grow large and successful “inevitably” start looking over their
shoulders.

“Andy Grove once said ‘only the paranoid survive,’ so
every company that has a successful franchise is naturally, and
inevitably, going to be paranoid,” he said in a panel discussion this
week held by the Technology Policy Institute.

“Sometimes they overstep the bounds of competition policy and get
slapped down by the antitrust authorities,” he said.

With Google facing its own competition complaints — most recently because of its deal to acquire flight software company ITA — Varian gave his thoughts on the antitrust scrutiny Microsoft faced more than a decade ago.

“This is how I look at the Microsoft case…as an example of this inevitable paranoia and overstepping the bounds with respect to tactics that would be acceptable business tactics in our economy,” he said.

In the aftermath of the case, Microsoft began to look “not so invincible” and Apple began to look “like it was rising from the dead,” he said.

Varian also addressed the size of his own company, arguing it’s difficult to gauge how big the search engine giant really is.

“If you look at Google, it’s very very difficult to talk about market share,” he said.

On the one hand, there are search market metrics, but “searches are free,” he noted.

Advertising is another possible metric.

“If you go to advertising, well, maybe Google is 2 percent of the world advertising market,” he said.

But gauging Google’s size could be a messy endeavor, according to Varian.

“None of it really makes sense in this context,” he said. “Everything is really up in the air in [because of] what do mean by market and how do you define it and how do you measure it.”