One of the most important players in Irish media visited Ireland last week, and journalists barely noticed. Until recently, Eric Schmidt was the chief executive of Google, but he has now taken up the more relaxed role of executive chairman. Under his leadership, Google opened its European headquarters in Dublin seven years ago, employing 200 people here. It now employs 2,200 and, along with Microsoft, Facebook and Zynga, is frequently hailed as the shiny new face of modern Ireland, recession notwithstanding.
So when Eric Schmidt speaks, politicians tend to listen, and what he wanted was for the Irish government to improve its broadband. After a woeful start, Irish broadband rollout had finally begun to pick up pace when the recession struck. Domestic fibre links are still nowhere near good enough, fewer than 40% of Irish businesses are online, and we are late on fourth-generation (4G) mobile rollout. In a healthy economy, competition between telecom companies would push broadband development to optimum levels, but Ireland’s biggest telco, Eircom, is a crock, and more investment is needed on basic infrastructure.
Schmidt is right to highlight broadband as a driver of economic growth, but, of course, what is good for broadband is also good for Google. Online advertising spend is growing here at a rapid rate, to the point where it is about to overtake radio and will eventually surpass that of television. Google scoops up a generous portion of that spend, which goes mainly on search advertising, as opposed to display. It is also the most visited website in Ireland, followed by Microsoft and Facebook.
Google now has something else in common with Microsoft; it is being investigated in America over alleged anti-competitive behaviour. It may be remembered that, during the 1990s, Microsoft was challenged about the bundling of its browser, Internet Explorer, with its Windows operating system. It was then challenged by the European Union over its licensing, a case that generated many hundreds of millions of euros in fines. Earlier this month, it lost a US Supreme Court case taken by a small Canadian company over patent infringement.
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Google is now being investigated by three US states — New York, California and Ohio — over claims that it favours its own websites above competitors in searches. It is an anecdotal fact that most searchers proceed no further than the first page of 10 results that Google proffers. Last week, the US Federal Trade Commission also announced it would review Google’s search business from a competition point of view.
We do not yet know whether these investigations will lead Google down the same path of endless lawsuits and staggering fines as Microsoft. Perhaps the search giant has learnt from Microsoft’s experience, or perhaps its army of lawyers are sharpening their pencils. The company is no stranger to the courts when it comes to issues such as copyright infringement. No matter how they play out, Google’s legal travails are unlikely to affect its presence in Ireland, since the savings it makes in tax alone should more than offset any monetary punishment.
One of the few sources of pride in modern Ireland is our image as a technology-driven economy, even if our real attractions are low corporation tax and an educated, English-speaking and increasingly easy-to-pay workforce. If Ireland truly was a technological powerhouse, then it wouldn’t need warnings from the chairman of Google over the state of its broadband infrastructure.
During the boom years, a better road system was seen as crucial for international investors and property developers, so better roads were built. Fibre-optic cable costs much less to lay per mile than asphalt, which is just as well, because the current government needs to start laying it.