Inside Google

Google acted again Tuesday to ensure that will be a dominant player in the increasingly important mobile market.  It clearly wants to avoid what happened to other tech giants as technology evolved.

Consider IBM. It dominated when large main frame computers were the driving force. But "Big Blue" didn’t keep up as the world moved to PCs.  Microsoft with its control of the most used PC operating system emerged as the new tech powerhouse.

With the growth of the Internet, Google has become the 800-pound gorilla, playing an ever larger role as the Internet reaches into almost all aspects of our lives. Now mobile is emerging as the next important technology and Google intends to do whatever it takes to be the key player.

Tuesday’s announcement that it will sell its own Android smartphone, the Nexus One, weakens the grip the telecom companies have had in the mobile market. Though it will offer the phone through T-Mobile and then Verizon and Vodaphone,  Google will also sell an unlocked device that can be used on any GSM network.   Traditionally phones have been subsidized by carriers who required consumers to sign lengthy contracts.

The Nexus One, dubbed a "super phone," by Google executives runs on the Google’s Android operating system.  It’s seen as a direct competitor to Apple’s popular iPhone.

The iPhone runs on Apple’s propriety software.  Google’s Android software is open sourced.  Because Google gets almost all its revenue from advertising, it can’t allow a situation to develop where one company  — Apple — could keep out applications and potentially Google’s advertising.

Nexus One is all about ensuring that the Android operating system is widely available and the best devices based on that system are competitive with Apple. It doesn’t hurt that it is likely to weaken the telecoms’ grasp of the mobile market.

Ensuring consumers with the right mobile devices is just part of the story, though.   Google needs to deliver the ads.  That’s what the planned $750 million acquisition of AdMob is all about. It’s the company’s third largest after $3.1 billion for Doubleclick and $1.65 billion for YouTube. Google already had its own mobile ad operation, buying AdMob would simply solidify its control of the mobile ad market.

On one level, offering a new phone and weakening the telecoms’ grip may give consumers more choices. The Internet giant will certainly spin it that way.

Indeed, as soon as Apple announced Tuesday it is buying Quattro Wireless for $250 million, Google posted an item on its Public Policy Blog saying that deal shows there is competition.  What it really shows is  two tech giants gobbling up firms in an effort to control the new market.

The FTC is closely studying the AdMob deal. It needs to look closely at the Quattro acquisition, too. After all  it was only months ago that Apple and Google shared two directors, Google CEO Eric Schmidt and Genentech’s Arthur Levinson.

Of even greater concern are privacy issues.  Regulators are just beginning to focus on the massive amounts of personal data that are gathered by online companies like Google so they can serve up their ads.  The mobile sector, is the wild west, compared to the wired Web. Rules need to be implemented about what data can be gathered in the mobile world, how it can be used or combined with databases already compiled on servers run by Google and others.

Consumers must have control of their data, whether it is even gathered and if it is, how it is used.  Offering a glitzy super phone doesn’t diminish that need. And putting your best spin forward and saying there is competition, doesn’t make it true.