Examination of Witnesses (Questions 518
- 519)
THURSDAY 26 OCTOBER 2006
GOOGLE
Chairman: Good morning everybody. Welcome
to this, which is a special session of our inquiry into the new
media and the challenges which it offers to the creative industries.
In an inquiry into new media it would have left a huge gaping
hole had we not had an opportunity to talk to Google who clearly
are now a major, if not the major, player in this area, so we
are particularly grateful to Nikesh Arora, the Vice President
of European Operations and to Andrew McLaughlin, Head of Global
Public Policy for coming to give evidence to us this morning.
Welcome, and can I invite Philip Davies to begin.
Q518 Philip Davies: Morning. Why
do you think that there is no UK equivalent of Google, YouTube,
MySpace or any other equivalent new media business, is there something
wrong with Britain why we cannot foster such business?
Mr Arora: I think there are examples
of companies which have fostered this market as well, if you look
at Cambridge, we have a very good relationship with what is going
on and we see lots of innovative businesses out there and I have
only been in this country myself for about two years, and four
years in Germany. The one big difference we see there is a cultural
difference between Silicon Valley and here: in the US it is okay
to fail and I think culturally it is sometimes hard in this country
for people to be accepted once they have failed. That is one big
difference I found from a cultural perspective, but other than
that I do see lots of companies over here which are trying to
do similar things and launch similar projects in this market place.
In fact Bebo, which is a local company, is now giving Facebook
and MySpace a run for their money. Skype was started in this part
of the world, it was not started in the US, so they are examples
recently of internet companies starting in this part of the world.
We think this is a huge market, we think Europe and the UK especially
is one of the bigger markets for us, we generate 16% of our revenues
and we now employ over 2,000 people in Europe so this is a huge
market.
Q519 Philip Davies: You think it
is more of a cultural thing why we might be behind the times on
new business because we do not like failure or we do not celebrate
people taking a risk as much as we should. What changes do you
think we need to alter that cultural standpoint? What sort of
policy changes do you think would be needed to change that culture
and to encourage people to take advantage of the new media sector?
Mr Arora: I think it is already
happening. If you look at how the internet is sort of creating
a global community by itself, over a billion connected people,
and five years ago, seven years ago, it was hard for global trends
to be seen by teenagers or people in these markets. I do not know
the precise numbers, but I know that there is a substantial share
of teenagers and people in their twenties and thirties who use
these services like MySpace, Skype, Google, and YouTube, they
are very aware. It is funny, we have done some research that the
young people do not read as many newspapers as older people do,
but they seem to have more information than older people, so they
have figured out a way of absorbing information from the internet.
Just them having access to what is happening around the world
and how success can be created by two people in a garage is already
creating people out there who are beginning to think, "What
can I do differently?" Reading The Financial Times
this morning, there is a young kid from school over here who started
a website called PrepMe, and it is a friend of Stanford. So clearly
there are people who are looking at success which is happening
in Silicon Valley and saying, "I can replicate this, I have
great ideas". The internet brings with it the opportunity
to do this and there are three very fundamental trends which are
happening out there which I think are going to make this a lot
easier process. One, is the tools of production have become very
cheap, so that anybody with a video camera or with a telephone
can actually go and make a video clipping and produce content.
Creating music is no longer as complicated as having to go and
have a huge recording studio in your £5 million pound house,
you can create audio as quickly as you like. The second thing
which is happening is the proliferation of broadband. If you look
at the UK with over 70% broadband, you cannot walk around a street
corner without being assaulted by someone trying to sell you broadband,
so clearly the proliferation of broadband is causing a tremendous
amount of access and ability for people to consume this content.
And lastly I think the cost of storage is coming down. I read
a fascinating statistic the other day from the University of California
at Berkeley that in 2002 five exabytes of content were created.
For us laypeople that would take us 40,000 years to watch if it
was television programming, that was just in 2002. But fascinatingly
today's iPod which stores about 10,000 songs, we believe in five
years you will have the equivalent which can store all the music
ever created on one iPod. So when these things begin to happen
and people have access to information, you will see creativity
and it will open up borders from a national perspective.
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