Google's Chess Move -- and Why It's Brilliant

Skeptics and cheerleaders alike have long wondered when Google (NAS: GOOG) would become Big Brother, the ominous overlord of George Orwell's futuristic thriller 1984. Mark Jan. 27 as the day it happened.

Four days ago, the Big G announced changes to its privacy policy that, in effect, allow all of its distinct products to actively share and act upon data comprehensively. You can look at this in one of two ways:

  1. Either Google is keeping the equivalent of an FBI file on you and using the aggregated information to boost profits.

  2. Or, Google is tracking every service you use and how you use it in an effort to raise the value of it's providing you. And, yeah, boost profits by collecting more relevant data for advertising.

No matter what Google says, privacy advocates and competitors will eventually argue that the company has gone too far because it already has a history of doing so. Unauthorized Wi-Fi mapping, for example. Facebook attempted to capitalize on Google's history of snooping gaffes with an unseemly stealth smear campaign that, thankfully, went nowhere.

Trouble in the clouds
The social network may have gone too far, but Microsoft (NAS: MSFT) chief executive Steve Ballmer already has a history of sticking it to Google in public statements, at one point saying that "no one uses" its Apps suite. What do you want to bet Ballmer will trash Google's new privacy policy the first time he's asked about it?

He'll get cheers if he does. Privacy advocates tend to express doubts about anything that exists primarily as a Web service because of the distance between data and user. Store information in far-flung servers and it becomes more vulnerable, the thinking goes, largely because of high-profile hacking stories.

Last year's takedown of Sony's PlayStation Network highlights the danger. Holes in's (NAS: AMZN) Web Services platform were thought to be partially to blame, a scary proposition given the huge number of businesses that use the e-tailer for hosting support.

Help for your brain
Which leads us to the question that matters most now that a more integrated Google experience is forthcoming: Is the trade-off worth it? Would you or any of us be OK were our accounts hacked and data exposed? What would the consequences be?

Frankly, it's a tough question to answer, but I'd probably feel no different than if I'd have suffered any other form of identity theft. I use the Google's services frequently for the value created when they act in sync. The Big G knows it, too, and provided an example in the FAQ explaining the benefits of its privacy changes:

A more consistent user experience across Google might mean that we give you more accurate spelling suggestions because you've typed them before. Or maybe we can tell you that you'll be late for a meeting based on your location, your calendar, and the local traffic conditions. Google users still have to do too much heavy lifting, and we want to do a better job of helping them.

Making the call: buy
We don't yet know how all this plays out over the long term. But integrated services are easy to imagine, and we already know from public statements that the Google+ social network is positioning to become a sort of communications flashpoint similar to what Microsoft has created with the People Hub embedded in Windows Phone. Privacy-policy changes are the first step to making this dream real, and I think that's worth enough to make an outperform CAPScall.

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At the time thisarticle was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He owned shares of Google at the time of publication. Check out Tim'sWeb home,portfolio holdings, andFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Google,, and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Google, Microsoft, and and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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