I actually feel it's misleading and wrong at a very fundamental level; this was the only thing I disagreed with in the whole press release!
Consumers "pay" for Google's services by giving ads attention so the ads have value and Google can sell them.
All the data harvesting is a means to a end: to make the ads more appealing so you'll click. Google don't profit from the data directly; in fact all the data harvesting and processing is a significant cost factor. There are certainly other businesses that resell data and profit directly from data harvesting, but AFAIK, Google is not really one of them.
It's a bit like saying that you pay a café by letting them observe you while you sit in their chairs. A basic misunderstanding of what's actually going on.
But in order to make the advertising business very profitable (this is, in order to give a reason for other businesses to use Google Ads to advertise themselves), Google needs to know all about you: who you are, where you are, what you like, what you don't like, what you like at certain times, what are your needs, etc, etc.
The real value of advertising is in showing the right advertisement at the right time at the right person.
Personal data is to advertisement what sugar is to candy.
Your analogy with the café is very misguided and not related at all with the situation.
It's still a means to an end. You don't pay with your data, you "pay" by interacting with ads.
Consider that Google actually became super profitable well before all the detailed tracking started. You grossly underestimate the synergy of "people searching for products" and "displaying ads". Everything else is an optimization.
You're describing Facebook... which is no where near as profitable as Google, in spite of much more invasive tracking.
If you never click an ad and use an adblocker so you never even see them, your traffic and your data just cost Google money. They may be able to extract some small amount of value by observing your behaviour and using those insights to improve their products, but they don't make any money until someone pays for an ad.
I agree the café analogy isn't perfect. I was just pointing out that outsiders who don't understand what's going on may fundamentally misunderstand the transaction. You can still provide value to the café by sitting in their chairs if you liven up the place and give them feedback on how to make the place nicer.
But if customers never buy anything, the café goes broke. And people stop interacting with ads on Google, Google does too.
You are wrong that by stating that if we don't click on ads or use adblockers we are costing money to Google.
Even if you don't use the ads or if simply ignore them, you still represent a group of interests that can be used to feed and train the machine.
Google learns through the searches you make and through the videos you watch and your behaviour will be used to improve the accuracy of ads shown to other people. That's your payment for using Google's services.
The only reason people stop interacting with ads it's because ads don't bring any real value, And any data that Google might collect brings up that value a lot.
I think you underestimate a lot of the number of people unaware of Google's presence and influence when it comes to advertisement. This number is much bigger than the number of people who install adblock on their browser.
Neither of us knows this, so we may as well stop arguing about it. What we do know, is that running the servers and hiring all those engineers costs money, and their revenue is almost entirely ads.
I don't think it's a stretch to assert that users that engage with and click on ads are much more valuable to Google than users that don't.
Whether the users that do neither contribute positively or negatively to the bottom line is an interesting question. I suspect they're a net negative, but obviously you disagree.
Google themselves probably know the answer, but I doubt they're telling...
Aside: a supporting data-point for my gut feeling here is that AdSense has always contributed much, much less to Google's revenue than AdWords does. The difference between the two gives a clear indication of how capturing user intent (searching for products) completely dominates how valuable (=effective) the ads are, and is much more important than all the other tracking combined. Google could probably turn off all the tracking and still make tons of money. Some numbers are here: http://www.investopedia.com/articles/investing/020515/busine...
Also you can't adblock paid top ranked search result so even if you don't click, and even if you know it's an ad, you've seen the brand in the top result, and the brand pay Google for that.
No it's not so you will click it. They collect the data from customers and offer it to the advertisers. The data is a big part of the product they sell to advertisers: targeting advertising. They don't sell user clicks (why would anyone pay for that?), they sell targeted advertising.
Advertisers quite literally pay for clicks. That was part of how Google disrupted the market back in the day; most other advertising networks were selling "impressions", but Google was so confident in the relevance of their ads that you got impressions for free and only paid when a customer actually clicked on it.
The click is worth paying for, because it is a signal that the user has seen the ad, thought about the ad, and is interested in the ad. Advertising gold.
Obviously Google have many products (they bought Doubleclick an "impressions" company), and there are analytics value-ads and all sorts of things. But the core of their business is still pay-per-click advertising.
Your idea that advertisers are buying raw data is a misunderstanding.
The "pay for click" is how they sell their product to advertisers. But advertisers do not pay for clicks. A click is worthless. They pay because they know that their adverts are being shown to the right people and there's a guarantee there in the "pay for click" thing. In order for Google to actually get those clicks, it must show them to the right people, and it does that by targeting.
Google sells targeted advertising, not clicks. Nobody pays for clicks. I do not think advertisers are buying raw data. I think they are buying advertising which is targeted based on that raw data.
In pay-for-click, advertisers are paying for advertising which is effective. The click is how that is measured.
There are other ways to measure effectiveness, but measuring clicks is simple and reliable. No matter how you do it, advertisers ultimately want to pay for ads that work and lead to sales.
Everything else is a means to an end, targeting in particular. Ineffective advertising is a worthless waste of money, no matter how well targeted it is. Untargeted advertising which leads to sales on the other hand, is very valuable.
So sure, advertisers will prefer targeted advertising. But that's because they expect it will work better than the alternative. What matters to them is whether it works, not how.
To the general public the how is critical though. If there was less tracking and spying and data harvesting we'd all be better off. So it's very important to squash the misunderstanding that tracking and targeting itself has intrinsic value for anyone. For society (and for the ad networks), tracking has a significant cost and is in many ways a significant liability. For advertisers it's a tool in their toolbox, and if we could replace it with a more benign one, that'd be good for everyone.
