Why Google's 'free stuff' isn't free

This is the second of a three-part, interview series with George Gilder on his new bestseller "Life After Google." In part 1, he explains Silicon Valley's "fundamental flaw." In part 2, below, he shows why Google's "free stuff" isn't free. In part 3, to come, Gilder describes a new internet, "after Google," of limitless entrepreneurship and prosperity rooted in human creativity.

Along with its powerful search engine, Google offers a vast slate of valuable products for "free," from a calendar to a word processor to classroom networks for teachers to elaborate multi-billion-user web platforms.

And who doesn't like things, productivity-enhancing products no less, that are free?

George Gilder, the author of the new book "Life After Google" that predicts the downfall of "Big Data," warned in an interview with WND that there is a cost to everything.

Ultimately, for consumers, the biggest cost may simply be Google's domination of the market.

Gilder noted that Google co-founder Sergey Brin asked a crucial question early in the company's history: "How does the strategy change if the price is zero?"

The answer turned out to be, Gilder writes in his book, "We win the entire market."

"Google uses its free strategy to ensure a monopoly," Gilder told WND. "It's giving away all these valuable and attractive goods and services to which people gladly yield their data."

That, he said, "obviates security, because nobody wants to steal free stuff."

And, significantly, "it also prevents learning," he added, explaining that by "giving most of your goods and services away for free, you escape the learning process that is central to economic growth and prosperity."

Gilder emphasized that an important premise of his information theory of capitalism, articulated in his 2013 book "Knowledge and Power," is that wealth is knowledge.

Learning under capitalism, he explained, "is partly enabled by a system of prices that efficiently convey information about all patterns of demand and utility across the economics."

He illustrates the power of the free enterprise system to grow knowledge with a whimsical observation.

"All the material goods that ever existed," including the material to make a smart phone, were available to the cave-dwelling Neanderthal, he said.

In 1981, Gilder's bestselling "Wealth and Poverty" provided a blueprint for the economic revolution led by Ronald Reagan, who cited him more than any other living author. In the 1994 version of his book "Life After Television, he predicted the current digital world and described the smartphone, in remarkable detail, that now dominates daily life.

Google only wants 'your life'

Practically, on a daily basis, a price of zero signifies a return to the ancient barter system, and what is exchanged for the goods is a person's attention and ultimately their time, which, Gilder points out, "is actually your life."

Google derives 95 percent of its revenue from ads tied to its search engine.

But the advertising model, bombarding people with unwanted ads, is "decaying," particularly with the advent of ad-blocking software, Gilder argues.

"Ultimately you reach a sterile impasse that I see Google approaching as it makes all of its money from advertisements that most people don't want to see," he said.

He believes the most important effect of free – which he contends will lead to Google's "undoing" – is the lack of concern for security.

"Who wants to steal free goods?" he writes in the book. "If the vast bulk of your product line is free, you avoid many of the real time demands of preventing hacks and thefts. You rarely have to establish a ground state and defend it.

"Indeed, in a stream of free goods, the chief hacker is Google and its insidious ad-insert hocus pocus."

Other players on the net, Gilder predicts, will solve that threat to Google's business model.

"Collectively they will give birth to a new network whose most powerful architectural imperative will be security of transactions as a property of the system rather than an afterthought," he writes.

Gilder's new book foresees that amid daily news of censorship, privacy violations and market monopolization, the age of the tech giants and their centralized, top-down hierarchical world is about to end, largely because their "neo-Marxist, deterministic" worldview is "fundamentally flawed."

He points out the vision of Google's founders goes far beyond profits and technological progress, noting they speak of their aims in prophetic and religious terms.

Their ultimate objective is to create a new "system of the world," he said, in which all of its data is compiled in a single "place" to be analyzed by increasingly sophisticated algorithms that transcend the human mind's capabilities.

But Gilder contends this "flat-universe theory of materialism" is the fundamental flaw, describing it as a deterministic "neo-Marxist political ideology" that considers the universe sheer matter, ruled by physics and chemistry, leaving little room for human consciousness and creativity.