We would never claim to be as smart as Google's pet economics professor, Hal Varian. But rereading the blog post Varian wrote to refute claims that Google's deal to sell ads on Yahoo would raise prices, some of his points puzzled us. Were I a student in one of his Berkeley classes, I'd raise my hand to ask three questions:
Hal Varian has a sweet gig. Not only is he Google's chief economist, but he also still holds professorships in three departments at Berkeley — Economics, the School of Information, and the prestigious Haas School of Business. Today, Varian put on his Google cap on to fisk a widely-circulated report that claimed the company's new ad deal with Yahoo would raise prices all around. It's actually worth reading, at least up to "the report suffers from a number of methodology flaws."
Google has come under increasing fire for a lack of transparency in how it does everything — from keeping porn off YouTube to calculating advertising rates to determining which search results go where. I may personally distrust the wise benevolence of markets, but information asymmetry is a time-tested business tactic. In an article comparing the applied economics of Microsoft in the PC era and Google in the Internet era, the New York Times gets more of the same blather from the Googleplex regarding the enigma wrapped inside a puzzle wrapped inside the algorithm from Hal Varian, Google's in-house rent-a-quote economics guru:
In a nearly 1,500-word piece on Google, "The Humans Behind the Google Money Machine," the New York Times didn't say much about said humans except that one of the people who interpret the sea of data generated by Google's advertising business is a Harvard grad in his twenties. Quelle surprise! The article does quote the company's chief economist, Hal Varian (pictured), as saying Google's business is "recession-resistant," and cites criticisms by Wall Street analysts and major advertisers that the Mountain View search giant's operations are like a "black box." Granted, Wall Street firms have been using black boxes, or automated algorithms, to manage trades for years, so the criticism is rather ironic. But the real nut are the details on how you can buy Google ads on the cheap. We've pared that down to exactly 100 money-saving words.
