By Quentin Fottrell
Every search has a surcharge.
The $10.6 billion first quarter revenue Google posted Thursday reflect the value of the data collected from consumers, experts say. “Whatever you post online, expect it to be used by companies to sell advertising,” says Rick Dakin, CEO of IT security business Coalfire. All the tidbits Google gleans from users of YouTube, Gmail, Google+ and other services boost the accuracy of the company’s targeted ads, and therefore, its revenue, says Michael Fertik, CEO and founder of Reputation.com, one of many new services designed to help consumers keep their web use anonymous. Advertising prices for “adword” or sponsored links are determined by an auction with 1 cent as the minimum bid, according to a Google spokesman.
In 2011, the company’s revenue topped $37 billion. Here’s how it works: Google tracks the movements of consumers through the use of “cookies” — little invisible pieces of code stored on computers or mobile devices that tell a company what searches consumers make on the web, what sites they visit — or places they go via Google Maps — and what they do there. And as SmartMoney.com reported, that personal information can be worth between $50 and $5,000 per person per year to advertisers. It’s not always used wisely. Last year, Google paid a $500 million charge to cover a settlement of a U.S. Department of Justice case alleging it had illegally profited from selling ads to unlicensed pharmacies.
While consumers get a lot of entertainment from free social networking sites like Google+ and email services Gmail, experts say they are often unaware of how much information they are sharing with market research companies. Google says it doesn’t sell data to third parties or market research companies, and “keeps private and personal information private.” John M. Simpson, director of Consumer Watchdog’s Privacy Project, says, “Google is selling all our desires and wishes to advertisers.” The Internet search giant updated its privacy policies last month to say it may combine the information users submit with Gmail, YouTube and other Google services to help it create a more three-dimensional picture of consumer habits.
Here are 5 ways Google cashes in on your clicks: