If you’re an avid blog reader, chances are you’ve already read the news of Google’s new AppEngine somewhere already this morning. Probably on TechCrunch?
I don’t want to bother rehashing what other people are already talking about. All I want to ask my readers is this: Doesn’t the idea of handing Google your code make you a little bit nervous?
Call me paranoid, but here’s how I see it: If you are a small startup, you don’t have alot of assets. All you have is an idea, and your code. Your code is, in fact, one of your greatest assets. Ideas are a dime a dozen, but your code is what brings your ideas to life. How you implement your ideas through your code is what sets your business apart from others.
Google has already demonstrated an immense desire to invest in startups with unique ideas and the right code to implement them. By storing your code with Google, what is to stop them from just peeking in? By using the AppEngine, you basically give Google a back door into your startup.
Now, before you all think I’m sitting here wrapping tinfoil around my head, let me quote some passages from the AppEngine Terms of Service:
6.3. Except as provided in Section 8, Google acknowledges and agrees that it obtains no right, title or interest from you (or your licensors) under these Terms in or to any Content or the Application that you create, submit, post, transmit or display on, or through, the Service, including any intellectual property rights which subsist in that Content and the Application
8.1. Google claims no ownership or control over any Content or Application. You retain copyright and any other rights you already hold in the Content and/or Application, and you are responsible for protecting those rights, as appropriate. By submitting, posting or displaying the Content on or through the Service you give Google a worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute such Content for the sole purpose of enabling Google to provide you with the Service in accordance with its privacy policy. Furthermore, by creating an Application through use of the Service, you give Google a worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute such Application for the sole purpose of enabling Google to provide you with the Service in accordance with its privacy policy.
Now, I’m far from an expert at legalese (so please correct me if you think Im off base here), but what this basically says to me is that Google won’t be claiming owneship of your application. They are reassuring you that your appication does indeed remain under your ownership. That said, they are stating that they do reserve the right to adapt, modify, publish, and distribute your application.
I’ve been in business long enough to know that a company must adhere to its contractual obligations in a public setting. But internally, a company will do its best to find some wiggle-room within its legal obligations; especially when it stands to benefit from doing so. Google could never get away with just blatently reproducing your code under its own brand. There would be a huge out-cry from the public if they were to do that. But nothing is stopping them from looking at your code and learning from it. Nothing is stopping them from evaluating your startup’s potential at an extremely intimate level; because you’ve already pulled down your pants and given them access to everything: code, content & userbase. It’s all stored in the Google cloud for them to see.
If Youtube had been built on Google’s AppEngine, do you think Google would have shelled out such major bucks for them? They might have shelled out less, or they might have shelled out even more; it all depends on how valuable they thought Youtube was after having unrestricted access to their backend.
And that’s the crux of what I’m getting at: Google AppEngine is an incubator. AppEngine makes it easy for Google to evaluate the potential of a startup before it even publically expresses an interest in acquiring it. They don’t have to deal with the legal hand-wringing that goes along with trying to evaluate a potential acquisition. They just look into their cloud and decide: is this something we want? If so, how much do we want to pay for it?
By using AppEngine for your startup, you let Google see your cards. There is no room left for bargaining, because Google will come to the table and already know everything they need to know.
I’d like to discuss this with you readers. If you have an opinion, please feel free to lay it on me by posting in the comments. Am I way off base here? I don’t think so, but maybe you disagree.
I agree… although I want to see and use this application, for any serious scripts or applications I develope, I will be using the security of my own computer.
I had my doubts as soon as I heard about Google App engine, but that quote from the ToS cemented it for me.
Thanks Rob.
I'd happily run small, short-lived applications on Google's cloud but for something like YouTube I'd want much more control.
So the TOS don't bother me, if Google want to rummage around some of my noddy little web applications, they can just invite me to the Googleplex for a visit.
Just to play devils advocate, wouldn’t it also make your startup more attractive to Google when they know that your software is inherently compatible with the Google Infrastructure? The integration cost would be zero.
Youtube has limited integration possibilities with Google as it relies heavily on MySQL down the back, whereas Google relies on big-table, so it has to maintain a parallel architecture; justifiable with a service the size of YouTube but maybe not for a little startup that it wants to buy.
Given that most startups now see acquisition as an exit point as opposed to an IPO, making yourself easier to acquire seems like a step in the right direction.
The other point to note is that big companies sometime acquire in order to obtain the people working in the startup as much as the code.
Just my 2”
@Spoddy, those are two excellent points. I understand that many companies now look to be acquired and nothing more. I shake my head at this business strategy, but you are right: if thats the goal, then you might as well ally yourself with google standards from the get-go.
@andymurd I'd definately want to run some short lived apps on google as well, but I, like you, would want to have complete control over my larger investments.
Thanks for sharing.
You conveniently left out the following excerpt:
that was mentioned twice in one paragraph that you quoted.
You might want to read their privacy policy about using your data for their purposes, too. Or find this in ToS. I wont do it right now, because legalese makes my head heavy.
Another benefit (apart from infinite scalability) to the developers, is that they can easily sell-out to Google, if Google sees opportunity. In fact, it is made easier by the fact that they can look at the data, at least with the permission of the app owner.
You are assuming that Google getting into your space is automatically going to mean you are screwed. Google is just as bad as Microsoft for releasing horrible ugly applications that nobody cares about soon after launch.
Ideas and code are important, but so are people and implementation. Sun hired the Jruby developer just so that he could work on Jruby full time. They could have just taken the source and developed it out themselves. I'm sure similar happens a lot in acquisitions. Companies get hired out just for the developers or to take a good competitor off the market.
You provide Youtube as an example, but was Youtube really that hard to reproduce? How long did it take after Youtube became big for people to create Youtube clones?
I think the idea is great but I actually like setting up my own server and server space is not that expensive. How many people are going to buy into their data storage and API's though? I am not worried about them stealing my code but I would probably still have to rewrite a lot of it if I want to move away from their system.
By the way, if you want a similar system for ROR check out Heroku.
Oh, and your WYSIWYG for comments sucks!
I’d be hard-pressed to put any code of value in the hands of Google (or any similar arrangement with another company) for all the reasons mentioned in the post and comments. But I do think the intent of Section 8.1 is being missed due to your worry about your code.
Paying particular attention to the last portion of each of the last two sentences, “….for the sole purpose of enabling Google to provide you with the Service….”, they are indicating that in order to run the app (provide the service), they must be able to run the code. If they were unable to run the app, then there would be no service.
It’s good to be wary but don’t go overboard. Understanding the position of the folks across the table is key to maintaining your own strong position. Personally, I’m not comfortable with being unable to edit or append an agreement for something so critical as sharing my own code.
Your greatest asset as a startup had better be your people, not your code. And if Google employees want to use their position to be "Evil", there are about a million things they could do that would be more profitable than looking at the source code of startups.
Hey Quad, thanks for stopping by. You're absolutely right, of course. Your team is your greatest asset…without the right people no idea will get off the ground no matter how good it is.
Sorry for offtop but it is difficult to make a sample database work on my wordpress installation, if it goes so with a freesample, what can I do when I buy one?
If you have a hugely succesful company, you will not have to try and get Google's attention. They can run a script on the resource usage to see which initiatives are sucessful. It seems to me that this is a major advantage for any startup that wants an exit point. Be succesful and you automatically have Google's attention.
Now suppose you are running on Google App Engine, and you get an offer. You go to Microsoft telling them about the offer. Wouldn't you think Microsoft might be willing to up the offer to get the traffic and application away from Google and onto their own servers? In fact, it is not terribly hard to write a Python-backend that allows a Google App Engine application to run on Microsoft SSDS infrastructure.
So as long as there is competition in the market, I do not believe valuations are only dependent on the fact that Google could see your code. Quite the contrary, Google App Engine gives you the ability to grow fast and scale without effort. When you scale, your monetary value increases fast. The money for YouTube was mostly because they had the audience, not the technology.