Why would Google Web Services cost $0?

Sunday, March 30, 2008 by Dave Winer.

Google Web Services, or GWS, is the hypothetical competitor to Amazon Web Services that I wrote about yesterday. 

The first question that comes up is how can they afford to give it away? That came up in yesterday's comments and the answer is important enough to deserve its own blog post.  

So here goes... 

Google has always challenged conventional wisdom that way, as Netscape did before. Remember when they let people download the browser for free, how foreign that seemed. 

Google's search engine cost nothing to use and had no ads for the first few years, and look at how well that turned out. 

Flipped around, I don't see why Amazon charges me to use AWS. I think I produce as much value for them as I use just by writing about it, but they haven't been willing to bend (not that I've asked them to). If there was no cost to it, I'd use their services for new things that I'm not willing to try as long as I have to pay. I know that because there are projects I've not attempted because the cost was prohibitive. 

Perhaps Google is thinking about acquisitions. How much would it be worth to buy companies without having to transition their technology to their platform? There would be no retraining either, all the programmers in the companies they acquire would know how to work in the environment. Further, can you imagine that they'd charge universities to teach comp sci using their cloud? 

Given the cost of acquisitons, recruiting and training they can afford to blow a lot of money on free bandwidth, storage and CPU to make the buying and hiring process more efficient and increase the hit rate (the percentage of programmers who work out). 

If they're smart they won't get involved in deciding which projects can use the service, as Apple has taken an interest in who can develop for the iPhone. How can a bureaucracy decide what projects will have merit in the market? Better to let a thousand flowers bloom knowing that the best ones will be available to you first because their software is perfectly compatible with yours. 

My guess is that's why Microsoft wants to buy Yahoo, which is built entirely on open source system software. Microsoft will be in much better position to acquire companies after Yahoo than before. 

Of course Google is doing this, how could they not be. What's hard to believe is how much of a running start Microsoft, Yahoo, and Google have been willing to let Amazon have.