It Is Now Official: Information is More Valuable Than Oil

Over the past year or so I’ve posted about both data and water becoming the new oil. While water may ultimately become the most valuable commodity in the world, last week’s news that Google has surpassed Exxon to become the second largest corporation in the US, it looks like we actually have the hard evidence to say that information is more valuable than oil.

With Apple holding the top spot, it is very clear that data and technology are valued higher than the more traditional and tangible assets of oil, cars and other commodities. I would not bet against Google taking the top spot and being the first trillion-dollar company. It might have the edge on Apple in the critical areas of momentum and innovation.

Company Values as of 2/7/2014
(in billions)

Apple = $465
Google = $394
Exxon = $390

Just like oil, the information that Google captures holds little value until it is refined and processed. While Google indexes more than 60 trillion individual web pages, it is the analytics that Google provides that are critical to driving the value of this mountain of data.

Google first started as an online resource that basically connected consumers to the most relevant websites for their queries. Now it is primarily a data driven ad platform. While Google develops and markets software, it gives away the programs for free while driving revenue by selling the information that is captured from those who utilize it.

The key metric by which Google profits is Cost-Per-Click (CPC). While CPC costs have been dropping continuously for the past six or seven quarters, the volume of clicks that Google sells is more than making up for this drop. Over the next few years it is estimated that more than 6 percent of all ad revenue in the world will be collected by Google.

Google’s rise to the top started in 1996 with a class project by two Stanford University students, Larry Page and Serge Brin. The first iteration of Google was actually called BackRub and the 28GB of data it contained was held on a Sun Ultra II.

In 2000 Google began selling “adwords” and SEO and SEM became the key drivers of the new search economy. Google purchased the then 18-month-old YouTube in 2006 for $1.65 billion.

Many people may feel that Google’s profiteering by selling their personal information is a violation of their long running code of conduct of “Don’t Be Evil.” However, I don’t think that there is any going back now. The genie is out of the bottle and Google’s dominance as the preeminent search engine will only become more powerful.

Of course, if Google needs to generate some quick cash, it is estimated that an ad on Google’s homepage (which has never been done) would go for approximately $10 million. Or, by eliminating the “I’m feeling lucky” option Google would capture more than $110 million each year in lost revenue. Don’t count on this happening anytime soon. Google’s data reserves show no sign of drying up.