How Google Could Game the Markets

Google holds enough information to game the financial markets like we have never seen before. The search data alone provides a treasure trove of information when extracted and analyzed properly.

As John Battelle put it, the search engines, Google in particular, hold the “Database of Intentions“.

The Database of Intentions is simply this: The aggregate results of every search ever entered, every result list ever tendered, and every path taken as a result. It lives in many places, but three or four places in particular hold a massive amount of this data (ie MSN, Google, and Yahoo). This information represents, in aggregate form, a place holder for the intentions of humankind – a massive database of desires, needs, wants, and likes that can be discovered, supoenaed, archived, tracked, and exploited to all sorts of ends. Such a beast has never before existed in the history of culture, but is almost guaranteed to grow exponentially from this day forward. This artifact can tell us extraordinary things about who we are and what we want as a culture. And it has the potential to be abused in equally extraordinary fashion.

This data holds a great deal of value for any number of reasons. The holder of this data could use the aggregate the data to build a financial model like we have never seen. Let’s watch the returns on that Google cash hoard to see if perhaps they are using it. Wouldn’t you? It isn’t illegal. Think about it. As an investor, what has value to you? INFORMATION. Obviously, GOOG has some pretty smart people working there. If you were to build a financial model, and then incorporate the one thing that no one else has, do you think you could achieve a pretty good return? Bet you could.

Who, within the search companies, has access to this data? Is it nameless, faceless? Tie it to an IP. Oh wait, an IP from a large M&A (Mergers and Aquisitions) firm. An IP from a large investment banking firm. Link up the search data from those two users and guess who is buying who? Heck, you don’t even need personalized search enabled to come up with that one, hostnames are just fine.

Google stock chartI know that this sounds very big brother, but it really isn’t. It isn’t even insider information. It is not illegal. In fact, it is a brilliant way to return the most value to your shareholders and organize the world’s information at the same time.

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