Is Google Too Big To Fail?

Robert Cottrell has a provocative post about the cloud today. Is the future of information in the cloud? Robert has his doubts:

I’d be on the pro-cloud side, were it not for the crash of cloud banking. The message from the banking cloud is that, the more trust you put in a system you don’t understand, the bigger the blow-out you get in the end. For basically cultural reasons, not technical ones.

Fertile analogy, no? Coming soon: "Is Google Too Big To Fail?"

I think this is exactly right. Yes, Google is too big to fail. If Google went down tomorrow, the loss of $100 billion in stock-market value would only be the tip of the iceberg in terms of the total economic loss associated with such an event. Between AdSense and AdWords, Gmail and Blogger, Google Docs and Google News, the company has built itself into an indispensable counterparty which would take many years and hundreds of billions of dollars to replace.

I think there’s definitely something to the theory that Nassim Taleb thinks the way he does partly because he grew up in Lebanon, where you couldn’t trust the banks. By contrast, most of the US and Europe grew up in a culture where banks were old and venerable and were to be trusted implicitly: even if they only had single-A credit ratings, you could happily enter into a long-dated swap contract with them because it was just in the nature of banks to be reliable and be around for ever.

Today, much of that trust is gone — but we still have trust in something more precarious still, which is the cloud, and the internet generally. I’ve been writing this blog for almost two years now — 3,872 entries and counting — and I have no local copy of my work. If the website disappeared tomorrow, for whatever reason, I would be genuinely traumatized.

So far, the internet has worked smoothly through the financial and economic crisis. But we’re alive to the possibility of black swans, now, and there’s no guarantee that our implicit trust in the internet and the cloud is well-placed. If we can’t trust the world’s biggest banks, why should we trust Google?