Google gives PayPal a run for your money
Shoppers browsing online for new designer sunglasses or that ultrathin cellphone have a new temptation: a speedy-looking blue shopping-cart icon offering to whisk them to a purchase.Skip to next paragraph
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Last month, Google, by far the most popular way to find things on the Internet (it processes about 45 percent of all searches), added Google Checkout to its burgeoning list of related products. By signing up, shoppers can quickly and painlessly (at least until the bill arrives!) click to buy anything where they see the Google Checkout shopping-cart symbol without entering their credit-card number or other information. Consumers can also keep track of what they've bought anywhere online in one place.
Google joins PayPal, a more full-service online- payment system owned by eBay, and others such as Bill Me Later, in offering an online "electronic wallet." These companies argue such systems are safer than punching in credit-card numbers all over the Net. Both Google and PayPal act as an intermediary and don't reveal the consumer's full credit-card number to the merchant at the site of the purchase.
But others worry that Google, in particular, is beginning to accumulate a tremendous amount of personal and financial data on consumers.
With Checkout, "Google has more data on you than before," says Philipp Lenssen, a full-time blogger in Stuttgart, Germany, whose Google Blogoscoped (blog.outer-court.com) tracks developments at Google. "They have your e-mails [if you use Gmail], they have your search queries, they have what you shop for, they know which results you click on. If you have the Google Toolbar installed, they know where you're surfing."
"We take the privacy of our users very, very seriously," says Benjamin Ling, product lead for Google Checkout. For example, buyers using Checkout can set up a special e-mail account to communicate with sellers so that their own e-mail address remains private. "We understand that we're playing a trusted role here," Mr. Ling says. "We seek to protect the privacy of our users while staying in compliance with the law."
Earlier this year, Google vigorously opposed in court a request from the US Justice Department to provide it with 1 million random Web addresses and records of one week of Google searches. A judge later ruled that Google must provide 50,000 Web addresses from its databank but would not have to reveal any terms users had searched for.
Other than requests from the US government, Google has little reason to disclose the data it's accumulating, Lenssen says. "They don't have any [business] incentive to hand out your credit card [number]," he adds.
Although Google is a widely recognized brand name, it still has some work to do to persuade shoppers that it will handle their money with care, says analyst Edward Kountz, who tracks online payments and financial services at JupiterResearch in Boston. "[Google's] very much a search 'brand.' It's not a trusted brand per se." The ultimate question, he says, is "Would you let them hold your wallet?"