The research for this report and the period it covers took place before the recent Covid-19 pandemic. Our modelling and polling sought to quantify Google’s impact in the year 2019. While it is too early to be certain of the long-term economic impact of the pandemic, in the last few months we have seen how digital tools can help families stay informed and connected, and businesses adapt to new ways of working.
10 ways in which the lives of Finns were helped by Google in 2019
Google supports the economic growth of Finland
1. In total, we estimate Google’s products support €4.3 billion a year in economic activity. Over the last five years, the economic activity driven by Google Search and Ads has grown by 46% in nominal terms.
2. Finland is a global powerhouse in app store development, in absolute terms behind only the US, Japan and China. In total, Android developers are estimated to generate €3 billion in annual revenue for the Finnish economy, with the majority of this coming from the thriving gaming industry. Per capita, app revenue is ten times higher than in the US, while 45% of Finns play a game on their smartphone at least once a week.
Google creates products that are helpful and valued by everyone
3. Together, Google Search and Google Maps save the average Finn 25 hours a year. In total, our estimates suggest that you would have to pay the average Finn €70 a month in compensation for them to decide to give up Google products. That is the equivalent of an additional 6% of GDP. Because they are often provided free at the point of use, much of the value created by Google products is not included in traditional economic statistics.
4. Google is helping shoppers make better decisions, creating a more competitive economy. 89% of shoppers think they make better purchasing decisions because of online information, and 83% of businesses think it is harder to get away with poor goods, food or service because of the internet.
Google helps businesses grow and innovate
5. Online search is now an important way that customers find businesses. In total, we estimate that referrals from Google ad services support €0.9 bn in economic activity in Finland by helping businesses reach new customers.
6. 80% of exporters agreed that online search and online advertising have made it significantly easier to find international clients. We estimate that around a third of Google Ads spending in Finland is going to international spending, suggesting that it is driving €0.3 bn in exports a year.
Google helps workers be more productive, learn new skills and develop their careers
7. Google is making workers more productive. A third of workers agreed that search engines make their work easier and save time. We estimate that Google services are delivering at least €1.6 billion a year in business time savings for the Finnish economy.
8. Google is helping people find jobs and learn new skills. Every year, 74% of 18-24 year old Search users use it to find a job, and 37% to get advice on their CV. 45% of Google Search users use it at least once a month to learn a new skill. The new Google Digital Garage in Helsinki has pledged to train 10,000 Finns by the end of 2020.
Google is committed to sustainable economic growth, and is helping others to do the same
9. Google is the world’s largest business purchaser of renewable energy, investing over $7 billion globally in renewable energy infrastructure. In September 2019, Google also announced that it is committing to two new wind energy projects, more than doubling its renewable energy capacity in Finland.
10. Google Data Centres use 50% less energy than the typical data centre, and 100% renewable energy across their operations. Finland is one of only five locations in Europe with a Google data centre. By 2020, Google will have invested €2 billion in the Hamina data centre, supporting an average of 4,300 jobs per year over the next two years.
Introduction - Google’s impact in Finland
The internet has created an era of unprecedented consumer and business choice
In 2018, for the first time, more than half the world’s population had access to the internet.1 Every day, around 900 million gigabytes of new data are created - the equivalent of 30 trillion digital photos.2
While we often talk about the benefits the internet has brought consumers through lower prices and greater transparency, even more important has been the sheer increase in choice and variety. An online retailer today can offer over 500 million products, while over 500 hour of new content are uploaded to YouTube alone every minute.3 One academic estimate from relatively early in the internet’s history suggested that, for example, for books the gains from increased choice are 7-10 times as large as the gains from lower prices or increased competition.4 For the first time, anyone with a smartphone or a web browser can access much of the world’s literature, science, movies, music, news or games.
But while it has been transformational for consumers, the internet has also radically expanded choices for businesses. Just as consumers can find goods from anywhere in the world, businesses can tap new markets for their services too. This has enabled new types of globally oriented businesses - from small manufacturing firms to new types of content creators.
Technology has always been one of the most important drivers of growth, productivity and an improved consumer experience - and this is particularly true for Finland. Finland is currently the leading country as measured by the EU’s Digital Economy and Society Index,5 and the country is also Europe’s most advanced market for cloud computing.6
Google helps people get things done, and grows the economy
Google’s mission is to “organise the world’s information and make it universally accessible and useful.” Google’s products like Search, YouTube and Android help people navigate the cornucopia of new information created by the internet.
In this report, Google commissioned us to seek to both better understand and quantify the ways in which their products help and enable Finnish people and businesses:
- How Google’s products support economic growth in Finland. We look at the overall economic impact of Google in Finland, the jobs supported by Google’s data centre in Hamina and how Android has helped Finland become a global powerhouse in app store development.
- The different ways Google’s products help individuals and families in their everyday lives. We explore how Google’s products help people learn, save time, and better connect with their friends and family.
- How Google helps businesses grow and innovate. We look at how Google is making it easier for small companies to connect with customers worldwide, increasing consumer power and enabling entirely new types of business.
- How Google helps people be more productive, learn new skills and develop their careers. We look at how workers are using Google products to get more done, how Google Search is an increasingly important way for people to find jobs and the potential for AI to further enable workers to be even more productive.
- Google’s commitment to sustainable economic growth, and how its products are helping other people to reduce their environmental footprint. We examine Google’s record as the world’s largest business purchaser of renewable electricity, and look at how its products are being used by individuals and businesses to cut their own carbon emissions.
Much of the value created by Google is not included in traditional economic statistics
Many of the most popular products of the internet are open and accessible for anyone to use - including many of Google’s leading services, such as Google Search, YouTube and Android.
Traditional economic statistics measure the value of a business or a product by the increases in economic transactions they create - in other words, by how much we have paid for something. That means they do not pick up many of the positive impacts created by Google’s open products - from saving us time around the home, to making it easier to communicate with distant relatives. Other studies have calculated that if you included the value provided by all open internet services in GDP, it would boost the growth rate by 0.7 percentage points a year.
In order to better understand the full breadth of the impact Google creates, we combined a range of qualitative and quantitative research techniques. We ran a new nationally representative poll of 1,000 Finns across the country, exploring how they used Google products in their ordinary life and how much value it was creating for them. At the same time we spoke to 200 senior business leaders across different types of industry and size of business, trying to assess the difference these products were making to their workforce. Finally, we constructed multiple economic models which could help us quantify the total size of the benefits created by Google for the Finnish economy or standard of living.
In total, measured traditionally, we estimate that Google products are supporting at least €4.3 billion in economic activity for local businesses.
As important as this traditional economic value, however, is the value created and time saved in everyday life. We found that the total consumer surplus of Google’s products in Finland is around €70 per month for the median person.
How we quantified Google’s impact in Finland
Traditional economic statistics often do not take full account of the full benefits of the digital economy, such as saved time or the increased opportunities that seamless, rapid access to information can bring. This would also have been true of the printing press or TV. But just because something is hard to measure, it does not mean that it is unimportant.
In this paper, we sought to use a range of different methods to quantify the economic impact and help provided by Google Search, YouTube, Android and other Google products:
- To start, building on the precedent of previous Google impact reports7, we used traditional economic modelling built upon third-party estimates of Google’s Finnish market size, potential returns on investment (ROI) and productivity enhancements to measure the economic activity driven by Google Search, Google Ads, AdSense, YouTube, Android and Google Cloud.
- In order to build a broader picture of the benefits, we conducted extensive public polling to ask individuals and businesses how they made use of Google products, and what difference they made to their leisure, work and society. Working with the panel provider Dynata, we polled a nationally-representative sample of 1,000 adults and 200 senior business managers in small, medium and large businesses across Finland, asking them 50 and 23 questions respectively about their experience using Google and other online products. Public First is a member of the British Polling Council, and full tables for all the data used in this report is available to download from our website.
- Finally, we explored 9 in-depth case studies of how businesses and individuals across the different regions and industries of Finland are using Google to power their business.
We go into
greater depth on our methodology in the last chapter, which explores how it
compares and contributes to the wider debate on measuring the value created by
the Internet. The full technical details are given in an appendix at the end of
the report.
While Google commissioned this report from Public First, all economic estimates are derived from official, third party and proprietary information.
Google supports the economic growth of Finland
The value of Google products in the economy
How Google supports growth
When we think of the economic activity driven by the Internet, we often focus on the creators of the software and hardware we use as consumers - the maker of our latest gadget or app.
In reality, however, the indirect impact of new technology is much more economically important than the direct revenue of its creators. What makes technology important is its ability to catalyse higher productivity for businesses and workers across all sectors in the economy. While IT makes up only around 3% of Finland’s GDP, it is estimated to be responsible for ICT has been responsible for half of the growth of productivity in Finland in recent decades.8
This is particularly true of Google. In this report, we focus on four ways in which Google products and services have boosted economic growth in Finland:
- They have made it easier for local businesses to connect with customers in Finland and worldwide. According to our business poll, 81% of Finnish businesses believe that online search is now an important way consumers find them.
- They have provided underlying platforms for new economic ecosystem and types of company. With companies like Rovio and Supercell, Finland, for example, is a global leader in smartphone game development, supporting thousands of local jobs.
- They have boosted the productivity of individual workers and businesses. While we have not included this value in our headline estimate of the economic activity supported by Google, we estimate that the enhanced productivity from Google Search and Apps is helping save Finnish businesses at least €1.6 bn a year.
- They have invested significant amounts directly in the local economy. Finland has seen some of Google’s most significant investments in Europe, with the Hamina data centre one of just five locations in Europe.
The economic impact of Google
Measured conservatively, we estimate that Google products support at least €4.3 bn of economic activity for Finnish businesses. If we assume standard economic wide multipliers, that is the equivalent of around 57,000 jobs.
This estimate is built upon third party estimates of ad revenues in Finland, and, as such, may be an underestimate of the full value created by Google in Finland.9
As a company, Google’s primary source of revenue is advertising, and a significant amount of the value we estimate comes from Search and Google Ads (€0.9 bn annually). In addition to this, we estimate a further €3.4 billion was generated for Finnish Android developers in 2018.
Over the
last five years, the economic activity driven by Google Search and Ads has
grown by 46% in nominal terms.
Google Search and Ads Economic Impact in Finland
Google contribution to GVA by region
Google’s Hamina data centre
Whenever someone uses Gmail, does a Google Search, edits a Google Doc, or watches a YouTube video, they are using a Google Data Centre which stores and processes enormous volumes of information.
There are currently four operational data centres in Europe - serving computers in their own countries and around the world. In March 2009, Google purchased the Summa Mill in Hamina and built a data centre in Finland. It is cooled by an innovative seawater system reducing energy use, and its interiors were designed by the celebrated Finnish architect Alvar Aalto.
Finland is one of only four existing locations in Europe with a Google data centre, chosen because of its good combination of energy infrastructure, developable land, and a highly skilled workforce.
Since its opening in 2009 Google has invested €800 million euros in the Hamina data centre, and in 2019 it announced that it intended to invest a further €1.2 billion euros by 2020 to continue to expand its data centre presence in Hamina, supporting an approximate 4,300 jobs per year on average.10
An earlier report by Copenhagen Economics investigated the direct and indirect impact of Google’s data centre on the Finnish economy. It found that the Hamina data centre had a direct contribution of €95 million a year and 1,600 jobs per year between 2009 and 2015.11
Once you add in indirect and induced effects, the total impact in the year 2016 was €770 million and 11,200 jobs. This does not include the recently announced additional investment.
The study also found that Finland was not yet benefiting from the full potential of the data centres. For example, other data centres in Europe have a larger footprint in terms of local jobs and Finland could do more to help local suppliers benefit from the continued investment by Google in data centres in Hamina.
If Finland
matched the effects achieved by other countries in Europe with data centres -
including in Belgium and the Netherlands - and also took full advantage of the
global growth in the demand for data centres, the annual economic contribution
would be €2.3 billion and 33,000 jobs.
Developers and the Gaming Industry
The mobile gaming industry in Finland
The Finnish gaming industry is a global success story. It now generates over €2 billion in revenue. A recent Neogames report found that almost 3,000 people were employed by the industry and - increasingly - people are travelling from across the world to Finland for jobs in successful games companies. Finnish games Angry Birds, Clash of Clans, and Clash Royale have been played by billions of people worldwide.12
The gaming industry in Finland has been particularly successful at understanding how smartphones and app stores have changed the kinds of games people play - Android and iOS are the most popular platforms for Finnish game developers.
The shift in how games were developed and distributed also made it much easier for small game studios in Finland with less international investment to develop a hit game. In 2016 there were 30 studios in Finland with an annual turnover of more than $1 million, a 50% growth from 2014.
In 2017 15
new companies were founded in Finland and 150 new games were released. Mobile
games remain a focus - but augmented and VR games (including those on
smartphones) are increasingly important.
Rovio
Rovio Entertainment Corporation is a true Finnish success story - a global entertainment company that creates mobile games which, by the end of 2018, have been downloaded over 4.5 billion times. Rovio is best known for their global Angry Birds brand, which started as a popular mobile game in 2009, and has since evolved from multiple games to various entertainment and consumer products in brand licensing. Rovio operates in mobile games, consumer products and animations. In 2016 Rovio released The Angry Birds Movie with a global success and 350 million dollar box office revenue, and globally launched the sequel, The Angry Birds Movie 2, in August 2019.
Despite the new
branches in brand licensing, the lion’s share of Rovio’s revenue is still
generated in gaming. As the gaming industry is truly global, the small size of
the Finnish domestic market has never limited the success of the company; the
majority of the revenue flows in from the global markets, most significantly
from North America. Google Play is the main distribution channel for apps and
games released on Android devices, and a significant 72% share of the worldwide
mobile game downloads in 2018 came from Google Play.13
In the first half of 2019, in-app purchases on Google Play represented
approximately 40% of Rovio's in-app revenue. Rovio expects the mobile gaming
market to further expand in the future as the number of mobile gamers is growing
while average in-game spend per user is increasing due to constantly developing
live ops and games as a service practices.
Seriously - the Finnish gaming company
Mobile game builder Seriously has a content development studio in Finland, while marketing and business development are handled from entertainment mecca Los Angeles. “We’re doing Hollywood backwards,” says Andrew Stalbow, Seriously Co-Founder and CEO. “We’re taking advantage of the massive shift from cinema and TV to mobile. Android is important for our mission of creating games with outstanding production quality that become a global phenomenon.” The company’s first game, Best Fiends, currently played by 1 million people every day, is a puzzle adventure game that feels like a Hollywood movie. Its success offers sound proof that Seriously’s formula is working and for Andrew, the benefits of Android are very clear: “Android is an incredible platform with a fantastic global reach,” he says. “It’s helping us build the next generation of entertainment brands on mobile and challenge the big guys.” To further expand the audience for Best Fiends, Seriously uses YouTube as a platform for fun, creative marketing. A recent video, “PewDiePie’s Valentine’s Challenge”, was tweeted by the YouTube team to its 48 million followers.
The economic impact of Android development
Android is the world’s most popular app platform, helping ensure that it has never been easier for app or game developers to deploy and market to customers worldwide.
Globally, over 5.9 million developers target Android first,14 with around 2% of global developers estimated to reside in Finland.15 In total, the Google Play store offers around 2.7 million apps to download,16 with over 75 billion apps downloaded globally from the Google Play store in 2018.17 The average consumer in advanced economies regularly uses over 30 apps, with just under 100 apps installed on their smartphone.18
In Finland, we estimate that Android developers generate €3.4 billion in annual revenue for the Finnish economy.
Per capita, app revenue is ten times higher than in the US, and in absolute
terms behind only the US, Japan and China. Other estimates have found that, in
total, the Android ecosystem supports
50,000 jobs in Finland.19
Google creates products that are helpful and valued by everyone
Google makes everyday life easier, freeing up valuable time
The importance of extra time
Since 1960, average working hours in the workplace in Finland fell by over 21%, from 38 to 30.20 As important as the decline in working hours in the office, however, has been the decrease in time spent doing work inside the house. In 1900, data from America shows that an average household would spend 58 a week preparing meals, cleaning and doing laundry. The arrival of new domestic technologies such as the clothes washer, vacuum cleaner and refrigerator helped significantly reduce the time needed for housework. By 2015, the average time spent on those same chores was less than eight hours.
Unlike the increase in productivity in the workplace, this increase in leisure time does not directly show up in official GDP statistics. Nevertheless, by significantly freeing up time, these new technologies increased leisure time, allowing households to spend more time catching up, relaxing or pursuing their other projects. On average, those we polled suggest that an additional hour of leisure is worth around €28 to them, suggesting that the extra time freed up by new technology can be highly valuable.
Today, it is increasingly digital technologies that are freeing up
time in the household. In this section, we look at the value of the time saved
by Google products such as Search, Maps, and Assistant. In total, we estimate that Google products are saving at least 25 hours
a year - the equivalent of over an extra day in free time.
Saving time with Google Search and Assistant
Making information easier to access is making a significant difference to people’s lives. Before the arrival of the search engine, the only way to get the answer to a question might be to ask a friend or drive to the library.
When we asked Finns why they used Google Search:
Speed
- 48% of Search users said speed: it saves them time
Coverage
- 78% of Search users said coverage: it provides information not available in other ways
Convenience
- 48% of Search users said convenience: it is easier or as easy as alternatives
In total, it is estimated that users save at least 23 hours a year from Search compared with other methods of finding information because it is faster and easier to access21
In 23 hours or less you can:
- Read the Unknown Soldier by Väinö Linna nearly 3.5 times
- Cycle from Helsinki to Vaasa
- Watch Happier Times, Grump 11 times
- Watch 46 episodes of Salatut Elämät
But this
number is likely to be a lower bound on the time saved by Google Search. If
you included the time saved by applying the new information from Google –
trying out a new recipe, or learning a new skill – the time saved would be even
greater.
Saving time with Google Maps
Until recently, we relied on atlases and paper maps to find new places. We may also have got into arguments about directions while driving, or been worried about going to unknown locations on our own.
Today, we find that Google Maps and other location apps have made it easier for people to find restaurants and businesses, get around in new cities, and get to places more quickly and easily. 61% of Finnish Google Maps users use it at least once a week and 14% use it daily.
When we asked a series of questions about why people used Google Maps, we saw that saving time was very common:
- 42% of Google Maps users regularly used it to stop them getting lost
- 41% of Google Maps users regularly used it to avoid traffic congestion or public transport delays
In total, we estimate that the use of Google Maps saves the average Finn two hours a year.
Percentage using Google Maps to...
Google is being used by people of all ages to learn new skills
Google helps people learn
We found that the majority of Finns, whatever age, are using Search to find new information, helping create a culture of lifelong learning. 88% of Search users say they are more likely to look something up when they are unsure about it than when before search engines existed. 92% of Search users research a topic at least once a month.
Google Scholar: access to the world’s best research
From science and history to economics, Google Scholar helps people access research and knowledge. It is a simple way to search for academic literature across sectors and disciplines: articles, theses, books, abstracts and court opinions, from academic publishers, professional societies, online repositories, universities and other web sites. Some studies have found Google Scholar to have both better sources and to be more usable than other methods of finding academic papers.23
While not every use of Search will be serious - around one third of Finnish users (30%) say they use Google Search at least daily to find a piece of trivia - the majority of Finnish users say they regularly use Search to help with their everyday activities:
- 75% of Search users regularly use Google Search to find a business, and 47% to research a big purchase.
- 52% of Search users regularly use it to research medical and health issues, and 20% to look up a gym or local fitness activities.
- 44% of Search users regularly use it to research a political candidate or issues, and 51% in total have used it to find where they need to go to vote.
Most popular uses for Google Search in Finland (size=popularity)
And when they do find information, for the most part they find Search useful. 38% of Search users agree that Search helps solve their problem the majority of the time, compared to 4% who thought that it was usually a waste of time or 8% who used Search as a way to procrastinate. Search is also ranked as among the most trusted sources of information, second only to official government publications.
Many people find it easier to learn through video rather than text. Like Search, YouTube is increasingly a medium through which people learn more about the world, pursue their hobbies or get help with day to day tasks. Worldwide, there are over 1 billion views of learning-related content on YouTube every day.24
We found that:
- Over half of YouTube users use it at least once a year to help with cooking (59%), and over two thirds to help with home maintenance (63%).
- 40% of YouTube users regularly use it to watch commentary on the news or political events, and a third (34%) to learn about fitness or health.
YouTube uses: popularity and frequency
Keeping in touch with friends and family
The arrival of the smartphone has made it possible to keep in constant connection with the people who matter to you - whether through text, photo or video. It has never been easier to find a group of friends who share your interests, no matter how obscure, or to keep in contact with distant family. In Finland, Android helps many people connect.25
Ninety years ago, the cost of making a three minute phone call between New York and London in today’s prices would be over $500: more than the average worker’s weekly salary.26 While some form of postal service has existed since the ancient world, in practice trying to keep in contact with distant relatives has historically been expensive, slow and unreliable.
Today, the internet has made seamless, instant communication possible. People can email, message each other, or talk to each other on video for as long as they like, often for free. Over two-thirds (76%) of Finns agree that the Internet has made it easier to more regularly keep in contact with their relatives.
We found
that the internet is increasingly becoming a way that people forge and maintain
relationships, creating significant consumer value - and much of this is taking place through Android or
Gmail. From our polling:
to keep in touch with friends at least once a week
have met a current or former friend online
current or former romantic partner online.
In total, that conservatively implies an additional 5 million relationships and 5.6 million friendships that started online.
The Internet is particularly important to people who find it hard to find others who share their interests in the physical world. Over three-quarters of Android users (85%) who say they find it hard to find people who share their interests in the real world say that being online has made it easier to find people who share their interests, and over half of them (53%) say that talking to people online has helped them feel less lonely.
At the same time, we use digital communications to stay in touch both with our extended family and close family through the day.
are able to keep in touch with them with their smartphone and computer
Google products are used near equally by people of all incomes, ages, and backgrounds
Over the last twenty five years, the Internet and smartphone have gone from being niche products to enjoying almost universal adoption - one of the fastest rates of adoption of any consumer product ever. This has seen them not just taken up by the usual early adopters of technology - disproportionately male, wealthy and highly educated - but across society, by people from all backgrounds.
Like the internet as a whole, Google’s products are highly egalitarian. In the data from our poll, those with higher incomes were a third more likely than those with low incomes to regularly drive a car or read a book for pleasure. By contrast, there was no statistically significant difference in how likely they were to use Google Search. Our polling data found clear evidence that Android was more likely to be used by those on low incomes than other smartphone platforms.
Use of Google products by income (1 = national average)
Similarly, Google’s products are widely used by both men and women, and there is little age gradient for Google Search. While the young are slightly more likely to regularly use YouTube, the majority of Google’s products saw high usage across ages. (The one exception where we did see a clear distinction was G Suite, where usage was significantly higher for younger generations.)
Use of Google products by age (1 = national average)
We saw clear data that Google’s products were being used by people from all backgrounds to help out with their everyday life:
- 46% of Google Search users over 65 regularly used it to research a medical issue, and 95% of Android users over 65 regularly use their phone or computer to keep in touch with friends.
- 45% of Google Search users with only a low income regularly used it to research a big purchase, with 71% agreeing that the internet helps them to make better purchasing decisions
The value of Google products in daily life
In this chapter, we have explored some of the ways in which Google products help people in their daily lives: saving time, making it easier to find information, and helping people better keep in touch.
There are all kinds of value that often do not get picked upon by traditional economic impact studies, which have tended to focus on the impact of a company or product on GDP.
GDP itself, however, has never included everything we value or every type of work we do. Taken literally, GDP takes no account of changes in our leisure time or the amount of work we do in non-market roles, such as housework or looking after family. The majority of the kinds of help we have explored in this study do not increase GDP in the way we normally measure it - but most people would agree that they are important.
How can we better understand and quantify the value created by Google in daily life?
One way to do this is to look at changes in the consumer surplus. The consumer surplus is defined by economists as the difference between the amount a consumer would be willing to pay and the amount they actually do pay.
This is particularly relevant for products such as Google’s, which are largely provided to the end user without monetary charge. Just because their price is zero, however, it does not mean that they are worthless.
In order to better understand the value of Google, we used two types of methodology to create new estimates for the consumer surplus of its core products:
- Where possible, we produced estimates of the value of the time saved from using Google products such as Search, Maps and YouTube
- We used our consumer polling data to explore what the minimum amount you would have to compensate them for losing access to each product, building on the methodology previously established by other leading economists27
We found that the total consumer surplus of Google’s products in Finland is around €70 per month for the median person:
Google Search
For Google Search, the total consumer surplus is equivalent to €5 bn.
YouTube
For YouTube, the total consumer surplus is €1.4 bn a year.
Google Maps
For Google Maps, the total consumer surplus is €0.5 billion a year.
Gmail
For Gmail, the total consumer surplus is over €5.9 billion a year.
Google Docs
For Google Docs, the total consumer surplus is over €1 billion a year.
Consumer Surplus (bn)
The total consumer surplus is equivalent to nearly 3% of GDP, the equivalent in size of the Finnish agriculture industry or half again the measured GDP contribution of ICT.
In addition, we estimate that the total consumer surplus from Android smartphones in Finland is worth over €4.3 billion a year or €149 per month for the median household.28
Crucially, our estimates found that this consumer surplus is significantly higher than for other consumer products. Indeed, when we asked people to choose from a range of things they would least like to give up, we found that Finns were more reluctant to give up Search than public transport and would rather lose access to a car than give up their smartphone.
Together, this evidence suggests that traditional statistics like GDP
are doing a poor job of measuring the value created by the Internet. Other studies have found that if the value
of free internet services are included within GDP, it would increase the recent
rate of GDP by the equivalent of 0.7 percentage points a year.29
We explore more how our findings fit into the literature in the last
chapter.
Google helps businesses grow and innovate
The referral traffic driven by Google is a highly valuable source of revenue for Finnish businesses
The evolution of advertising has always been closely tied to changes in the wider structure of the economy. As advertising has become more personalised, targeted and immediate, it has driven growth and innovation in the wider economy: enabling new types of business to connect with customers, and providing a new source of revenue to fund others.
The first adverts were inherently local - as far back as Roman times, there is evidence of signposts and posters being used to drive customers to local businesses. With the 20th century came mass media, bringing an expansion and infusion of new voices. Genre entertainment (such as Westerns, situation comedies, and news shows) was largely premised and funded by the ability to define audience segments as well as generate scale, and sell advertising on that basis. Then radio joined newspapers, TV joined radio and mass-market magazines
Likewise, advertising on the internet is continuing to drive growth and innovation:
- Making it possible for small businesses to more easily reach customers worldwide
- Funding new types of content, including websites, blogs, and video
At the heart of Google’s business model for most of its products is advertising. Google’s key innovation in the advertising space was using data to:
- Help advertisers reach people at the best possible moment;
- Help them ensure their money was well spent;
- Enabling niche businesses to target those with very specific interests.
That means fewer, better ads for the customer - and a much higher rate of return for the business advertising.
While the direct impact of Google Ads is important for Finnish businesses, even more important is the organic referral provided by Google Search. In our polling, businesses in Finland estimated that online search was the most important way of customers finding them, ahead of word of mouth. 80% of the businesses we spoke to agreed that thanks to search engines, it was far easier for local customers and clients to find them.
On average, Google calculates that for every euro businesses spend on Google Ads, they receive back €8 back in profit. To start, each business receives on average back €2 for every €1 they spend. This in turn is further boosted by traffic that comes through organic search, with other estimates suggesting that businesses receive around five clicks on their search results for every one click on their ads.30
That means the majority of the value created by Google advertising is captured by businesses and their customers. In total, our estimates suggest that Google Search and Ads are driving €0.9 bn of economic activity for businesses in Finland.
As before this estimate is built upon third party estimates of ad revenues in Finland - Google did not give us any new financial information - and, as such, may be an underestimate of the full value created by Google in Finland.31
It is not only businesses that benefit from the traffic driven by Google Search and Ads. The referral traffic provided by Google Search is an important driver of attention for non-profits too, while over the years Google Ad Grants have allocated $5.3m worth of free online advertising through in-kind Google Ads to around 100 organisations in Finland.
Willitomaatti
Willitomaatti Catering began using Google AdWords soon after it started trading in 2012. “It quickly became apparent that Google AdWords is a key marketing tool in our sector. Our customers primarily shop online,” explains Jussi Peisa, the entrepreneur behind the business. “I got great support in my own language from Google on a turnkey basis. The visibility, presence and, consequently, the number of unique visitors to our company’s website have all increased significantly. And our revenue has grown by 70% since 2013, with the website now getting thousands of visitors. In fact, our adverts are viewed 18,000 times a month, with 98% of our customers finding us via the Internet.”
Jussi started his events catering business alone, but, thanks to the success the business has seen within the space of just two years, he now employs 12 people. Demand for the company’s services exploded in 2014 when word began to spread about Willitomaatti Catering’s high-quality products. “Even though orders come in from all around southern Finland, we’ve also started generating interest in Helsinki, where our home city of Porvoo has a great reputation for artisan products and people are prepared to pay for high-quality,” Jussi explains. In Jussi’s eyes, the decision to use Google was easy: “AdWords enables us to monitor our sales very accurately and is a really useful tool. Once you’ve learned how to use it properly, the rewards speak for themselves.”
Google Ad Grants
Google.org has a global, five-year goal to award $1 billion in grants and contribute 1 million employee volunteer hours. It works across education, economic opportunity, and inclusion and finds partners and programmes in different countries that will help people and businesses. Throughout this document some of the relevant programmes supported by Google have been highlighted.
Ad Grants connects people and nonprofits through free Google Ads. Its mission is to provide additional support and services to help nonprofits and causes, and encourage them in driving advertising results and greater social impact through high quality online advertising.
Using the targeted Ad Grants campaigns, hundreds of nonprofits can reach people who want to help those in need, and people looking for work, at the right time, and successfully move them to donate or apply.
Google Ad Grants have allocated $3 billion worth of free online advertising through in-kind Google Ads to over 27,000 organisations in 30 countries across Europe, the Middle East and Africa. In 2018, Google provided around $377,000 of free advertising to nonprofits from Finland through the Google Ad Grants programme. Since 2013, $5.5 million in free advertising has been provided to 113 grantees.
Google Search and Ads have made it much easier for local and international customers to find Finnish companies
How important would you say each of the following are as ways customers/clients find your business?
Helping businesses export
One of the biggest transformations of the internet is that businesses can reach anywhere across the globe. At the same time, it has made it easier for small businesses to compete with larger enterprises – meaning that organisations no longer have to commission expensive TV or print advertising campaigns, but can target customers much more clearly.
Tools like Google Ads, Analytics and Market Finder have made it much it much easier for businesses of any size to reach new customers wherever they are based. 71% of the businesses we spoke to agree that compared to the time before search engines, it was now far easier for global customers or clients to find their business.
Looking only at businesses who said that a majority of their customers came from abroad, 80% agreed that their business would have significantly fewer international clients without online search and online advertising.
Based on our polling, we estimate that around a third of Google Ads spending from businesses in Finland is targeted at international customers, suggesting that Google Ads is driving €0.3 bn in exports a year.
Market
Finder is a tool offered by Google to help businesses create a global business
plan to target new customers. In the most recent data, Google Market Finder has
helped 29 Finnish companies in the first half of 2019 build an export plan,
while overall Market Finder traffic has increased by a half (48%) over the
second half of 2018.32
Finnair
From research and planning to the final purchase decision, more people are choosing to go online for the entire customer journey. This shift has had a significant impact on the travel industry, with more people searching and shopping across touchpoints, making the customer journey increasingly complex. Finnair wanted to take a data-driven approach to gain a deeper understanding of customer behaviour and help improve its online campaigns.
Founded almost a century ago in 1923, Finnair may be one of the world’s oldest airlines, but it has kept afoot of the changing landscape by investing in digital across the entire organisation — with digital channels now accounting for approximately one quarter of the company’s sales.
With the support of Dagmar, the airline’s long term strategic marketing partner, Finnair began by creating a comprehensive data roadmap.
“In this fast paced and constantly changing environment, uncovering insights is not an easy task,” explains Antti Kallio, Dagmar’s Chief Business Officer, Data & Technology. “Digging into data can provide the insights needed to understand today’s complex customer journey.”
Centralised data provides insights, which gives brands the opportunity to understand and get closer to audiences with more relevant campaigns and messaging, giving them end-to-end control of their marketing as well as a way to easily and effectively measure results.
Finnair and Dagmar worked to implement a data-driven attribution model to gain a better understanding of the roles of each channel throughout the customer journey and make better decisions on channel-specific investments in terms of ROI.
The teams worked to integrate data from Campaign Manager, Display & Video 360, Search Ads 360 and Analytics 360, while seamlessly linking up its analytics and media buying with Google Marketing Platform. Google Marketing Platform is a powerful suite of integrated Google products that bridges the gap between online marketing and analytics tools to help brands discover new insights into their customers.
Thanks to this holistic approach, Finnair gained a deeper understanding of its existing customers throughout the entire customer journey — helping it to decipher what customers needed and where they needed it most. By combining rich analytics with interest and behavioural data, the airline was also able to discover new audiences similar to its existing high-value customers and direct these new prospects to the booking funnel. Ultimately this powerful data meant that Finnair and all of its agency partners could make better decisions on channel-specific investments to provide the highest ROI.
The team had anticipated that the data-driven approach would help them understand their customers but were surprised at just how large an impact it had. Joni Tillström, Digital Marketing Manager at Finnair was certain that the data-driven approach would work but was pleasantly surprised at just how much of an impact it had.
“Even though the initial hypothesis was that consolidation and migrating to a data-driven attribution approach would have a significant, positive impact, the results exceeded our expectations,” explains Tillström.
With the help of the new approach, the first half of 2018 saw impressive gains with a 125% Year-on-Year increase in flight searches. The initial response rate for advertising increased by 54%, indicating major improvements in ad relevancy and activation.
Total performance marketing activities drove 31% more bookings and a 44% better conversion rate. Media spend increased by just 1.3%, demonstrating the improved targeting and significant boost to ROAS.
Helping local customers find businesses
It is not just global customers that Google helps businesses reach, but local people too. Tools like Google Maps and Google My Business have made it easier for people locally, regionally, and nationally to find new businesses like restaurants and shops. This can be particularly important to those in out of the way locations.
In our consumer polling, we found that:
Local Business
Local Restaurant
Something New
Finnish Design Shop
As the world’s leading online store for Finnish design products, Finnish Design Shop effectively combines Google products to market its services. With the help of its partner Tulos Helsinki, the Finnish Design Shop uses Google AdWords and Google Analytics side by side, which provides it with a robust platform for the growth and development of its online store. This strategic partnership has seen the company’s sales increase much faster than the market – and there’s no end in sight! Finnish Design Shop’s improved profitability has led to the company hiring several new employees and taking on a considerably larger product warehouse.
Teemu Kiiski, CEO of Finnish Design Shop, sheds light on the company’s relationship with Google tools: “We’ve been skilfully using Google services to increase our sales for years, but just when we thought they couldn’t get any better, we’ve achieved a further 30% growth.” And according to the company’s online marketing manager, Toni Voutilainen, Google products are perfect for the ongoing testing and monitoring of the online store’s performance, as well as for promoting a culture of development in the company. “It’s really important to understand just how we interact with different customers. People’s behaviour online is much more chaotic than we could ever imagine, so interpreting the site’s analytics correctly is extremely important to us,” he explains. “Combining this data with a touch of creativity enables us to make our communications more profitable and get a better return on our investment in online advertising. We can compete with larger companies with the same platform, and when we do it well, we pay less per click than our bigger competitors.”
Google is helping create a more consumer centric Finnish economy
By increasing consumer transparency, Google is helping drive better customer service
By increasing transparency and choice, Search and other online tools have increased effective competition - leading to more productive companies and a better quality service for the end customer. In today’s economy, it is much harder for a business to get away with a poor quality good or service.
The people and companies we polled agree: 89% of shoppers think they make better purchasing decisions because of online information, and 83% of businesses think it is harder to get away with poor goods, food or service because of the internet.
This happens not only online, but offline too. 68% of people say they use their phone to research a potential purchase in a shop in the last year. This allows them to avoid products which get poor reviews, and make sure they are paying a good price.
Helping small businesses compete and grow
Given their lower entry costs, internet tools are often particularly important for the productivity of small businesses. Anyone who wanted to start a large export business twenty years ago, would probably have to invest in an international advertising campaign, in-house IT servers and expensive software licences.
In our poll, out of businesses with less than 250 employees we saw:
Google makes it easier for new companies to compete with established firms
Free online tools, cloud computing, and the ability to communicate with customers across the globe have dramatically reduced the barriers to entry for start-ups, and made it easier for them to grow.
In our poll, out of businesses less than five years old we saw:
Google’s products are enabling entirely new types of business, such as YouTube Creators
For decades publishers, record labels, and TV producers have been besieged by requests from individuals wanting a chance to reach a wide audience. YouTube has provided many with an alternative - giving them a platform to communicate directly to people all over the world. While children used to dream of becoming a film or sports star when they grew up, an increasing number now say their dream is to become a YouTube vlogger.33
Worldwide, YouTube has a total audience of
over 2 billion users, with over 500 hours of content uploaded every minute and
one billion hours of content watched every day. This immense audience supports
thousands of independent creators. The number of channels with more than one
million subscribers globally has grown by more than 65% year on year, and the number of
channels earning five figures per year more than 40% year on year.34 The top 10
Finnish YouTube creators on their own have received more than 2 billion views.
Hydraulic Press Channel
A golf ball, a Barbie doll and a mobile phone were some of the multiple objects that got crushed with a powerful hydraulic press on video in 2015 as a Finnish YouTube channel Hydraulic Press Channel was launched. Already in 2016 the channel started to generate so much revenue that the founders, Lauri and Anni Vuohensilta, were able to leave their daytime jobs and focus only on their new company HPC Entertainment and its two YouTube channels: the original Hydraulic Press Channel with 2.2 million subscribers and Beyond the Press with 557K subscribers.
Today, the videos on the channels have been viewed 470 million times in total and the two mobile games published have been downloaded 4.5 million times. Total revenue of the company in 2018 was 310K €, almost all of which came from foreign trade and cooperations with brands such as 20th Century Fox, Netflix, TikTok and Fortnite.
The future holds exciting things for HPC Entertainment’s continuous growth: the third mobile game is to be launched later this year, the first employee in addition to the founding couple was just hired to the company, and they are launching a YouTube channel production and management service for companies and other entities to purchase.
Biisonimafia
Formed by a group of friends from the Finnish town of Punkaharju in the early 2000s, by 2006 Biisonimafia had become a full-blown business. “We started out making videos for TV channels and using YouTube to market our trailers”, explains actor and director Kaitsu Rinkinen, one of the group’s founding members. “Over the last year, advertisers have started paying us for content advertising partnerships, so now we’re completely focused on YouTube,” he continues.
According to Kaitsu, the best thing about their approach is being able to continuously release new material for fans to enjoy, regardless of TV schedules. What’s more, their fans, who are mostly males aged 13–35, are able to comment directly on the content they watch, making the whole experience very social.
“We’ve got 70,000 subscribers, with around 90% from Finland. In terms of views, our record is 1.3 million a month. For us, YouTube is the most technologically-advanced online video service. It also has the largest audience and is really socially-oriented, which is great for marketing and production. It’s fair to say we’re busy all the time” delighted Kaitsu remarks.
Google helps workers be more productive, learn new skills and develop their careers
Google helps workers be more productive
In the last five years, Finnish companies report significant increased adoption of the use of email, smartphones, search engines, online maps, and online office suites - and they expect this adoption to only increase in the next five years.
Usage of internet technologies over time
Like the PC and the spreadsheet a generation before, arguably the most important personal productivity tools of the last generation have been the smartphone and the search engine:
- Workers were more likely to use Google Search in an average week for their work than a laptop, desktop computer, Microsoft Office or car.
- Just under a quarter of workers said that they used Google Search for over an hour a day on average.
- A third of workers agreed that search engines make their work easier and take less time
It is not just Search. 34% of individuals say that smartphones make their jobs easier, while 24% of business leaders say that online maps are essential to the running of their business and 33% think the same about an online office suite. A previous Forrester Consulting study estimated that the deployment of G Suite and tools like Docs, Sheets and Slides had the potential to save employees 15 minutes to 2 hours per week in more efficient collaboration.35
The
employers we spoke to agreed that the internet has increased productivity and
enabled new styles of working:
Increasingly, many companies are turning to cloud providers such as Google Cloud to enable them to grow seamlessly. According to Eurostat data, over 65% of Finland enterprises use cloud computing services, compared to an EU average of 26%.36
On average, businesses have seen a net return of up to €2.5 for every €1 invested in cloud services, with some of the most successful users on Google Cloud seeing returns of up €10 for every €1 invested. In total, Deloitte estimates have found that Google Cloud has increased productivity in Finland by €50 mn.37
Given the
significant number of workers and businesses who in our polling said they now
used and relied on Google products, the increases in productivity are likely to be substantial. We estimate, that
Google Search and G Suite alone could be creating at least €1.6 billion a year in
business time savings for the Finnish economy.38
Protecting businesses online with leading security
While the internet has enabled new opportunities for businesses to save time and money, it has also created the potential for new types of risk from data breaches or loss. One recent business survey found that 28% of small businesses in the US had suffered a data loss in the last twelve months, with 69% of those forced offline for a limited period and 10% forced into bankruptcy.39
Protecting businesses online with leading security
Security features are built into all of Google’s products, services and infrastructure to keep data protected, and Google has dedicated teams and technology to continually improve that security.
Defense in depth
The security of Google’s infrastructure was designed in layers that build upon one another, from the physical security of data centres to the security protections of hardware and software to the processes used to support operational security. This layered protection creates a strong security foundation for everything Google does.
- Physical security to protect data integrity: Google distributes data across multiple data centres, so that in the event of a fire or disaster, it can be automatically shifted to stable and protected locations. Each of those data centres is monitored and protected 24/7, and access is tightly controlled with measures like biometric identification and laser-based surveillance.
- Custom hardware with security at its core: Security starts in hardware. Google created processes to help ensure the security of its hardware, including vetting the vendors they work with, designing custom chips, and taking measures to identify and authenticate legitimate Google devices. This foundation allows the delivery of security at every level.
- Encryption to keep data private and protected: Encryption brings an even higher level of security and privacy to Google’s services. As the data created moves between your device, Google services, and data centres, it is protected by security technology like HTTPS and Transport Layer Security. Google also encrypts email at rest and in transit by default, and encrypt identity cookies by default.
- Processes for secure operations: Google uses security monitoring to protect users from malware. Applications are constantly monitored and patches are deployed through automated network analysis and proprietary technology. This allows Google to detect and respond to threats to protect products from spam, malware, viruses, and other forms of malicious code.
- Google actively scans to find vulnerabilities: Google scans for software vulnerabilities, using a combination of commercially available and purpose-built in-house tools, intensive automated and manual penetration testing, quality assurance processes, software security reviews, and external audits.
- Google designs with security in mind: Google’s security and privacy experts work with development teams, reviewing code and ensuring products utilise strong security protections.
- Strong controls to limit access to trusted personnel: Google limits access to users’ business’ data to Google personnel who need it to do their jobs; for example, when a customer service agent assists a user in managing their data. Strong access controls are enforced by organisational and technical safeguards. Google works with third parties, like customer support vendors, to provide Google services, an assessment is conducted to ensure they provide the appropriate level of security and privacy needed to receive access to data.
- Incident management to resolve threats quickly: Google’s security team works 24/7 to quickly detect, resolve, and notify the appropriate individuals of security incidents. The security incident management program is structured around industry best practices and tailored into the "Incident Management at Google (IMAG)" program, which is built around the unique aspects of Google and its infrastructure. Incident response plans are regularly tested, so Google always remains prepared.
Google helps people get more done while on the go
The average person in Finland spends 1.2 hours a day travelling, or around 450 hours a year. Until recently, much of that time would have been wasted.
From podcasts to apps, streaming videos to gaming, the rise of the smartphone has helped make travelling far more entertaining for many people - but often more productive too. Rather than wait to get back to your desk to look up a crucial piece of information or respond to an urgent message, we are now able to act much more in the moment.
In our polling, we saw many ways in which Finns were using their smartphone to remain productive while on the go:
- Looking up information. 89% of Search users regularly use it to answer a question while on the go.
- Managing work. Over half (61%) of Android users regularly use their phone to answer their work email or do other work while on the go.
- Kept on schedule. 74% on Android users regularly check their calendar while on the go, and 78% used online maps or a calendar reminder to avoid being late to a meeting.
Google is helping workers upskill and find new jobs
Helping people find jobs and grow in their career
For over a hundred years, an important goal of public policy has been to help match workers with the right jobs, and once in work, train and improve their skills.
By making it easier to research different options, search engines such as Google Search help improve consumer choice, transparency and competition.
One of the most important markets in which this is true is the labour market. Google Search is increasingly the leading gateway through which workers look for a new position and, once there, seek to improve their skills.
Every year:
This is particularly true of younger workers. 74% of 18-24 year old Search users and 66% of 25-34 year old Search users say they use it at least once a year to look for a new job, and 37% and 43% respectively to get advice on their CV.
Helping managers learn more at work
Like their workforce, business owners and managers are also increasingly turning to Google products to stay on top of trends and opportunities, be aware of what their competitors are doing, and constantly improve their own practices and management.
In our business poll, we found that at least once a month:
Preparing people for the jobs of the future
As digital technology becomes more central to the future of the economy, the importance of digital skills has also grown in importance. Finland has one of the highest prevalences of digital skills in the EU - but around a quarter of the population still lack basic digital skills.40
In September 2019, Google opened a new Google Digital Garage in the centre of Helsinki. The centre, a Grow with Google skills hub, offers training to jobseekers, small businesses and students. Topics covered include digital marketing, analytics, coding, digital wellbeing, online safety and privacy.
Over the last four years, similar tech education centres have trained 12 million people in Europe, the Middle East and Africa, with 45% of those taking Google courses receiving promotions, founding new companies or expanding their existing businesses. Google pledged to train 10,000 unemployed Finns by the end of 2020.41
This
Digital Garage comes on top of Google’s pre-existing jobseeker training program
Digital Excellence Academy, which has been active in Finland since 2016.
Digital Excellence Academy
Google partnered with Saranen Consulting, ELY Centre and TE Services in Finland to create Digital Excellence Academy, a six-month long education program that provides its participants with training in e.g. Google products, marketing analytics and service design, as well as hands-on experience in a local company. The Digital Excellence Academy is part of the Grow with Google programme.
Henri Kemppi, a Digital Excellence Academy graduate, shared his experience:
“Digital Excellence Academy fitted just perfectly on my career path at the time. I have a Master’s degree in marketing but the practicalities of digital marketing were never part of my studies, and earlier I was working more in traditional sales and marketing. As the whole field is now rapidly becoming digital, I was just in time to complement my skills through this education program. It’s great that I could make use of my new skillset right away in my work.
I learned so much, not only from the talented course instructors but also from other participants that came from many different backgrounds and companies. The program was a perfect fit for my situation and I ended up finding myself a new passion in digital marketing. I feel the measurability and speed attributes of the program help me to get the most out of my prior skills in marketing.”
In the future, AI will enable workers to be even more productive
In its first twenty years, the majority of value created by Google services came from improved access to information and communication. In the next twenty years, the value created by the application of AI and machine learning to automate routine tasks is likely to be just as important. Google's CEO has argued that the company is set to move from “a company that helps you find answers to a company that helps you get things done.”42
As industry adapts to the next wave of technologies - big data, AI, and advanced robotics - we find that companies across Finland have already incorporated internet technology into their daily operations, decision making, sales and marketing.
Two-thirds of Finnish businesses expect data science and machine learning to be used by a majority of their workers within the next five years.
While it is hard to predict the future reach of a specific company, we can more confidently predict the potential of AI and the digital industry for the economy as a whole.
In total, our estimates suggest that AI has the potential to boost the economy in Finland by 16% by 2030, boosting average growth rates by an average 1.46 percentage points a year. That is the equivalent of an additional €3.5 bn in GDP, or an additional €600 per Finn, each and every year.
As well as boosting living standards, AI is also likely to make work itself more pleasant - freeing up time for employees to spend on more creative or meaningful tasks.
As one example of this, the average employee in Finland today spends over three quarters of an hour a day doing administrative tasks, such as filling out paperwork, submitting expenses or booking a meeting room.
Through products such as Assistant and Duplex, Google has already demonstrated technology that can suggest standard email replies, find a suitable slot for a meeting or book an appointment.
If we could use AI to take over just 10% of
the average worker’s administrative tasks, it would save them the equivalent of
15 hours in work time a year – and by itself boost productivity by 1.0%.
Google is committed to sustainable economic growth, and is helping others to do the same
Google is a sustainable business
In the rest of this report, we have looked at how Google makes people and workers more efficient - saving them money and time.
As important, however, is another type of efficiency: making sure the products and services we consume take up less of the planet's scarce physical resources. By spreading the digital revolution to the physical world, and making greater use of AI, smart technologies and better data, we have significant potential to improve the resource efficiency of our society, and increase our sustainability.
This is already happening. By applying AI to the design of its data centres, Google has helped significantly increase their energy efficiency: they use 50% less energy than a typical Data Centre, and compared to five years ago, achieve seven times as much computation power with the same amount of electrical power.43 At the same time, other work by the company has shown the potential to increase the value of wind energy by 20% by improving its predictability.
More broadly, the digital revolution as a whole is helping create the dematerialisation of economy - decoupling the link between growth and use of resources. Instead of each of us creating and owning 20 different tools, we have increasingly replaced them with multifunctional devices like the smartphone - while our library of DVDs or CDs has been replaced by streaming media. Looking forward, new technology can increasingly help substitute for physical travel or other resource intensive goods.
Google is the world’s largest business purchaser of renewable electricity, and since 2017 it has matched 100% of the electricity of its operations with purchases of renewable energy. In total, globally it has purchased nearly 26 million MWh of renewable energy. Sourcing energy for its data centres from renewable energy helps reduce their embedded water use compared to buying power from the grid by 88%.
Thanks to its renewable energy programmes and carbon offset programmes, Google has been carbon neutral since 2007. In addition to this, it has reduced its overall carbon intensity by 86% since 2011.
The company has set a long term goal to not just offset its energy consumption over the year, but to power its operations 365 days a year, 24 hours a day, with carbon-free energy.
In Finland, this goal is already very close to being achieved by agreeing Power Purchase Agreements (PPAs) with multiple wind energy providers, the Hamina data centre has helped ensure that the vast majority of its energy (97% in 2017) is matched on an hour by hour basis with renewable energy.44
In September 2019, Google also announced that it is committing to two new wind energy projects, more than doubling its renewable energy capacity in Finland.45
Google products help people reduce their CO2 emissions
By making us more efficient, Google products help reduce our environmental impact and increase our sustainability: Google Maps reduces the amount of time spent in a car; as it is easier to work from home because of internet services, we reduce commuting time and environmental cost.
Google Maps reduces the amount of time people spend in a car because users change travel patterns. It can also make it easier for people to walk - confident that they won’t get lost. 42% of Google Maps users say that it allows them to walk or cycle rather than drive at least once a month.
In total, Google Maps provides more than 1 billion kilometres of transit directions per day, while in Finland the time saved by Google Maps saves 30,000 tonnes of CO2 emissions a year - the equivalent of flying around the world around 10,000 times.
Google tools make it easier - as our business polling showed - for people to work from home. This reduces commuting time and environmental impact. If the average Finnish employee works from home for an extra day a month, this by itself saves around 2,700 tonnes in CO2 emissions a year.
Google Search and YouTube help people understand the environment and their impact on it. From our polling we know people use Google Search to be responsible, environmentally friendly citizens. 53% of Search users have researched their own environmental impact in the last year.
Percent using Google Search to research their environment
Smart home tools help customers reduce their own energy consumption. Globally, Nest thermostats have helped its customers save more than 29 billion kWh of energy.46
Calculating the overall impact of Google
How can we estimate the total impact created by digital products and services like Google on the Finnish economy, society and standard of living?
Traditional economic impact studies have tended to focus on the impact of a company or product on GDP. GDP itself, however, has never included everything we value or every type of work we do. Taken literally, GDP takes no account of changes in our leisure time or the amount of work we do in non-market roles, such as housework or family care.
For the most part, this hasn’t mattered too much - there is reasonable evidence that GDP is highly correlated with the other things that we care about, such as a clean environment or overall happiness. GDP might not measure all that mattered, but it made a reasonable stand-in.
If there is one thing that is striking about the digital economy to an economist, however, it is how much of it is free. The world’s seven most popular websites - Google, YouTube, Facebook, Baidu, Wikipedia, Reddit and Yahoo!47 – are all offered without charge. As many estimates have calculated, the modern smartphone replaces what once would could have been dozens of separate devices costing thousands of pounds, including phone, camera, video camera, games console, alarm clock, map, satnav, book, television, DVD player, Walkman, stopwatch, torch, debit card, compact mirror, step tracker, portable speaker and compass.
At the same time, as we
have explored throughout this paper, digital services are increasingly both
saving us time in our non-market work - making it easier to do housework or DIY
- and substituting for jobs that once we might have paid someone to do for us,
such as booking a flight or holiday, and enabling new types of
careers.
The combination of a
lack of prices and the fact that many digital services are a completely new
type of good - there is no real non digital equivalent to a search engine -
makes it much more challenging for economists and statisticians to estimate how
much they matter to consumers.
Nevertheless, economists have developed multiple methods that allow us to estimate how much value – or consumer surplus – is created by unpriced goods, which in this paper we have applied in turn to Google’s products, including:
- Using time or attention as a proxy for the cost we are prepared to pay for digital goods. Money is not the only cost we have to pay to use a good or service – our time is valuable too. According to our poll, the average online Finn estimates that they spend just under an hour a day on their smartphone. This time carries a significant opportunity cost of everything else we could be doing either for leisure or our job – suggesting that we must find the digital service at least as valuable as the alternatives.
- Asking individuals to estimate the amount they would be hypothetically willing to pay for a free service – or alternatively, what they would be willing to accept to give it up. For decades, economists and social scientists have experimented with the best way to ask individuals about their preferences over unpriced goods, such as a natural park or clean air. When designed right, these surveys can deliver surprisingly results. In the future, the arrival of new mass online polling solutions such as Google Consumer Surveys and big data enabled by the internet could potentially allow us to significantly improve the accuracy, speed and reliability of our economic statistics – allowing us to better measure what as individuals we really care about.
- Comparing preferences for a free good against another good which has a price attached. Finally, rather than try and construct a hypothetical price – something we rarely do in real life – we often find it easier to compare between different items: would people rather give up their washing machine or dishwasher? By comparing items with prices to those that are unpriced, we can produce a ranking, and bracket how valuable the free good must be.
While we have tried to directly estimate the time saved by Google services whenever possible, on other occasions we have had to rely on stated preferences, as has long been common practice in other areas where valuation is challenging, such as environmental economics. These estimates work by asking individuals whether they would be prepared to lose access to a particular product for varying amounts of money - and assuming that if they reject this deal, the service must be worth at least that amount. Other research has found that these kind of estimates give a reasonably reliable estimate of the value created by digital services (see Box) - with survey respondents providing similar responses even when there is a real, non-hypothetical risk of losing access if they did not provide an accurate estimate.
As a sense check, we also asked our polling recipients to rank Search, YouTube and their smartphone against other consumer goods by which they would most want to avoiding giving up - finding that, on average, internet connected Finns would rather lose access to public transport than their smartphone or a search engine.
Another question might be what we are measuring against: if Google didn’t exist, how would the world look different? Presumably another search engine would be the market leader - but how would its quality differ? Given the scale of the consumer surplus we found, an alternative only 10% worse would lead to significant reductions in consumer welfare. For the most part, in our polling we always asked those we surveyed the value of a specific Google product rather than a generic category - leaving them the hypothetical option to switch to a competitor even if they lost access to Google’s product. This makes our study different from many of the other studies that have been done on the value of digital products, and given the high values we found, suggests that many people significantly value Google’s services.
In total, our estimates suggest that a conservative estimate of the total consumer surplus created by Google services in Finland is €14 billion a year or €880 per year for the median person. We believe this work supports the growing evidence in the literature that digital services are creating significant unmeasured value for ordinary findings. While our estimate is already a large number, other studies have found that the value of online search by itself could be as high as €15,600 per person a year.48
Other estimates of the consumer value created by the digital economy
Depending on their methodology and assumptions, the estimates of the value produced by the online economy can vary by many orders of magnitude. In general, however, even the more modest estimates find that online services are creating significant surplus value beyond what their users directly pay.
Goolsbee and Klenow’s paper Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet (2006) uses the opportunity cost of the leisure time spent on the Internet to estimate a total consumer surplus equivalent to $3,000 on average in the US.
McKinsey’s report The Web’s €100 billion surplus (2011)49used stated preference methods to calculate the total consumer surplus created by online services, netting off consumers preference to avoid advertising or sharing their data. Their estimates found that search created a monthly consumer surplus equivalent to €3.1, for email €3.2, maps €1.1 and video €0.9.
Brynjolfsson and Oh’s paper The
Attention Economy: Measuring the Value of Free Digital Services on the Internet
(2012)50 updated
the methodology of Goolsbee and Klenow (2006) to account for that the Internet
might simply be substituting for watching TV, finding that free online sites
create the equivalent of around $500 per person in consumer surplus.
Brynjolfsson, Eggers and Gannameni’s paper Using Massive Online Choice Experiments to
Measure Changes in Well-Being (2017) used online surveys to test both
willingness to accept compensation in place of digital goods and to create a
ranking of different goods. They find significantly higher numbers, with a
consumer surplus for search the equivalent of $17,500 a year, for email $8,400,
maps $3,600 and video $1,170. In order to test the reliability of these
hypothetical numbers, they run a smaller scale experiment where they actually
make some people go through with giving up the online service – and find this
creates little change in valuation. In addition, they run a ranking experiment,
and find that giving up search engines, email and smartphones are all ranked
somewhere between the equivalent of losing $500 to $1000 a year.
Methodology
As described in the main report, accurately estimating the value created by digital products is extremely challenging – and this is particularly true for products that are offered without monetary charge, are used widely across the economy, and contain elements of both consumption and production, as is true for many Google products.
While we believe our estimates are based on conservative assumptions, it is worth being aware of their limitations:
- Many of our estimates are based on the gross impact of Google’s products, as it is hard to accurately quantify what a counterfactual world without Google would look like.
- Conversely, in some cases we have not been able to fully quantify all the impacts created by Google products, suggesting that our estimates should be viewed as a lower bound.
- Many of our estimates make use of new polling carried out for this report – but as in any poll, consumers may underestimate or overestimate their use of products. (Full polling tables for data used in this report are available in an online appendix.)
- Best practice in many of these areas, such as valuing an hour of leisure time or using stated preferences to calculate consumer surplus, remains an area of active academic debate.
- Google did not provide any new or internal data to generate these estimates. All our modelling is based on third-party or public data, alongside our own internal estimates.
Consumer Benefits
Google Search
Our headline estimate of the total consumer surplus of Google Search is calculated as the geometric average of:
- Time saved. Following the methodology of Varian (2011), we assume that using Google saves 15 minutes per question, with the average person asking 1 answerable question every 2 days. Time saved is valued at the self-reported polling data of average incomes, and we scale the overall estimate by third party estimates of Internet prevalence and polling information on Google Search usage. (More information of this overall approach can be found in the Economic Value of Google, a presentation by Google Chief Economist Hal Varian.)
- Stated preference (Willingness to Accept). As part of our polling, we asked participants a single discrete binary choice question of “Would you prefer to keep access to Google Search or go without access to Google Search for one month and get paid [Price]” with the price offered randomised between €1.25, €2.5, €5, €10, €20, €50, €100, €200 and €500. We linearly regressed the results of this poll to derive a demand curve and used this to calculate total consumer surplus per user. Finally, we scaled this estimate by third party estimates of Internet prevalence and polling information on Google Search usage.
Following Brynjolfsson et al (2017), we chose a Willingness to Accept (WTA) rather than Willingness to Pay format for our Stated Preference question as we believed this best matched the status quo, given that the majority of Google Services are offered without monetary charge.
As with many other products, the mean consumer surplus is significantly higher than the median – or, in other words, a few dedicated users use it disproportionately more than the average.
In order to ensure that our household level figures were not misleading, we based them not on the mean household value for WTA compensation, but instead a separate estimate of the median WTA. We derived this by regressing our polling data again, using an exponential method which we judged was more likely to accurately represent the bottom of the distribution.
Google Maps
Our headline estimate of the total consumer surplus of Google Maps is calculated as the geometric average of:
- Time saved. We calculate time saved by Google Maps, using estimates of time saved by advanced traveler information systems from Levinson (2003) and total time spent travelling by mode from our polling, calibrated by Finnish Labour Force Survey data on the total time spent commuting. Time saved is valued at 37.5% of the estimated hourly income of Google Maps users, following standard practice for calculating the value of travel time savings.
- Stated preference. As with Google Search, we asked the participants of our poll a single discrete binary choice question of “Would you prefer to keep access to Google Maps or go without access to Google Maps for one month and get paid [Price]” with the price offered randomised between €1.25, €2.5, €5, €10, €20, €50, €100, €200 and €500. We linearly regressed the results of this poll to derive a demand curve and used this to calculate total consumer surplus per user. Finally, we scaled this estimate by third party estimates of Internet prevalence and polling information on Google Maps usage. In addition, we constructed a separate estimate of the median WTA compensation for losing Google Maps which we used for our per person and household estimates.
YouTube
Our headline estimate of the total consumer surplus of Google Search is calculated as the geometric average of:
- Time saved. Extrapolating from the methodology Varian (2011), we assume that using YouTube saves 11 minutes per question, using self-reporting polling data to calibrate the number of questions asked. Time saved is valued at the self-reported polling data of average incomes, and we scale the overall estimate by third party estimates of Internet prevalence and polling information on YouTube usage.
- Stated preference (Willingness to Accept). As part of our polling, we asked participants a single discrete binary choice question of “Would you prefer to keep access to YouTube or go without access to Google Search for one month and get paid [Price]” with the price offered randomised between €1.25, €2.5, €5, €10, €20, €50, €100, €200 and €500. We linearly regressed the results of this poll to derive a demand curve and used this to calculate total consumer surplus per user. Finally, we scaled this estimate by third party estimates of Internet prevalence and polling information on Google Search usage.
Gmail and Google Docs
Given that we had no time saving estimates for these products, we instead relied on estimates drawn again from stated preferences, following the same procedure. We asked the participants of our poll a single discrete binary choice question “Would you prefer to keep access to [Gmail / Google Docs] or go without access to [Gmail / Google Docs] for one month and get paid [Price]” with the price offered randomised between €1.25, €2.5, €5, €10, €20, €50, €100, €200 and €500. We linearly regressed the results of this poll to derive a demand curve and used this to calculate total consumer surplus per user. Finally, we scaled these estimates by third party estimates of Internet prevalence and polling information on each product’s usage. In addition, we constructed a separate estimate of the median WTA compensation for each product which we used for quoted per person and household estimates.
Android
In addition to measuring the consumer surplus individuals received for individual Google services, we also investigated the overall consumer surplus Finns receive from their smartphone.
We asked the participants of our poll a single discrete binary choice question “Would you prefer to keep access to your smartphone or go without access to your smartphone for one month and get paid [Price]” with the price offered randomised between €1.25, €2.5, €5, €10, €20, €50, €100, €200 and €500.
We then scaled this number by Android’s market share in Finland and Lee (2016)’s estimate of the proportion of net smartphone consumer surplus, excluding substitution value.
Given the overlap with individual services - one reason we value our phone is because it allows us to access Search, Maps, Gmail or YouTube - and the challenges in decomposing the value attributable to software and hardware, we did not include this estimate in our number for the overall value created by Google in Finland.
Business Benefits
Google Ads
Following the precedent of past Google impact reports, we use third-party data to estimate the total size of the Finnish Google Ads market, combining PWC Global Entertainment & Media Outlook data on the total Finnish paid search market with other estimates of Google’s market share.
Following the methodology of the US Google Economic Impact Report, we then scale this revenue by an assumed Return on Investment (ROI) factor of 8, from:
- Varian (2009) estimates that businesses make on average $2 for every $1 they spend of AdWords.
- Jansen and Spink (2009) estimate that businesses receive 5 clicks on their search results for every 1 click on their ads.
- Google estimates that search clicks are about 70% as valuable as ad clicks.
- Total ROI is then 2 * spend + 70% * 5 * 2 * spend – spend = 8 (spend).
More information on this methodology is available at https://economicimpact.google.com/methodology/
AdSense
In order to estimate total Finnish Adsense revenues, we scale Google’s 2019 global Traffic Acquisition Costs to network members by Finland’s share of global display spending, derived from PWC Global Entertainment & Media Outlook data. In addition, we also include the estimated returns to advertisers, drawing on the estimated ROI of display advertising from Kireyev et al (2013).
YouTube
In order to estimate total Finnish revenues to Finnish creators, we combine:
- Google’s reported global YouTube advertising revenue in 2019
- PWC Global Entertainment & Media Outlook data on total Finnish video advertising revenue as a share of the global total
- Sandvine data on YouTube’s 2017 share of EMEA video bandwidth
- AdStage data on YouTube CPC and CTRs
We then further scale this by an assumed conservative ROI factor.
Android
We scale App Annie 2019 data on worldwide Android app store consumer spend and Android revenue share by Caribou Digital (2016)’s estimate of the Finnish share of total app store value captured, and a 70% revenue share for the developers. We then scale this by the ratio between app store revenue and total revenue, including consultancy work, derived from Card and Mulligan (2014).
AI
We draw on McKinsey Global Institute (2017) estimates of the proportion of automatable jobs in Finland, and conservatively assume that combined software and hardware costs for automated task converge to 10% of the cost of human labour. Next, we assume that automation takes place over 50 years, following a logistic S-curve, with Finnish state of adoption proxied by its current lag in internet adoption with the US.
In order to estimate the potential impact on administrative tasks, we draw on polling data on average time spent on administrative work.
- Internet Trends 2019, Mary Meeker, Bond, https://www.bondcap.com/report/itr19/#view/9
- Author calculation derived from https://www.seagate.com/files/www-content/our-story/trends/files/idc-seagate-dataage-whitepaper.pdf
- Number of SKUs at a standard supermarket from https://www.fmi.org/our-research/supermarket-facts; number of SKUs from an online retailer from https://www.scrapehero.com/number-of-products-on-amazon-april-2019/; YouTube uploads from https://www.statista.com/statistics/259477/hours-of-video-uploaded-to-youtube-every-minute/
- Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers, Erik Brynjolfsson, Yu (Jeffrey) Hu, Michael D. Smith, 2003
- https://digital-agenda-data.eu/charts/desi-composite
- https://ec.europa.eu/eurostat/statistics-explained/index.php/Cloud_computing_-_statistics_on_the_use_by_enterprises
- Including Google Economic Impact (US, 2019, Google), Google’s Impact in the UK: At Home, At School At Work (UK, 2018, Public First), Google’s Economic Impact (Canada, 2018, Deloitte),Google Economic and Social Impact (New Zealand, 2017, AlphaBeta), Google Economic and Social Impact (Australia, 2015, AlphaBeta) and Google’s Economic Impact: United Kingdom (UK, 2014, Deloitte)
- Public First calculation drawing on The Conference Board data and Spieza (2012)
- For our full methodology, see the appendix at the end of this report
- https://www.blog.google/around-the-globe/google-europe/unleashing-digital-opportunities-europe/
- https://www.copenhageneconomics.com/publications/publication/finlands-economic-opportunities-from-data-centre-investments
- http://www.neogames.fi/wp-content/uploads/2019/04/FGIR-2018-Report.pdf
- https://www.appannie.com/en/insights/mobile-gaming/the-state-of-mobile-games-in-2019-and-beyond/
- https://evansdata.com/press/viewRelease.php?pressID=244
- Caribou Digital Report
- https://www.statista.com/statistics/266210/number-of-available-applications-in-the-google-play-store/
- Store Intelligence Data Digest Q4 and Full Year 2018, Sensor Tower
- The State of Mobile 2019, App Annie
- The App Economy in Europe: Leading Countries and Cities, Dr Michael Mandel and Elliot Long, Progressive Policy Institute, 2017
- https://stats.oecd.org/index.aspx?DataSetCode=ANHRS#
- Economic Value of Google, Hal Varian
- Unless stated otherwise, we use ‘regularly’ in this report to refer to an action taken at least once a month.
- https://www.jstor.org/stable/20865386?seq=1#page_scan_tab_contents https://pdfs.semanticscholar. org/7dab/41504f61a8f85fc83c26e6700aad34a251c5.pdf 2
- https://www.thinkwithgoogle.com/data/youtube-viewership-statistics/
- https://gs.statcounter.com/os-market-share/mobile/finland
- World Bank. 2009. World Development Report 2009 : Reshaping Economic Geography. World Bank.
- Using Massive Online Choice Experiments to Measure Changes in Well-Being, Brynjolfsson, Eggers and Gannameni, 2017
- Some of this value overlaps with the consumer surplus from Google’s other core products such as Search or YouTube. As such, we have not included it in the total value.
- The Attention Economy: Measuring the Value of Free Digital Services on the Internet, Brynjolfsson and Oh, 2012, https://aisel.aisnet.org/cgi/viewcontent.cgi?article=1045&context=icis2012
- https://economicimpact.google.com/methodology/
- For our full methodology, see the appendix at the end of this report
- Google provided data
- See, for example here or here.
- https://youtube-creators.googleblog.com/2019/11/my-final-letter-in-2019.html, https://www.youtube.com/yt/about/press/ and https://www.statista.com/statistics/259477/hours-of-video-uploaded-to-youtube-every-minute/
- The Total Economic Impact of Google Apps for Work, Forrester Consulting, 2015, link
- https://ec.europa.eu/eurostat/statistics-explained/index.php/Cloud_computing_-_statistics_on_the_use_by_enterprises
- Public First calculation based on Economic and social impacts of Google Cloud, Deloitte, September 2018
- Assuming half of Finnish workers use Google Search on a weekly basis, and 20% of workers use G Suite. Based upon work by Forrester Consulting, we assume each user of G Suite saves between 15 minutes and 2 hours each a week. We conservatively assume that workers research one question through Google Search a week, and that this saves them 15 minutes. Total time saved is converted into a monetary amount using Finnish average output per hour.
- https://staysafeonline.org/small-business-target-survey-data/
- http://ec.europa.eu/information_society/newsroom/image/document/2018-20/fi-desi_2018-country-profile_eng_B4400116-A9B9-4D17-9137969FEFF24981_52222.pdf
- https://yle.fi/uutiset/osasto/news/google_setting_up_tech_training_hub_in_helsinki/10826035
- https://www.youtube.com/watch?v=lyRPyRKHO8M&feature=youtu.be
- https://services.google.com/fh/files/misc/google_2019-environmental-report.pdf
- https://www.copenhageneconomics.com/dyn/resources/Publication/publicationPDF/0/500/1569061077/copenhagen-economics-google-european-dcs-infrastructures-impact-study_september2019.pdf
- https://www.blog.google/around-the-globe/google-europe/unleashing-digital-opportunities-europe/
- https://services.google.com/fh/files/misc/google_2019-environmental-report.pdf
- https://en.wikipedia.org/wiki/List_of_most_popular_websites
- Using Massive Online Choice Experiments to Measure Changes in Well-Being, Brynjolfsson, Eggers and Gannameni, 2017
- The Web’s €100 billion surplus, McKinsey, 2011, https://www.mckinsey.com/industries/media-and-entertainment/our-insights/the-webs--and-8364100- billion-surplus
- The Attention Economy: Measuring the Value of Free Digital Services on the Internet, Brynjolfsson and Oh, 2012, https://aisel.aisnet.org/cgi/viewcontent.cgi?article=1045&context=icis2012