Google’s Impact in Romania

Economy

Helping Consumers

Business & Innovation

Workers & Productivity

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 Romanians were helped by Google and the Internet in 2019

Google supports the economic growth of Romania

1. In total, we estimate Google’s products support 4.3 billion lei in a year in economic activity. Over the last five years, the economic activity driven by Google Search and Ads has more than doubled in nominal terms.

Google creates products that are helpful and valued by everyone

2. Google Search is being used by people of all ages to learn new skills. 93% of Search users say they are more likely to look something up when they are unsure about it than when before Search engines existed. 59% of Search users over the age of 65 regularly use it to learn a new skill.

3. Together, Google Search and Google Maps save the average Romanian 26 hours a year. That is the equivalent of creating three extra work days in time by making it easier to find information and get where you’re trying to travel.

4. In total, our estimates find that the total value of Search, Maps, and YouTube is worth around 130 lei in value per month for the median Romanian internet user. The total consumer surplus is equivalent to 4% of GDP.

Google helps businesses grow and innovate

5. Online search is now an important way that customers find businesses. On average, for every leu businesses spend on Google Ads, they receive 8 lei back.

6. 80% of exporters agreed that their business would have significantly fewer international clients without online search and online advertising. We estimate that just under half of Google Ads spending in Romania is going to international spending, suggesting that it is driving 1.9 billion lei in exports a year.

7. The internet has brought about more transparency and safety in e-commerce. 92% of shoppers think they make better purchasing decisions because of online information, and 91% of businesses think it is harder to get away with poor goods, food or service because of the internet.

Google helps workers be more productive, learn new skills and develop their careers

8. Google is making workers more productive. 87% of workers agreed that search engines make their work easier and take less time. In total, we estimate that Google Search and G Suite are creating at least 14 billion lei per year in business time savings for the Romanian economy.

9. Google is helping people find jobs. Every year, 74% of 18-24 year old Search users use it to find a job, and 63% to get advice on their CV.

10. Businesses are using search to increase their productivity and skills A majority of businesses regularly use a search engine to keep up to date with industry trends, research a new business opportunity, explore new markets or research ways to increase efficiency.

Introduction - Google’s impact in Romania

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 hours 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.

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 to 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 Romanian people and businesses:

How Google’s products support economic growth in Romania. We look at the overall economic impact of Google in Romania, and how this has rapidly grown.

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 from AI to further enable workers to be even more productive.

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 Romanians 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 Romanian economy or standard of living.

In total, measured traditionally, we estimate that Google products are supporting at least 4.3 billion lei 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 Romania is around 40 lei per month for the median person.

How we quantified Google’s impact in Romania

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 reports⁵, we used traditional economic modelling built upon third-party estimates of Google’s Romanian 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 Romania, 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 are available to download from our website.

Finally, we explored 25 in-depth case studies of how businesses and individuals across the different regions and industries of Romania 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, it did not supply any additional financial information and all economic estimates are derived from official, third party and proprietary information.

Google supports the economic growth of Romania

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.

This is particularly true of Google. In this report, we focus on three ways in which Google products and services have boosted economic growth in Romania:

They have made it easier for local businesses to connect with customers in Romania and worldwide. According to our business poll, 92% of Romanian businesses believe that online search is now an important way consumers find them, more important even than word of mouth (89%).
They have provided underlying platforms for new types of jobs and companies. The Android ecosystem alone, for example, is supporting 14,000 jobs in Romania.
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 Romanian businesses at least 14 bn lei a year.

The economic impact of Google

Measured conservatively, we estimate that Google products support at least 4.3 bn lei of economic activity for Romanian businesses. If we assumed standard economic wide multipliers, that is the equivalent of 1.8 billion lei in GVA, or supporting around 9000 jobs.

This estimate is built upon third party estimates of ad revenues in Romania - Google did not give us any new financial information - and, as such, may be an underestimate of the full value created by Google in Romania.⁶

As a company, Google’s primary source of revenue is advertising, and a significant amount of the value the company creates for Romanian companies we estimate comes from Search and Google Ads (€0.9 bn annually). Over the last five years, the economic activity driven by Google Search and Ads has more than doubled in nominal terms.

This value is generated right across the country.

Google Search and Ads Economic Impact in Romania (bn)

Google contribution to GVA by region (Lei)

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 Romania fell by nearly a quarter⁷. As important as the decline in working hours in the office, however, has been a decrease in time spent doing work inside the house. In 1900, data from America shows that an average household would spend 58 hours a week preparing meals, cleaning and doing laundry. The arrival of new domestic technologies such as the washing machine, the vacuum cleaner and the 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 33 lei 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 26 hours a year - the equivalent of over three extra working days 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 main ways to get the answer to a question might have been to ask a friend or drive to the library.

When we asked Romanians why they used Google Search:

Speed

87%

87% of Search users said speed: it saves them time

Coverage

88%

88% of Search users said coverage: it connects them with information not available in other ways

Convenience

74%

74% 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 access⁸

In 23 hours or less you can:

Hike from Bâlea Lake to Moldoveanu Peak and back
Watch 4 luni, 3 săptămâni şi 2 zile 12 times
Drive along the Transfăgărășan from one side to the other ten times

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.

Increasingly, we are accessing the information available from the internet and Search in different ways. In our polling, 45% of Romanians had tried using an AI personal assistant (such as Google Assistant, Siri or Cortana).

Looking forward, we estimate that AI assistants like Google Assistant have the potential to save Romanians an additional 27 hours a year.⁹

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.

When we asked a series of questions about why people used Google Maps, we saw that saving time was very common:

52%

52% of Google Maps users regularly¹⁰ used it to get directions while travelling

47%

47% of Google Maps users regularly used it to stop them getting lost

47%

47% 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 Romanian three hours a year.

Percentage using Google Maps to...

Google Maps Case Study

Since 2018, the Danube Delta, one of the most impressive natural sites in Europe, can be navigated using Street View. With the help of WWF, the Google Street View team made available online over 1500 kms of water canals and rural roads. The Danube Delta is a protected area and very difficult to reach by car. Mapping the Danube Delta on Google Street View made its natural environment and cultural heritage available to anyone with an Internet connection.

Google is being used by people of all ages to learn new skills

Google helps people learn

Every day, Google connects people with information to help them answer questions in their work, home and social lives. According to our polling, 93% of Search users research a topic as least once a month, whilst 84% of YouTube users regularly learn it to learn something new.

We found that the majority of Romanians, whatever age, are using Search to find new information, helping create a culture of lifelong learning. 93% of Search users say they are more likely to look something up when they are unsure about it than when before search engines existed. 59% of Search users over the age of 65 regularly use it to learn a new skill.

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.¹¹ Dr. Daniel Păvăloaia is an Associate Professor of Information Systems at the Alexandru Ioan Cuza University of Iaşi. He pursued his PhD in Accounting Information Systems at the same University and defended his Thesis in 2008. Ever since, he has been using Google Scholar for managing his research and list of articles and keeping a track on the impact of his publishing activity through the h-index, statistics and citations. Google Scholar is also helping him in the process of research reporting as part of his academic tasks. Moreover, Google Scholar recommending system is informing him about any new paper that is published on his domain of interest. This way, he is always informed about the research state, the citations and therefore the impact of his research. He sees Google Scholar is an extremely useful tool for professors as it supports both teaching and research activities.

While not every use of Search will be serious - over a third of Romanian users (38%) say they use Google Search at least daily to find a piece of trivia - the majority of Romanian users say that regularly use Search to help with their everyday activities:

75%

75% of Search users regularly use Google Search to find a business, and 85% to research a big purchase.

82%

82% of Search users regularly use it to research medical and health issues, and 35% to look up a gym or local fitness activities.

55%

55% of Search users regularly use it to research a political candidate or issues, and 46% in total have used it to find where they need to go to vote.

Most popular uses for Google Search in Romania (size=popularity)

And when they do find information, for the most part they find Search is useful. 78% of Search users agree that Search helps solve their problem the majority of the time, compared to 5% who thought that it was usually a waste of time or 6% as a way to procrastinate. Search is also ranked as among the most trusted sources of information, second only to official government publications.

YouTube uses: popularity and frequency

Google arts and culture

100 years since Romania’s Reunification, in 2018

Google celebrated 100 years since Romania’s Reunification on 1st of December 2018, by making available on Google Earth a collection of representative sights from Romania entitled “Discover Romania”, which includes natural sights as Cascada Bigar or Vulcanii Noroioși and man-made sights as Bran and Peleș Castle. The collections of the National Reunification Museum and the Reunification Cathedral from Alba-Iulia can be accessed using Google Street View. The Romanian Ministry of Culture appreciated the initiative, saying that it offers people from all over the world the chance to know more about Romanian culture and national heritage.

Romanian Masterpieces on Google Arts and Culture

17 Romanian museums and galleries made their collections available online on the Google Arts and Culture platform, some being selected for European Year of Cultural Heritage, an initiative aiming to promote European culture. Major Romanian art pieces, as the Harlequin painting by Corneliu Baba, can now be accessed by anyone with an Internet connection, promoting Romanian culture and heritage. Important moments of Romanian and European history, as the communist revolution and Ceaușescu's trial can also be accessed on the platform. During Sibiu International Theatre Festival Google Arts and Culture organized a special Culture Lab focused on Romanian heritage and reinstated Romania’s importance on the platform by announcing a partnership with the Ministry of Culture. The National Astra Museum, showcasing an impressive collection of Romanian rural homes can also be accessed on the Google Arts and Culture platform.

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.¹²

We found that:

Over half of YouTube users use it at least once a year to help with cooking (92%), and over two thirds to help with home maintenance (90%).
82% of YouTube users regularly use it to watch commentary on the news or political events, and 87% to learn about fitness or health.

Google’s Education Programmes

Computer Science First (CS First) provides free, easy-to-use computer science enrichment materials that engage a diverse student population in grades 4-8 (ages 9-14). Facilitators use the video content to teach kids coding basics with Scratch, a block-based coding tool. CS First is available online and can be used by anyone, in any setting.

Education Programs CSEdu

Îndreptar digital

Google.org granted $0.7 million to Îndreptar Digital, a nationwide program that trained approximately 1700 school teachers about digital skills. The teachers were from all 41 municipalities in Romania and Bucharest and over 38 000 students benefited from their teachers’ training experience. For most teachers, this was the first time they learned more about digital skills and had the chance to implement them in their daily teaching activities. “This program is one step ahead towards considering each student an autonomous individual rather than a by-product of the system, changing the process of teaching - learning - evaluation in such a way that we focus on the student’s aspirations. It is a program that promotes a new teaching process, one in which the students should be attracted by our pedagogical skills, where the system should focus on the student and not the other way around.” Marian Cîrlig, headteacher and primary school teacher in Radovanu, Călărași - 33 years of teaching experience, teaching now 3rd graders (9 year olds), he uses Îndreptar Digital tools in class since students were in their 1st grade.

Digital Nation

Google.org granted Digital Nation half a million dollars to develop a national project to provide digital skills to young people from small Romanian cities, with little access to educational and work opportunities. The project is piloted in 3 cities, aiming to help 300 people find a job in the first year. Digital Nation uses Google Classroom in order to make sure that the students are engaged. They started to build meet-up hubs in the 3 selected cities to give a chance to the local community to interact offline. This project is also supported by the National Ministry of Education, which is engaging local Computer Science teachers as trainers and community supporters.

InfoEducatie

Google Romania promoted nationwide Computer Science Education, by supporting The Romanian Computer Science Teachers’ Association (UPIR) for the last 7 years to organize the “InfoEducație” competition. Students across the country are invited to learn new skills and develop educational and utility software, web applications, multimedia projects and robots in order to win certificates and prizes. Every year, the best participants meet at the Gălăciuc camp, where teams of contestants collaborate to design and build software applications.

Robert Dolca, now a software engineer working at Uber, competed in the event three times while in high school. He says, "For me, InfoEducatie has been an opportunity to challenge myself and learn. We met passionate and talented people, and we received constructive feedback on our projects.”

Europe Code Week

During Europe Code week, Google supported the National Association of Public Romanian Libraries and its institutional partners to boost non-formal education and popularization of 3D Printing technology using the library public infrastructure. The project targeted 1000 young people, between 5 and 18 years old from 5 cities. The participants had the chance to experiment with 3D technology, find out more about the latest developments in the fields, while also rediscovering the local library.

"Thanks to this project children from low-income families who do not usually have access to computers and technology, coming from poor communities were exposed to information and practical demonstrations in the field of ICT. The children's reaction was overwhelming, they were absolutely fascinated by the 3D models. Young children have interacted with the mascots of the project, representing a couple of robots. The older ones felt inspired to ask questions and interact with experts. Some of them took into account the possibility of participating in advanced courses in 3D modeling and printing in the future. I had the feeling that, thanks to these 3-hour workshops, I brought some light and hope to the eyes of the disadvantaged children and youngsters who felt on that occasion as part of a more inclusive and tolerant community.”

Promoting safety and security online

Controlling who sees your data

Google has made it easier for users to make decisions about their data directly within its services. For example, without leaving Search, users can review and delete recent search activity, get quick access to relevant privacy controls from their Google Account, and learn more about how Search works with their data.

Auto-delete settings lets users choose a time limit for how long they want to keep their activity data. Data older than the chosen limit will be continuously and automatically deleted from a user’s account. This makes it easy for users to set it and forget it, but with an option to go back and update these settings at any time.

How parents keep their children safe online

Google has a number of features designed to give parents control over their childrens’ screen time. Activity reports show how much time they’re spending on particular apps. Notifications also allow responsible adults to block apps and manage any purchases.

Google’s feature Family Link also allows parents and carers to set limits on screen time; bed times; and to lock devices.

If parents are ever worried about their child’s whereabouts they can use Family Link to locate their device.

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.

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 (around 2000 lei): more than the average worker’s weekly salary.¹³ 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 (85%) of Romanians 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 phones or Gmail. From our polling:

98%

98% of Android users use their smartphone or computer
to keep in touch with friends at least once a week

39%

39% of Android users say they
have met a current or former friend online

32%

32% of Android users say they have met a
current or former romantic partner online.

In total, that conservatively implies an additional 5 million relationships or friendships that started online.

At the same time, we use digital communications to say in touch both with our extended family and close family through the day

69%

69% of Android users use their smartphone or computer to keep in touch with their close family at least daily

49%

49% of Android users use their smartphone or computer to keep in touch with extended family at least once a week

Google products are used near equally by people of all incomes, ages, and backgrounds

Over the last twenty five years, the Internet and smartphones have gone from being niche products to 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, with next to no statistical significant difference in how likely Romanians were to use Google Search, no matter their income.

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.

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:

85% of Google Search users over 65 regularly used it to research a medical issue, and 97% of Android users over 65 regularly use their phone to keep in touch with friends.
64% of Google Search users with only a basic education regularly use it to learn a new skill, and 82% of YouTube users with only a basic education regularly use it to learn something
68% of Google Search users with only a low income regularly used it to research a big purchase, with 83% 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, 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 economists¹⁴

We found that the total consumer surplus of Google’s products in Romania is around 130 lei per month for the median person:

Google Search

22bn Lei

For Google Search, the total consumer surplus is equivalent to 22 bn lei a year.

YouTube

12bn Lei

For YouTube, the total consumer surplus is 12 bn lei a year.

Google Maps

3bn Lei

For google Maps, the total consumer surplus is 3 bn lei a year.

Consumer Surplus (bn)

The total consumer surplus is equivalent to nearly 4% of GDP, the equivalent in size of the Romanian agriculture industry or half again the measured GDP contribution of ICT .

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 Romanians 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.¹⁵ 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 Romanian 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 businesses 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 that their lei were 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 Romanian businesses, even more important is the organic referral provided by Google Search. In our polling, businesses in Romania estimated that online search was the most important way of customers finding them, ahead of word of mouth. 88% 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 leu businesses spend on Google Ads, they receive back 8 lei back in profit. To start, each business receives on average back 2 lei for every 1 leu 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.¹⁶

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 4.3 bn lei in total of economic activity for businesses in Romania.

As before this estimate is built upon third party estimates of ad revenues in Romania - Google did not give us any new financial information - and, as such, may be an underestimate of the full value created by Google in Romania.¹⁷

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 $64.6m worth of free online advertising through in-kind Google Ads to organisations in Romania.

Google My Business Case Study

eFlores.ro

Delia and Lucian are the owners of eFlores.ro, a flower shop that also sells online in South-East Romania. Before benefiting from free digital marketing consultation in Google Atelierul Digital Hub in Constanța, the entrepreneurs did not have a satisfying number of customers visiting their shops or ordering flowers online. The consultant helped them make a Google My Business Account. The GMB account made the flower shop visible on Google Maps and easier for customers to reach, while the Google Ads account helped eFlowers reach a wider audience. The entrepreneurs are thinking of hiring more employees due to the new business opportunities found using Google products.

Imoplus

Imoplus is a startup from Timișoara, aiming to disrupt the local real estate market by using an innovative online platform to help sellers and buyers find the best offers. Started in May 2017, with only two employees, it managed to reach 10 employees and over 50,000 Eur revenue by the end of the year. Google Ads, GSuite, and Google Analytics were crucial for their business development, helping them reach a large number of clients from Timișoara and the surrounding area.

Google Ads Case Study

Maderomania.ro

Cristian is the owner of maderomania.ro, a website selling products 100% made in Romania. After he started using Google Ads and Analytics, his turnover increased around 40% year over year. His business is already employing 100 people and is attracting more and more foreign buyers with the help of Google Ads. Cristian thinks using Google products was a turning point for his business, that transformed a small Romanian business into an international firm that exports to many other European countries.

Cristian Bîrzu, Entrepreneur, maderomania.ro

La Moara Bucovina

Daniel is the owner of a small inn in rural Romania, La Moara Bucovina. He benefited from a free consultation session with one of the experts at Google Atelierul Digital Hub. Following the consultation, he started using Google My Business and Google Ads, managing to attract more than 30 people every day on his inn’s website. The business grew so much that he is thinking of building new accommodation facilities and double the number of employees.

Daniel, owner of La Moara Bucovina

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.

Over the years Google Ad Grants have allocated $64.6m worth of free online advertising through in-kind Google Ads to organisations in Romania. In 2018 alone, Google provided around $5.4m of free advertising to nonprofits from Romania through the Google Ad Grants programme.

Google Search and Ads have made it much easier for local and international customers to find Romanian 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. 81% 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 just under half of Google Ads spending from businesses in Romania is targeted at international customers, suggesting that Google Ads is driving 1.9 billion lei in exports a year.

Market Finder Case Study

Google Romania launched Market Finder in Romania during Grow with Google Export Summit, a full-day conference for local companies interested in growing internationally. The conference covered topics such as: “What it Takes to Succeed on the Global Market”, “How to Create a Successful Export Strategy” and “International Payments”. More than 200 local entrepreneurs from major cities of Romania managed to network and gain more insights about building an international growth strategy. Market Finder is seen as a very successful tool, helping businesses find the best export opportunities.

Export with Google Atelierul Digital - International Growth workshops roadshow in 6 cities across Romania

Sequel to the launch of Market Finder in Romania, Google Romania introduced Export with Google Atelierul Digital, a series of 6 workshops across the country dedicated to Romanian exporters. 140 companies attended the workshops and learned how to unlock the export opportunities for their businesses.

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

71%

71% of Google Maps users regularly use it to find a local business

Local Restaurant

66%

66% of Google Maps users regularly use it to find a local restaurant

Something New

66%

66% of Google Maps users regularly use it to look for something new to try

Google is helping create a more consumer centric Romanian 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: 92% of shoppers think they make better purchasing decisions because of online information, and 91% 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. 88% 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:

81%

81% agreeing that online tools have made it easier for their business to compete with larger enterprises

79%

79% agreeing that it is now far easier for global customers to find their business

82%

82% saying that they regularly used a search engine to research new marketing opportunities

Google makes it easier for new companies to compete with established firms

Free online tools, cloud computing, and the ability to communicate to 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:

76%

76% agreeing that the costs of starting a business have reduced substantially because of internet tools

89%

89% agreeing that online tools have made it easier to grow and scale their business

93%

93% agreeing that online search is a crucial way customers and clients find their business

Google for Startups

Google for Startups supports startups around the world by providing products, contacts, and Google's expertise to help founders move through key stages of their development. It also helps to promote and network startup communities. Google for Startups has 50 partners in more than 140 countries, reaching more than 250,000 founders worldwide in 2018 alone.

StepFWD

Google for Startups, in partnership with the US Embassy, Techhub and Codette, a local NGO promoting coding among girls, supports StepFWD - a 6 week pre-accelerator for startups with gender balanced teams. The aim of this program is to increase the number of female founders in Romania and inspire more women to pursue entrepreneurship. The pre-accelerator offers founders mentorships, classes and a community of startups, investors and professionals.

Launchpad

Together with Techcelerator, a local startup accelerator, Google Romania organized 4 Google Launchpad mentoring events focused on: Market Validation, Product Market Fit , Building a Marketing Strategy and Scaling and trained 12 startup teams in each event. Launchpad is a program for founders offering hands-on training and one on one mentoring from international experts.

XVision

Ștefan co-founded XVision, a tech startup using AI and Machine Learning to better diagnose X-Rays.

”The time our team took to participate in the Google Launchpad program was surprisingly well invested. Attending mentors are diverse and full of domain specific knowledge. All of them have knowledge complementary to your team, and they can offer good advice modeled to our specific needs.

XVison’s team is mostly technical, so in our case the discussions we had about marketing, customer identification and acquisition and the process of selling a product were extremely valuable. Since mentoring was adapted to our startup’s case (and not just general advice), we were able to shape some strategic decisions based on it, decisions that we still follow today.”

Prokuria

Radu leads Prokuria, a tech startup aiming to reinvent the procuring system for big companies. He really appreciated the one on one mentoring session because he was able to get into the specific details of its company and focus on solving its problems. “Having the Launchpad mentors for one day in Bucharest was incredible. For us, the one-to-one sessions were about further refining our focus for the next iteration, and identifying potential problems ahead. We mostly appreciated the depth of our discussions with them and the technical details provided, all while avoiding generalities and high-level theorising on start-up strategies.”

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.¹⁸

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 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.¹⁹

YouTube Creators

Andrei Terbea

Andrei Terbea is an animator who joined YouTube in 2013 by creating his eponymous channel where he posts animated commentary videos. Because his videos are in English, he is one of the most famous Romanian creators in the world, with over 2 million subscribers and 130 million views.

His work is so appreciated that last year he was nominated for the Streamy Awards for Creator of the Year, one of the highest prizes given to the YouTube community.

Andrei, creators and animator, 29 years old.

Jamila Cuisine

Geanina is one of the most influential cooking creators in Romania. She created her cooking channel, JamilaCuisine, on YouTube in 2012, which now has over 950K subscribers and 270 million views. The YouTube cooking channel helped her develop a successful cooking blog, as well as launching 3 cookbooks, selling now in all book shops across Romania. Geanina is now trying to reach an international audience, creating videos in English or subtitled in English about the most delicious Romanian recipes.

Geanina, Cooking Creator, 31 years old

Istoria cu Virgil

Virgil launched its YouTube channel, Istoria cu Virgil, in 2017 reaching now over 23K subscribers and 1,5 million views. His channel describes Romanian history humoristically, trying to reach a younger audience. Virgil's online presence impressed the National Romanian Television (TVR) which offered him the opportunity of bringing the content he was creating on YouTube on national television in his own show - Istoria cu Virgil.

Virgil, creator and TV host, 26 years old

Andra Gogan

Andra Gogan started her YouTube channel in 2015, reaching over 800K subscribers and 122 million views. Her YouTube popularity helped her launch a musical career, with the most popular song being viewed over 10 million times. Andra also opened a dance academy for children and teenagers. Her online presence helped her grow Andra Gogan`s Dance Academy to 23 locations in 8 Romanian Cities.

Andra Gogan, Creator, 20 years old

YouTube initiatives in Romania

YouTube Creators Academy is the go-to place for YouTube Creators by offering them all the resources they need to create engaging content on YouTube. Ever since the website offers content in Romanian, more people can learn how to build an online presence without struggling with language.

The economic impact of Android development

Android is the world’s most popular app platform, helping ensure that it is never been easier for app or game developers to deploy and market to customers worldwide.

Globally, over 5.9 million developers target Android first,²⁰ with around 2% of global developers estimated to reside in Romania.²¹ In total, the Google Play store offers around 2.7 million apps to download,²² with over 75 billion apps downloaded globally from the Google Play store in 2018.²³ The average consumer in advanced economies regularly uses over 30 apps, with just under 100 apps installed on their smartphone.²⁴

Independent estimates have found that, in total, the Android ecosystem supports 14,000 jobs in Romania.²⁵

Mobile App Launchpad and Google Developer Training

Google Atelierul Digital pentru Programatori

Google Atelierul Digital organized free programming hands-on classes for 600 students in 3 Romanian cities: București, Cluj-Napoca, Timișoara. Each student participated in 3 hours hands-on classes for 11 weeks and had the possibility to participate in further coding education programs to advance their knowledge.

Irina had no previous Android programming experience before participating in the Android Fundamentals Google Atelierul Digital workshops. She thought that Android was too complicated, but the classes helped her discover that it is an easy to learn programming language with many applications. She really appreciated receiving hands-on training and is thinking of building an Android app for her Bachelor thesis.

google-atelierul-digital-pentru-programatori

Google helps workers be more productive, learn new skills and develop their careers

Google helps workers be more productive

In the last five years, Romanian 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, landline or car.
8% 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. 60% of individuals say that smartphones make their jobs easier, while 31% of business leaders say that online maps are essential to the running of their business and 39% 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.²⁶

The employers we spoke to agreed that the internet has increased productivity and enabled new styles of working:

95%

95% of the business leaders we polled agreed with the statement “Having access to the Internet makes the employees of my company significantly more productive”;

85%

85% agreed “It is easier for employees to work remotely”; and

91%

91% agreed “It is now easier for workers and different teams to collaborate than before online apps and cloud services”

Increasingly, many companies are turning to cloud providers such as Google Cloud to enable them to grow seamlessly. According to Eurostat data, around 10% of Romania enterprises use cloud computing services.²⁷

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 to €10 for every €1 invested.²⁸

Given the significant number of workers and businesses who in our polling said they now used and relied on Google products, this is likely to be substantial. We estimate that Google Search and G Suite alone could be creating at least 14 billion lei per year in business time savings for the Romanian economy.²⁹

Digital Workshop

Google Atelierul Digital: Inovație prin Design Thinking

Program description: Google Atelierul Digital organized 50 free Design Thinking workshops in Romania for entrepreneurs and aspiring entrepreneurs in 5 cities: Bucharest, Cluj-Napoca, Constanța, Iași and Timișoara.

Ruxandra wanted to start her own business so she joined one of the workshops in her hometown, Iași. She found the training very enjoyable and immediately applied it to her business idea - a new concept of gym. Together with her business partner she started applying the Design Thinking methodology, by interviewing possible customers and planning a brainstorming session. With the help of this workshop she can make sure that her newly launched business is already validated by the market.

Adela is a business consultant based in Bucharest, working with both startups and SMBs as well as bigger local companies. She joined the workshop thinking that Design Thinking will be a great addition to how she was helping businesses and afterwards she decided Design Thinking is so important that she should focus more on it. She started going to conferences, forums and training to become a facilitator, opening new business opportunities for her.

Adela, Business Consultant, Bucharest

Google Atelierul Digital: Offline

Program Description: Google Atelierul Digital organized over 400 offline trainings for more than 39K people in all cities of Romania. The trainings introduced people to digital marketing, focusing on building a successful online presence, and using Social Media and Analytics to help businesses get more customers.

Rita participated in one of the 400 Google Atelierul Digital Offline Marketing Trainings organized all over Romania. She enrolled in the training because she was dreaming about a job in digital marketing. A local entrepreneur came to talk to the participants about the challenges of running a digital business and, while asking questions to the participants, he noticed Rita’s interest in online marketing and offered her a 3 months internship. The internship went well, and Rita was offered a full time job at his firm. She also followed the online courses for the Google Atelierul Digital certificate.

Rita credits Google Atelierul Digital with helping her achieve her dream job in digital marketing.Marketing Trainings.

Rita, Cluj-Napoca

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 utilize 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 organizational and technical safeguards. And 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 Romania spends 45 minutes a day travelling, or around 280 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 Romanians were using their smartphone to remain productive while on the go:

Looking up information. 68% of Search users regularly use it to answer a question while on the go.
Managing work. Most (80%) Android users regularly use their phone to answer their work email or do other work while on the go.
Kept on schedule. 75% of Android users regularly check their calendar while on the go, and 51% 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:

64%

64% of Search users use it to look for new jobs

55%

55% of Search users use to get advice on their CV

83%

83% of Search users to learn a new skill

This is particularly true of younger workers. 74% of 18-24 year old Search users and 77% of 25-34 year old Search users say they use it at least once a year to look for a new job, and 63% and 69% 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:

88%

88% used a search engine to learn a new skill;

90%

90% used a search engine to keep up to date with industry trends;

87%

87% used a search engine to research a new business opportunity or competitor;

73%

73% used a search engine to explore new marketing opportunities;

90%

90% used a search engine to research ways to improve efficiency.

Preparing people for the jobs of the future

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.”³⁰

As industry adapts to the next wave of technologies - big data, AI, and advanced robotics - we find that companies across Romania have already incorporated internet technology into their daily operations, decision making, sales and marketing.

55% of Romanian 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.

As one example of this, the average employee in Romania today spends between thirty minutes and an hour on administrative tasks every day, including tasks like 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 22 hours in work time a year – and by itself boost productivity by 1.1%.

Calculating the overall impact of Google

How can we estimate the total impact created by digital products and services like Google on the Romanian 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 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!³¹ – are all offered without charge. As many estimates have calculated, the modern smartphone replaces what once would have been dozens of separate devices costing thousands of euros, 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 Romanian estimates that they spend just over 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 alternative.

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 accurate 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 avoid giving up - finding that, on average, internet connected Romanians 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, suggest 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 Romania is 37 billion lei per year or around 130 lei per month 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 as a whole could be as high as $15,600 per person a year.³²

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)³³used 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)³⁴ 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 on 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 3 lei, 6 lei, 12 lei, 25 lei, 50 lei, 125 lei, 250 lei, 500 lei and 1250 lei. 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 traveller information systems from Levinson (2003) and total time spent travelling by mode from our polling, calibrated by Romanian 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 3 lei, 6 lei, 12 lei, 25 lei, 50 lei, 125 lei, 250 lei, 500 lei and 1250 lei. 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 3 lei, 6 lei, 12 lei, 25 lei, 50 lei, 125 lei, 250 lei, 500 lei and 1250 lei. 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 3 lei, 6 lei, 12 lei, 25 lei, 50 lei, 125 lei, 250 lei, 500 lei and 1250 lei. 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 Romanians 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 3 lei, 6 lei, 12 lei, 25 lei, 50 lei, 125 lei, 250 lei, 500 lei and 1250 lei.

We then scaled this number by Android’s market share in Romania 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 Romania.

Business Benefits

Google Ads

Following the precedent of past Google impact reports, we use third-party data to estimate the total size of the Romanian Google Ads market, combining PWC Global Entertainment & Media Outlook data on the total Romanian 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 Romanian Adsense revenues, we scale Google’s 2019 global Traffic Acquisition Costs to network members by Romania’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 Romanian revenues to Romanian creators, we combine:

Google’s reported global YouTube advertising revenue in 2019
PWC Global Entertainment & Media Outlook data on total Romanian 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 XXXX 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 Romania, 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 Romanian 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
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)
For our full methodology, see the appendix at the end of this report
Total Economy Database, The Conference Board
Economic Value of Google, Hal Varian
Extended the methodology in Varian (X) from Google Search to Google Assistant, and assuming that it adds an additional ½ answerables question per day and each question takes 1 min to answer.
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/
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
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
See, for example here or here.
https://youtube-creators.googleblog.com/2019/11/my-final-letter-in-2019.html
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
https://www.progressivepolicy.org/blog/app-economy-jobs-in-europe-part-1/
The Total Economic Impact of Google Apps for Work, Forrester Consulting, 2015,
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 around half of Romanian workers use Google Search on a weekly basis, and 30% 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 Romanian average output per hour.
https://www.youtube.com/watch?v=lyRPyRKHO8M&feature=youtu.be
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