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 Swedes were helped by Google in 2019
Google supports the economic growth of Sweden
1. In total, we estimate Google products support 76 billion krona a year in economic activity in 2019 in Sweden. Over the last five years, the economic activity driven by Google Search and Ads has increased by around 80% in nominal terms.
Google creates products that are helpful and valued by everyone
2. Together, Google Search and Google Maps saves the average Swede 25 hours a year. That is the equivalent of creating an extra day of free time by making it easier to find information and get where you’re trying to travel.
3. In total, our estimates find that the total value of Search, Maps, YouTube, Docs and Gmail to consumers is worth around 638 krona in value per month for the median Swedish internet user. The total consumer surplus is equivalent to over 4.5% of GDP.
Google helps businesses grow and innovate
4. Google is helping small businesses grow. 63% of businesses with less than 250 employees agreed that online tools have made it easier for their business to compete with larger enterprises.
5. Google is creating a more competitive economy. 52% of Google Search users regularly use it to research a big purchase, with 82% of shoppers think they make better purchasing decisions because of online information. At the same time, and 79% of businesses think it is harder to get away with poor goods, food or service because of the internet.
6. Google is enabling new kinds of business. The Android ecosystem supports 78,000 jobs in Sweden, while the top 10 Swedish YouTube creators have received more than 7 billion views.
Google helps workers be more productive, learn new skills and develop their careers
7. Google is making workers more productive. In total, we estimate that Google Search and G Suite are creating at least 39 billion krona a year in business time savings for the Swedish economy.
8. Google is helping people find jobs. Every year, 74% of 18-24 year olds use it to find a job, and 68% to get advice on their CV.
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. Google Data Centres use 50% less energy than the typical data centre, and 100% renewable energy across their operations.
10. By helping people get where they need to go faster, Google Maps prevents 100,000 tonnes in CO2 emissions, the equivalent of taking around 34,000 flights around the world. 28% of Google Map users say that it makes it easier for them to walk or cycle rather than drive at least once a month, and 37% of Search users have researched their own environmental impact in the last year.
Introduction - Google’s impact in Sweden
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 is 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.” As a gateway to the internet for many people, Google’s products like Search, YouTube, and Android have made it possible 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 Swedish people and businesses:
- How Google’s products support economic growth in Sweden. We look at the overall economic impact of Google in Sweden, and how it has supported industries right across the country.
- 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.
- 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 1,005 Swedes 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 504 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 Swedish economy or standard of living.
In total, measured traditionally, we estimate that Google products are supporting at least 76 kr 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 Sweden is around 638 kr per month for the median person.
How we quantified Google’s impact in Sweden
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 Swedish 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 1005 adults and 504 senior business managers in small, medium and large businesses across Sweden, 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 8 in-depth case studies of how businesses and individuals across the different regions and industries of Sweden 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 Sweden
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 Sweden:
- They have made it easier for local businesses to connect with customers in Sweden and worldwide. According to our business poll, 76% of Swedish businesses believe that online search is now an important way consumers find them.
- They have provided underlying platforms for new economic ecosystems and types of companies. The Android ecosystem alone, for example, is supporting 78,000 jobs in Sweden.6
- 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 Swedish businesses at least 40 kr bn a year.
The economic impact of Google
Measured conservatively, we estimate that Google products support at least 76 kr bn of economic activity for Swedish businesses. If we assumed standard economic wide multipliers, that is the equivalent of supporting around 73,000 jobs
This estimate is built upon third party estimates of ad revenues in Sweden, and, as such, may be an underestimate of the full value created by Google in Sweden.7
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.
Over the last five years, the economic activity driven by Google Search and Ads has increased by around 80% in nominal terms.
Google Search and Ads Economic Impact in Sweden
Google contribution to GVA by region
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 Sweden fell by over 15%, from 33 to 28.8 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 100 kr 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 another three days of vacation 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 Swedes why they used Google Search:
Speed
- of Search users said speed: it saves them time
Coverage
- of Search users said coverage: it provides information not available in other ways
Convenience
- 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 access.9
But
this number is likely to be a very conservative estimate of 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. 56% of Swedish Google Maps users use it at least once a week and 16% use it daily.
When we asked a series of questions about why people used Google Maps, we saw that saving time was very common:
- of Google Maps users regularly used it to stop them getting lost
- 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 Swede 2.4 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 Swedes, 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. 80% of Search users use it to learn something 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. 11
While not every use of Search will be serious - 17% of Swedish users say they use Google Search at least weekly to find a piece of trivia - the majority of Swedish users say that regularly use Search to help with their everyday activities:
- of Search users regularly use Google Search to find a business, and 52% to research a big purchase
- of Search users regularly use it to research medical and health issues, and 14% to look up a gym or local fitness activities
- of Search users regularly use it to research a political candidate or issues, and 35% in total have used it to find where they need to go to vote
Most popular uses for Google Search in Sweden (size=popularity)
And when they do find information, for the most part they find Search useful. 76% of Search users agree that Search helps solve their problem the majority of the time, compared to 7% who thought that it was usually a waste of time or 7% 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.12
We found that:
- Nearly three-quarters of YouTube users use it to help with cooking (73%), and over four fifths to help with home maintenance (85%).
- 36% of YouTube users regularly use it watch commentary on the news or political events, and a third (35%) to learn about fitness or health.
YouTube uses: popularity and frequency
Editor's note: Anne-Christine Hertz is a Swedish inventor who works at Health Technology Centre of Halland. Here, she shares a story of how the Centre used Street View to invent a device that helps elderly with Alzheimer’s.
A few weeks ago I met 75-year-old Lars Jonsson and his wife Ingrid. They married when Lars was 40 and have lived a happy, fulfilling life together. Lars also suffers from dementia.
Every three seconds someone develops dementia, a condition that creates disability and dependency among many elderly, robbing them of memory and judgment. It's not only overwhelming and stressful for those suffering, but also their loved ones. It was tough on Ingrid when her husband suddenly had trouble recalling the memories they’d spent a lifetime creating.
We met Lars and Ingrid when they came to test a device we invented to improve the lives of dementia patients. It’s called BikeAround, and it pairs a stationary bike with Google Street View projected on a big screen to take patients on a virtual ride down memory lane, letting them pedal around a place they have visited in the past. As Lars sat in the saddle, Ingrid suggested we take him back to the city and church in which they got married. Lars’s face flickered with happiness as the church rose up before him. The expression on his wife’s face when she knew for sure that he remembered was heartwarming.
The development of the BikeAround system, which is now owned by health care company Camanio Care, started back in 2010 at Health Technology Center in Halland, Sweden. We were conducting research on dementia, and noticed people living with the disease were given different access to physical activity depending on which municipality they were living in. Since it’s often recommended that dementia patients perform physical activities to stimulate both physical and mental health, this was an issue. We wanted to find a way to motivate the elderly with dementia to exercise more, in a safe and secure way.
Our strongest memories are tied inexorably to location. It’s no coincidence, when you think about any big memory or past event, your first thought is often “Where was I when that happened?” BikeAround taps into this idea by combining mental and physical stimulation—surrounding the patient with places they recognize through the Street View images, and then having them pedal and steer through them. Scientists think this kind of pairing produces dopamine in the brain and has the potential to affect memory management in a profound way.
“I have always looked at digitization and technology as a catalyst to open up the world not just to the tech savvy, but also to the elderly, who often live in digital exclusion. We’re excited about having found a way to bring happiness to many people living with dementia and their relatives. But what's also exciting to me is that this is just one example of how technology can be harnessed to make a real impact on people's lives. If we look beyond ourselves and unleash our imaginations, there's no limit to what we can do to help others”.
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 Sweden, Android helps many people connect.13
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.14 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 (68%) of Swedes 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 and 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
Social Connections
In total, that conservatively implies an additional 1.1 million Swedish relationships and 0.9 million friendships that started online.
At the same time, we use digital communications to stay in touch both with our extended family and close family through the day.
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 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 more likely than those with low incomes to regularly eat in a restaurant. By contrast, there was no statistically significant difference in how likely they were to use Google Search.
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 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:
- 47% of Google Search users over 65 regularly used it to research a medical issue, and 96% of Android users over 65 regularly use their phone or computer to keep in touch with friends.
- 48% of Google Search users with only a basic education regularly use it to learn a new skill, and 66% of YouTube users with only a basic education regularly use it to learn something
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 up 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 economists15
We found that the total
consumer surplus of Google’s products in Sweden is around 638 kr per month
for the median person:
Google Search
For Google Search, the total consumer surplus is equivalent to 70 kr billion
YouTube
For YouTube, the total consumer surplus is 39 kr billion a year
Google Maps
For Google Maps, the total consumer surplus is 11 kr billion a year
Gmail
For Gmail, the total consumer surplus is over 85 kr billion a year
Google Docs
For Google Docs, the total consumer surplus is over 19 kr billion a year
Consumer Surplus (bn)
The total consumer surplus is equivalent to nearly 4.5% of GDP, the equivalent in size of the double the size of the agricultural sector in Sweden and double the size of the Tourism sector contribution to GDP .
In addition, we estimate that the total consumer surplus from Android smartphones in Sweden is worth over 66 kr billion a year or 2470 kr per month for the median household.16
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 Swedes were more reluctant to give up Search than a dishwasher 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.17 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 Swedish 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 that their kronor were well spent;
- Enabling niche businesses to target those with very specific interests.
That means fewer, better ads for the customer, that are more relevant to their real interests - and a much higher rate of return for the business advertising.
While the direct impact of Google Ads is important for Swedish businesses, even more important is the organic referral provided by Google Search. Our polling showed that, 76% of businesses in Sweden estimated that online search was an important way of customers finding them. 74% 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 krona businesses spend on Google Ads, they receive back 8 kr back in profit. To start, each business receives on average back 2 kr for every 1 kr they spend. This in turn is further boosted by traffic that comes through organic unpaid search results, with other estimates suggesting that businesses receive around five clicks on their normal search results for every one click on their ads.18
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 73 kr bn in total of economic activity for businesses in Sweden.
As before this estimate is built upon third party estimates of ad revenues in Sweden - Google did not give us any new financial information - and, as such, may be an underestimate of the full value created by Google in Sweden.19
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 $37.4m worth of free online
advertising through in-kind Google Ads to around 100 organisations in Sweden.
CarpetVista doubles return on ad spend with Smart Display
Leading online carpet shop CarpetVista specialises in handmade and machine made carpets. With an aim of making efficiency and profitability gains, the company began exploring ways of automating their display marketing efforts.
The CarpetVista team decided to test Google’s smart display campaigns with the aim of increasing their return on ad spend (ROAS). Powered by Google's machine learning, smart display campaigns automate and then optimise targeting, bidding, and ads.
The straightforward setup required only a dynamic data feed of products and a couple of assets and creatives from CarpetVista. Using the automated Smart Bidding tactic Target ROAS enabled CarpetVista to efficiently scale the campaigns without having to invest time in setting up specific targeting. Because it is based on machine learning, Smart Bidding optimises for different ads, products, and audience segments automatically. In all, the team was able to launch and scale smart display campaigns in more than seven markets within three weeks.
“Smart display campaigns gave us a very convenient tool that helped us expand in our biggest markets in an extremely efficient way, without increases in manpower and in time spent." – Ulrika Klinkert, Chief Marketing Officer, CarpetVista
The results speak for themselves: with smart display, CarpetVista is seeing twice the return on ad spend of other display activities. Conversions are 20% higher and the conversion rate is 300% better. The team also reports that they’ve been able to save a great deal of time, which they can now devote to growing their display activities. CarpetVista’s future strategy includes plans to scale the success of smart display to more markets.
Google Search and Ads have made it much easier for local and international customers to find Swedish 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 easier for businesses of any size to reach new customers wherever they are based. 67% 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, 62% agreed that their business would have significantly fewer international clients without online search and online advertising.
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
Google is helping create a more consumer centric Swedish 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: 82% of shoppers think they make better purchasing decisions because of online information, and 80% 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. 62% 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
The economic impact of YouTube
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 teenagers 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 creator.20
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.21 The top 10
Swedish YouTube creators on their own have received more than 7 billion
views, thus providing the necessary reach to build their media businesses.
SBAB bank drives home a serious message and reaches millions with rap on YouTube
Rising property prices in Sweden have made it increasingly difficult for first-time buyers to get a foot on the housing ladder. With less savings and smaller pay cheques, younger people find it particularly hard to buy their first home. Under the tagline “everyone should have a home”, mortgage lender SBAB Bank AB makes housing more accessible.
So the message was serious, but to reach and appeal to younger people, the bank wanted to deliver it in a playful way. Casting comedian Björn Gustafsson, supported by musician Julia Frej, to rap about the various housing issues he faced while growing up, the goal was to create a lighthearted and humorous campaign. In doing so, the bank also took the risk of creating a video that lasts over 3 minutes in a world of supposedly diminishing attention spans.
To reach as many people as possible, the bank partnered with its marketing agency Pineberry, as well as creative agency EMAKINA DBG to run an awareness building campaign using YouTube’s TrueView in-stream format. This way, the ad plays for an initial 5 seconds before the viewer gets the choice to continue watching or to skip it. Advertisers only pay when a viewer watches for at least 30 seconds or until the end of the video, whichever comes first, or if they click on a card or another element of the in-stream creative.
The initial view goal was 5 million — ambitious in a country of just 10 million people — and the teams chose a broad audience to increase the campaign’s potential reach.
The unconventional creative decision paid off. With over 5.47 million views, the campaign was Sweden’s most-viewed YouTube ad in 2018. “YouTube was the perfect channel to promote this type of creative commercial,” says Simon Davidsson, Client Lead at Pineberry.
“What makes YouTube so unique compared to other media channels is the possibility to run a two or three minute commercial. It’s the most cost-effective format since it lets people watch the full length of the music video without us paying more than if it had been 30 seconds. No other marketing channel can give you that benefit.”
Benefits of the campaign: Awareness, interest and ad recall
The momentum gained by the series generated a mix of both paid and organic views, creating extra value in the process. The final episode registered over 680,000 organic views which resulted in an increased reach of over 13% on top of the paid traffic.
Beyond the comments and shares from an engaged audience, Search traffic increased by 41% compared to the same period in the previous year. A Brand Lift study revealed a relative increase of 66% in brand interest, 118% increase in ad recall, and a 25% improvement in brand awareness.
The results have encouraged SBAB to look for more online video opportunities moving forward. “As long as you have the right creatives and setup, YouTube has proven to be an effective marketing channel,” says Patrik Söder, Chief Marketing Manager at SBAB. “Depending on the nature of the campaign and the marketing objectives, SBAB will keep having YouTube as a part of their future marketing mix.”
Linda Hallberg
Passionate about art and makeup, Linda Hallberg launched her makeup focused YouTube channel in parallel to her full time job as a makeup artist. Through Linda's creative expression and playful style, her channel quickly gained global interest from makeup lovers around the globe. Lindas YouTube channel grew organically and now has a global audience of +350,000 subscribers.
Building on her expertise in makeup and feedback from her growing audience on YouTube, Linda launched her own makeup brand, Linda Hallberg Cosmetics in 2016. The business has expanded rapidly, reaching a turnover exceeding SEK11m and employing 7 people at the company office in central Stockholm.
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.
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 78,000 jobs in Sweden.25 Around a third of these are core development jobs, with the rest coming
from other roles in developer companies such as management, or the wider
spillover impact for the local economy. Alongside direct revenue from the
Google Play Store, developers also receive a significant income from contract
work developing apps for businesses and brands.
Google helps workers be more productive, learn new skills and develop their careers
Google helps workers be more productive
In the last five years, Swedish 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.
- A third of workers agreed that search engines make their work easier and take less time
It is not just Search. 47% of individuals say that smartphones make their jobs easier, while 29% of business leaders say that online maps are essential to the running of their business and 31% think the same about an online office suite. A previous Forrester Consulting study estimated that the deployment of G Suite and tools like Google 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:
Increasingly, many companies are turning to cloud providers such as Google Cloud Platform to enable them to grow seamlessly. According to Eurostat data, over 57% of Swedish enterprises use cloud computing services, compared to an EU average of 26%.27
Cloud computing services like Google Cloud Platform make it possible for a company to instantly access and scale on-demand computer resources on-demand, rather than having to build and manage infrastructure on their own.
This enables five key benefits: saving money, increased flexibility, enhanced collaboration, enabling big data or AI-driven solutions, and safeguarding data with built-in, building best-in-class digital security.
On average, businesses have seen a net return of up to 2.5 kr for every 1 kr invested in cloud services, with some of the most successful users on Google Cloud seeing returns of up 10 kr for every 1 kr invested. In total, Deloitte estimates have found that Google Cloud has increased productivity in Sweden by 10 kr mn.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 39 kr billion a year in business time savings
for the Swedish economy.29
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.30
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 Sweden spends 1 hour a day travelling, or around 400 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 Swedes were using their smartphone to remain productive while on the go:
- Looking up information. 61% of Search users regularly use it to answer a question while on the go.
- Managing work. Over a third (36%) of Android users regularly use their phone to answer their work email or do other work while on the go.
- Kept on schedule. 53% of Android users regularly check their calendar while on the go, and 45% 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 61% of 25-34 year old Search users say they use it at least once a year to look for a new job, and 68% and 48% 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:
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.”31
As industry adapts to the next wave of technologies - big data, AI, and advanced robotics - we find that companies across Sweden have already incorporated internet technology into their daily operations, decision making, sales and marketing.
Two-thirds of Swedish 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 Sweden by 16% by 2030, boosting average growth rates by an average 1.4 percentage points a year. That is the equivalent of an additional 71 kr bn in GDP, or an additional 7100 kr per Swede, 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.
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
11 hours in work time a year – and by itself boost productivity by 0.8%.
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.32 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 and increasing its reliability for businesses.
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 by 88% the embedded water use compared to buying power for the grid.
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.
Google products help people reduce their CO2 emissions
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.
Based upon the evidence from our polling, Google Maps is reducing 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. 28% 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 Sweden we estimate that the time saved by Google Maps saves 100,000 tonnes of CO2 - the equivalent of flying around the world around 35,000 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 Swedish employee works from home for an extra day a month, this by itself saves around 3150 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. 37% 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. Global, Nest thermostats have helped its customers save more than 29 billion kWh of energy. 33
Calculating the total economic impact of Google
How can we estimate the total impact created by digital products and services like Google on the Swedish 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!34 – 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 krona, 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 Swedish estimates that they spend over an hour 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 kinds 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 Swedes would rather lose access to public transport than their smartphone and would rather lose access to a dishwasher than 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 Sweden is
225 kr billion a year or around 7650 kr 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 as a whole could be as high
as $15,600 per person a year.35
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)36 used 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)37 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 10 kr, 20 kr, 50 kr, 100 kr, 200 kr, 500 kr, 1000 kr, 2000 kr and 5000 kr. 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 free to the end user and required no up-front investment.
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 Swedish National Travel 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 10 kr, 20 kr, 50 kr, 100 kr, 200 kr, 500 kr, 1000 kr, 2000 kr and 5000 kr. 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 usage.
- In 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 YouTube for one month and get paid [Price]” with the price offered randomised between 10 kr, 20 kr, 50 kr, 100 kr, 200 kr, 500 kr, 1000 kr, 2000 kr and 5000 kr. 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 YouTube 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 10 kr, 20 kr, 50 kr, 100 kr, 200 kr, 500 kr, 1000 kr, 2000 kr and 5000 kr. 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 Swedes 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 10 kr, 20 kr, 50 kr, 100 kr, 200 kr, 500 kr, 1000 kr, 2000 kr and 5000 kr.
We then scaled this number by Android’s market share in Sweden 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 Sweden.
Business Benefits
Google Ads
Following the precedent of past Google impact reports, we use third-party data to estimate the total size of the Swedish Google Ads market, combining PWC Global Entertainment & Media Outlook data on the total Swedish 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 Swedish Adsense revenues, we scale Google’s 2019 global Traffic Acquisition Costs to network members by Sweden’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 Swedish revenues to Swedish creators, we combine:
- Google’s reported global YouTube advertising revenue in 2019
- PWC Global Entertainment & Media Outlook data on total Swedish 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 Swedish 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 Sweden, 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 Swedish 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
- 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)
- The App Economy in Europe: Leading Countries and Cities, Dr Michael Mandel and Elliot Long, Progressive Policy Institute, 2017
- For our full methodology, see the appendix at the end of this report
- https://stats.oecd.org/index.aspx?DataSetCode=ANHRS#
- The time saved by using Google Search to find new information is measured relative to the time it would take to find the same information using a library. See Economic Value of Google (Hal Varian) for more details on the underlying methodology.
- 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/sweden/#monthly-201901-202001
- 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
- See, for example here or here.
- https://variety.com/2019/digital/news/youtube-2-billion-users-tv-screen-watch-time-hours-1203204267/, https://www.youtube.com/yt/about/press/ and https://www.statista.com/statistics/259477/hours-of-video-uploaded-to-youtube-every-minute/
- 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
- 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 half of Swedish 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 Swedish average output per hour.
- https://staysafeonline.org/small-business-target-survey-data/
- https://www.youtube.com/watch?v=lyRPyRKHO8M&feature=youtu.be
- https://services.google.com/fh/files/misc/google_2019-environmental-report.pdf
- 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
- The Attention Economy: Measuring the Value of Free Digital Services on the Internet, Brynjolfsson and Oh, 2012