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Recently, Google announced a partnership with investment banking company, Citigroup, to release a new "smart checking accounts" through Google. Although currently vague what its goal is, this new program, named Cache, is offering users with an account at Citi, to view their accounts on a new Google interface for easier use and design.
Although many may be jumping to participate in Google's new high tech projects as per usual, many economists have pointed out this will also give Google even more information about a large portion of the population. Google already collects information on millions of users through their services such as Gmail, Google Chrome, Google Ads, Google Shopping, Google (the search engine), and Youtube. With the release of Cache, Google will be able to gather information on how much money people and how exactly they are spending it. Google and Citi are hoping users and regulators will accept Google's promises that personal information about banking will only be used with consent.
With the release of this new service, there is also the possibility of threats. It should be remembered that 20 years ago, Walmart attempted to get into the retail banking business, and failed with backlash from economic regulators. With the release of Cache, it is a possibility that these regulators could see the threat of an oligopoly approaching the U.S. financial system and reject the idea. However, Google is outsourcing the regulated parts of Cache to Citi to avoid this.
Another possible threat is backlash from Google expanding its monopoly power to the world of finance. In 1956, the US Bank Holding Company Act was passed to keep banking and non-banking businesses separate, to prevent companies from using their financial power to push consumers towards their main company.
As Google prepares to push yet another service to the public, will it survive? Or be crushed by people in fear of Google becoming even more powerful and gaining access to even more of consumers' information for benefit in their other services?
Sources:
https://nextcity.org/daily/entry/economics-in-brief-google-gets-into-banking
https://www.ft.com/content/ac22c4de-078b-11ea-a984-fbbacad9e7dd
https://www.businessinsider.com/google-banking-citigroup-cache-checking-accounts-atm-2019-11
I think that this new partnership will gain a lot of revenue since we learned that Google is able to control what shows up on searches. I believe that they are now more inclined to show their bank online and will start to hide their competitors websites in order to maximize their profit. It will be interesting to see how this works out since many people are happy with the banks they already have, and whether Google's control over the internet will work in their favor.
ReplyDeleteI think that many people will be very skeptical because of Google's history of selling data. I would question Google's intentions in the business because they generate the majority of their revenue through selling data. I think Google is just making the new interface so that they can access more data. Even if Google promises to keep information private I would be wary. Many companies have violated customer privacy and I would not be surprised if Google violated people's privacy.
ReplyDelete58% of people said they would trust Google with handling their finances, a percentage higher than both Apple and Facebook but lower than Amazon. I was surprised by this figure as Apple has a stronger track record of protecting user privacy and already offers their own credit card. I believe this speaks to the immense dominance of Google and the reliance people have built around Google's set of services. It may simply be more convenient to centralize everything will Google for many users.
ReplyDeleteSource: https://www.wsj.com/articles/next-in-googles-quest-for-consumer-dominancebanking-11573644601