Google's AppEngine is an incubator for innovation. But is that really a good thing?

If you're an avid blog reader, chances are you've already read the news of Google's new AppEngine somewhere already this morning. Probably on TechCrunch?

I don't want to bother rehashing what other people are already talking about. All I want to ask my readers is this: Doesn't the idea of handing Google your code make you a little bit nervous?

Call me paranoid, but here's how I see it: If you are a small startup, you don't have alot of assets. All you have is an idea, and your code. Your code is, in fact, one of your greatest assets. Ideas are a dime a dozen, but your code is what brings your ideas to life. How you implement your ideas through your code is what sets your business apart from others.

Google has already demonstrated an immense desire to invest in startups with unique ideas and the right code to implement them. By storing your code with Google, what is to stop them from just peeking in? By using the AppEngine, you basically give Google a back door into your startup.

Now, before you all think I'm sitting here wrapping tinfoil around my head, let me quote some passages from the AppEngine Terms of Service:

6.3. Except as provided in Section 8, Google acknowledges and agrees that it obtains no right, title or interest from you (or your licensors) under these Terms in or to any Content or the Application that you create, submit, post, transmit or display on, or through, the Service, including any intellectual property rights which subsist in that Content and the Application 

 

8.1. Google claims no ownership or control over any Content or Application. You retain copyright and any other rights you already hold in the Content and/or Application, and you are responsible for protecting those rights, as appropriate. By submitting, posting or displaying the Content on or through the Service you give Google a worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute such Content for the sole purpose of enabling Google to provide you with the Service in accordance with its privacy policy. Furthermore, by creating an Application through use of the Service, you give Google a worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute such Application for the sole purpose of enabling Google to provide you with the Service in accordance with its privacy policy.

Now, I'm far from an expert at legalese (so please correct me if you think Im off base here), but what this basically says to me is that Google won't be claiming owneship of your application. They are reassuring you that your appication does indeed remain under your ownership. That said, they are stating that they do reserve the right to adapt, modify, publish, and distribute your application. 

I've been in business long enough to know that a company must adhere to its contractual obligations in a public setting. But internally, a company will do its best to find some wiggle-room within its legal obligations; especially when it stands to benefit from doing so. Google could never get away with just blatently reproducing your code under its own brand. There would be a huge out-cry from the public if they were to do that. But nothing is stopping them from looking at your code and learning from it. Nothing is stopping them from evaluating your startup's potential at an extremely intimate level; because you've already pulled down your pants and given them access to everything: code, content & userbase. It's all stored in the Google cloud for them to see.

If Youtube had been built on Google's AppEngine, do you think Google would have shelled out such major bucks for them? They might have shelled out less, or they might have shelled out even more; it all depends on how valuable they thought Youtube was after having unrestricted access to their backend.

And that's the crux of what I'm getting at: Google AppEngine is an incubator. AppEngine makes it easy for Google to evaluate the potential of a startup before it even publically expresses an interest in acquiring it. They don't have to deal with the legal hand-wringing that goes along with trying to evaluate a potential acquisition. They just look into their cloud and decide: is this something we want? If so, how much do we want to pay for it?

By using AppEngine for your startup, you let Google see your cards. There is no room left for bargaining, because Google will come to the table and already know everything they need to know.

I'd like to discuss this with you readers. If you have an opinion, please feel free to lay it on me by posting in the comments. Am I way off base here? I don't think so, but maybe you disagree.