When Google first announced its autonomous vehicle program in 2010, software engineer Sebastian Thrun credited Google co-founder Larry Page and Sergey Brin with trying to solve "really big problems using technology," including car safety and efficiency. But believing Google doesn't want to make money off of the technology is akin to taking its "Don't be evil" mantra at face value: it's a noble goal, but it stands in the way of turning a profit. Eventually, the self-driving car will have to answer to shareholders.

This is one way it could.

First, it's worth examining how Google makes money: big data. Google aggregates big data, analyzes it, and monetizes it. To date, that has meant ads: at the very bottom of Google's latest earnings release you can see that 96 percent of Google's revenues come from advertising.

The problem is that Google's ad business is acting somewhat like the lowly commodity memory chip: although the numbers sold has increased, the average cost per chip, or click, has steadily fallen. The number of Google AdWords ads users clicked on increased by 42 percent versus a year ago, while the cost-per-click revenue decreased by 16 percent: the number of people clicking on Google's ads are increasing, but the amount of revenue per ad is decreasing. Google's goal is to prop up the value of each paid click by any means necessary, even as it tries to expand its ad volume.

Historically, Google has sold AdWords ads against its search results, but with the addition of services like Gmail, Google has added another trove of data to (anonymously) mine and sell ads against. But since Google didn't have enough sources of big data, it went out and created more.

For example, Google went out and created the Android mobile operating system, which it gave away for free. Android established Google as a player in the mobile space: as a foundation for applications, and as a distribution vehicle for movies and TV shows sold through its Play store. But mobile phones also established a new axis for data: location. Theoretically, a shopper walking down the street could open Google Wallet, find a number of low-cost daily deals near him, and walk over to take advantage. The company also can figure out where you live and work: the locations where you'll most commonly spend your time.

By logging into Google's network of online services, Google learns a bit more about you: YouTube, for example, reveals a bit more about what you might want to watch during your down time. Maps hints at what businesses you prefer and where you might like to travel. Google Play can also tell Google what e-books you prefer, the type of apps you download, and also what movies and TV shows you prefer. Google TV does this as well, but far less effectively. Google+ also reveals your preferences, with the "+1" button emerging as one of the most effective arrows in Google's quiver. By connecting them all together, Google builds a better, more valuable profile of your habits and preferences, which in turn it can sell to advertisers.

That's the foundation that Google is building upon with the self-driving car.

Continue Reading: Bringing Google Services to the Open Road>

At launch, of course, the reality will be quite different. A self-driving car will actually be a consumer of the vast amount of geospatial data that Google has itself collected, positioning each car on the road with the Velodyne LIDAR sensor that "sees" obstacles plus Google's own precision GPS data. Google is currently collecting the third phase of that data, the street signs and other markers that help drivers increase and decrease speed and react to unexpected hazards.

But as the self-driving car evolves, and governments and drivers begin to trust in its ability to drive more safely than human drivers, the "driver" is going to become more of a passenger, with profound implications. (Bryant Walker Smith of Center for Internet and Society points out that Google's cars would need to drive themselves more than 725,000 representative miles without incident to say with 99 percent confidence that they crash less frequently than conventional cars. Google hit 300,000 miles without a Google-caused accident this August.)

First of all, there's the productivity aspect. Google believes that there's implicit value in saving its users a few seconds per search, the justification in launching Google Instant in 2010. Imagine how much time an automated commute will save. A self-driving car takes one of the advantages of public transportation - the freedom to work or relax, while being carried to your destination - and applies it to a custom journey.

Second, there's the leisure element. If Google's smart, the dashboard of the self-driving car will become a small office or living room, becoming a showcase for Google's services and Google Play. No longer will your phone have to guess at how long it will take you to reach your next appointment, based on current traffic - a fleet of connected, self-driving cars will know, and can send an automated email if an unexpected accident occurs. Meanwhile, the display can serve up an audible e-book or, if the conditions allow for it, a movie.

Finally, and most important, there's the shopping component. A targeted daily deal sent to an Android phone still requires the user to hoof it to the nearest coffee shop or restaurant to redeem it. A self-driving car, on the other hand, expands the range of what a user may consider a "convenient" deal. Normally, driving an extra 20 minutes to score a free appetizer might be a deal-breaker. But if you could kick back and watch an episode of South Park? That deal becomes more attractive.

Basically, a self-driving car flips the concept of the impulse buy on its head: instead of putting the product directly in the user's face at a checkout line, the user is ferried directly to the merchant. That has to be worth something to someone.

And don't discount one other piece of technology Google has up its sleeve: Google Glass. Essentially, Glass is nothing more than a personal HUD, a technology that has appeared in vehicles for years. The problem with a HUD is that it can be distracting; users tend to focus on the information it displays, rather than reacting to road hazards.

With a self-driving car, those distractions go away. At this point, the car's windows could become something more akin to an augmented reality display than anything else. Imagine the car "tagging" buildings as it moves by them, listing the upcoming performers at a music club, for example, and allowing the driver to buy tickets on the main display. Automated city tours could "exit through the gift shop" at sponsored hotels and restaurants.

Essentially, the self-driving car would become yet another platform for Google, and any partners it allows in, to tap into.

At this point, Google faces a number of technical and legal problems that it has yet to solve. But don't believe that either the self-driving car or Google Glass emerged in a vacuum. Google could certainly license Glass and its self-driving technologies if it so chose, creating a new revenue stream. But both technologies also fit inside its established business models, too.