Without a doubt, Google is playing a larger and larger role in business. But as many have found out, doing business with Google requires certain expectations to be set up front. This is not to say that doing business with it is awful, or that other companies do not have many of these issues as well, of course. Still, there are some very good reasons to be wary about doing business with Google.

Eric Schmidt (executive chair of Google’s board) recently joked about whether your Android contact list and most recent calls should be used to customize advertising. Whether Google is heading in that direction or not, no one wants to think that Google takes these matters lightly. Time and time again, Google’s executives (particularly Mr. Schmidt) have made it clear that they will get as much data generated by your online activities as legally and technically possible. Is that necessarily bad? No. But their attitude seems to be that if you want any kind of online privacy, you need to go through extreme measures.

Most users never stop for a moment to ask themselves how Google can do so much for no cost to them. Of course, the answer is advertising, and that is nothing new. But what makes Google’s advertisements so valuable is not just their wide reach but the selective targeting. You see, Google has taken the same engineering that produced its excellent search engine and applied the effort toward linking ads to people, based in no small part upon the data harvested as a result of your daily interactions with them.

Of course, seeing ads on Google Search based on previous searches is not a shock. But it’s a bit creepy (and occasionally embarrassing) when you go to a site and look at products there, and then ads from that site follow you around to every site you visit for months. If you want to know what other users do with their computers, just look at what ads Google displays for them.

In addition to the inherent privacy concerns (”What if a hacker gets a hold of this?” and “What if other sites figure out how to use this?”), there are legal concerns. As the government continues to subpoena Google’s data, it is quite possible that data concerning you will end up in a government database, and who knows where it will go from there.

Google is famous for rolling out new products on a regular basis. Unfortunately, it is also famous for pulling the plug on them. Sure, other companies do the same thing. But Google’s threshold for failure feels a lot lower. Even more frustrating is when it does this with APIs. It has become clear that Google opens APIs to study usage in the wild, but once it has learned what it wanted to, Google shuts down the APIs. This may work great for Google, but it is a nightmare scenario for companies that depend upon its products and services.

Overall, the quality of Google products is high. But there are some exceptions, and those exceptions (especially Android’s issues) are quite visible and damaging. Google’s “perpetual beta” was cute when it was Gmail or Orkut. When the same mentality is applied to your phone’s OS or your business email, it is an entirely different story. Google seems to currently view its target audience as consumers or small businesses for whom its applications are not mission critical.

Google takes an extremely data-driven approach to deciding how to do things. For example, its usability changes are driven by massive amounts of data. It will roll out a change to a “small” group of users (which could be millions of people), observe how usage patterns change, and then make decisions from there. Google is lucky to have one of the largest user bases in the world for its applications, so it can take this approach and have tons of data.

Google doesn’t like user feedback, in large part because it is hard to quantify. The problem is that it believes the data, not users. While this isn’t terribly surprising (IT professionals have plenty of horror stories about how they did what users wanted, and it was a mess), it can be very frustrating to work with Google or to hope for a particular feature or change to be made. There just isn’t a way for the voice of the customer to be heard.

If you are part of a business, the traditional customer-vendor relationship is familiar, comfortable, and normal to you. But this is not in Google’s DNA. Google’s main currency is actually your clickstream data. Why does it give away Google Analytics? So it can collect clickstream data? Gmail? Search? Same thing. Its APIs? More data to feed the machine. Google’s true business is to run a commodities market where it is both the market itself and the sole producer of the commodity. In Google’s eyes, it is seller’s market. You have no other choices, and there are plenty of other people happy to buy that same commodity. Where other vendors would work hard to keep you happy, Google does not even bother to tell you to take a hike.

Google is really good at getting individuals and small businesses the products they need for free or nearly free. But it struggles when doing business with enterprises because the expectations are different. Google succeeds with the smaller companies because they understand that you get what you pay for. They don’t feel that a service that is free, or nearly so, is worth complaining about.

An enterprise, though, is often willing to pay more money to get certain things, like no ads, preferential treatment, a dedicated account executive, and SLAs. These are not bad things. But again, Google just is not set up to do business like this (with the exception of Google Apps for Business). Because it has such minimal interaction with you as client, it isn’t going to understand your needs, let alone try to cater to them. If what it delivers is fine with you, that’s great. But if you want the handholding, customization, support, etc., that a traditional vendor will sell you for an upcharge, Google isn’t going to be providing it.