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A Santa Monica, Calif.-based consumer group called Consumer Watchdog has called on the U.S. Justice Department to investigate and take action against Google. One “remedy” being suggested is the break up of Google into multiple companies.
Sound familiar?
One of the lawyers involved in a press conference held to announce the group’s call to action was Gary Reback, who is most famous for leading the anti-trust charge against Microsoft in the late 1990s. Reback is also founder of the Open Book Alliance, which exists to oppose organizations — especially Google — which seek to “monopolize” control of digital books. Reback is out to get Google. But he’s not the only one.
The FTC is delaying Google’s $750 million acquisition of AdMob, which is a mobile advertising company, while they look at how the deal would affect competitiveness in market. It’s possible that the commission might try to block the acquisition in the courts.
European antitrust regulators are investigating claims that Google favorably ranks itself in search results and unfavorably ranks competitors.
I think all this is just the beginning. Google is far too successful, pervasive and powerful to escape the coming morass of legal headaches, discovery processes and accusations.
Google’s got lawyers, too, and plenty of money to pay fines. And Google keeps increasing the amount of money it spends on lobbying the government. Google spent $1.52 million in 2007, $2.84 million in 2008, $4 million in 2009, and has already spent $1.38 million just during the first quarter of this year. The money goes toward influencing the Congress, the Commerce Department and, of course, the Federal Trade Commission. The company can defend itself — legally and politically, at least.
But the harsh reality it is like that Google will be tried in the court of public opinion. It has already been found guilty by its competitors and poked at by ambitious government officials. The investigations and the trials ahead are the penalties. There is no escape for Google.
The claim that Google advantages itself in search rankings is especially problematic for Google.
Google ranks results according to, among other things, popularity. Google’s services tend to be popular. Is that fair? Is Google giving too much weight to popularity? It’s a judgment call.
It goes both ways. In addition to allegedly building algorithms that help Google Web sites, Google could build Web sites that pander to its own algorithms. Google knows which criteria boost search engine rankings. Meanwhile, Google’s entire business is based on the popularity of its Web sites. Does the company use this knowledge to build Web sites guaranteed to succeed? Does it use information unavailable to competitors?
(This is, by the way, one of the issues used by those who called for the break-up of Microsoft. They said the Office division had access to secret operating system information that competitors had no access to, and that advantaged Office.)
Google’s critics claim Google uses “penalty filters” to make sure certain companies are hard or impossible to find using Google Search. These filters, according to critics, were designed to prevent companies from cheating, from “gaming” the indexing system unfairly.
For example, Web site creators use to give themselves an advantage by adding large numbers of invisible keywords to the bottom of pages.
Google’s “penalty filters” largely ended that. But critics also charge that Google is using these same mechanisms to keep competitors’ rankings low.
Google’s search algorithms are complex and multifaceted. Most of all, they’re secret. Search algorithms are to Google what the Colonel’s secret chicken recipe is to KFC, or Coca-Cola’s recipe is to the soft drink maker. Easily copied if revealed, search algorithms are Google’s secret sauce.
If a wave of litigation challenges Google, will the search giant be forced to reveal them?
Even if Google’s actions are provably above board, a wave of litigation would likely to highlight Google’s incredible power to determine the success or failure of not only competitors, but all companies, organizations and people. The newspapers over the next decade will be filled with legal accusations and claims against Google. The effect of this constant barrage could erode Google’s reputation.
Even if Google wins in court against its various attackers, the damage could be serious. The consensus about Microsoft’s anti-trust troubles is that it lost its various cases. But did it? The goal of that initial action was to at least prevent Microsoft from “bundling” Internet Explorer with Windows and at most break the company into smaller units, separating applications and operating system.
Yes, Microsoft suffered. But last time I checked, IE still comes with Windows, and Microsoft is still one company. It really doesn’t matter if Microsoft won or lost those cases. The pain and suffering of the “discovery process” is the penalty.
Microsoft was ground through the anti-trust meat grinder in the 1990s. If their experience portends Google’s fate, the company can expect its internal e-mail to be subpoenaed, then data-mined for juicy tidbits. (They’ll likely find little on CEO Eric Schmidt, who obsessively deletes his e-mail “as quickly as possible.”)
The trouble with e-mail is that you can always find something through the data-mining process the lawyers called electronic discovery. Google is a huge company with lots of people in it sending gigabytes of e-mail each year. They will no doubt find all kinds of damaging statements. With all those people and all that e-mail, somebody said something that doesn’t look good. Those statements will be distributed to the press, and Google executives will be forced to testify and defend or denounce them.
Is Google a de facto “public utility” that should be regulated as such? Does Google’s ownership of 80% search market share in the US (and 90% in Europe) make the company a “monopoly”? That argument could prove difficult for the lawyers, because the idea that consumers can’t easily choose an alternative search engine is quite a stretch.
Ultimately it doesn’t matter what the courts decide. The damage to Google may be severe, and could hit the company regardless of innocence or guilt.
When the lawyers and the politicians start grandstanding, everybody loses but the lawyers and the politicians, who always seem to benefit exclusively.
Personally, I believe Google is an unusually ethical company. But it has committed the greatest of all sins. It has succeeded. And now it may face punishment for that. The punishment will be endless bad press from the process of being investigated and sued for antitrust activity. And the best place to read about it will be on Google News.
