Friday, June 24, 2011

Is Google Stacking the Deck of Results?

It has been reported in the NY Times and the Wall Street Journal that the monolith of the internet, Google is being investigated by the Federal Trade Commission (FTC) for anti-trust issues. The FTC admits that suing Google for anti-trust will not be easy because, "Under U.S. antitrust law, it isn't illegal to have a monopoly—only to acquire one unlawfully or abuse it" (Wall Street Journal). Add to the mix that the courts "have significantly narrowed the scope of antitrust law in recent years" (Wall Street Journal). That means that the FTC is going to have it's hands full attempting to prove that Google has done the following, with intent:

1. Acquired smaller competition in order to squash the threat.

2. Limit consumer's choices, based on their "natural hierarchy" of algorithm.

3. Adwords, Google's system of matching search results to like-minded advertising (by way of pay-per-click advertising) to help filter in paid-for advertising into search results.

What gives? I thought that Google was the soft and fuzzy, good guys of the internet? Has that changed? It depends on who you ask. 

Both newspapers are running similar stories concerning the "maybe/maybe not" game that the FTC is playing on Google. There is some cause for concern that Google, by virtue of its own success could be tilting the playing field. The most vocal critic of Google's practices is FairSearch.org who has singled out Google as being worthy of industry scorn. The site has cobbled together information about Google's size of the market share, quotes that the co-founders of the company have said in the past and what some other industry experts are saying as being indicative that Google isn't playing fair with its competitors or its end users. 

Fairsearch.org has made up a fact sheet with key facts about how BIG Google is and how potentially bad that could be for internet browsers, companies and advertisers. According to FairSearch.org, "Google controls more than 70% of all searches in the U.S." (Fairsearch.org), and that "Google has a dominant position in almost every EU country, with an overall search market of 94% in Europe" (Fairsearch.org). And possibly the biggest shocker is that "Google controls 98% of the U.S. mobile search market" (Fairsearch.org). If that is correct, then that means that Google, while capturing an increasing percentage of cell phone sales with their Android models, Google is poised to be more powerful yet. According to the UK paper, The Guardian, reports that "Android is the dominant smartphone platform worldwide for the second quarter in a row, in a market that has grown by 83% to 101m from 55.2m a year ago" (The Guardian). The Guardian also reports that "smartphones outsold PCs for the second quarter in a row, underlining the dominance of the new devices"(The Guardian). 

If you asked Google what they think about the alleged suit pending, they would probably say that there is skepticism due to their success. You might call it the "don't hate me because I am beautiful" argument. What is for sure is that Google has no intentions of slowing down. Adweek reported recently that Google CEO Eric Schmidt was predicting "the next trillion-dollar industry" to the Cannes Lions award ceremony attendants. Schmidt is projecting that the next big thing will be "tap and pay" where your cell phone acts in place of your credit card. Or, as Mr. Schmidt put it, "your phone will know what you want and it will allow you to pay for it without a credit card. “The best thing would be if Google knew what you wanted without you having to type it in,” Schmidt said. 'With your permission, with a mobile phone we can trigger search queries about where you are'” (Adweek). 

Schmidt also announced that the company intends to introduce "Google Wallet" wherein your phone is linked to your bank account, acting like a virtual credit card. Schmidt is predicting that within the year, "a third of all checkout stands in restaurants and retail stores will allow you to “tap and pay” with your mobile phone. 'How big a market is that? We're talking trillions of dollars'” (Adweek). That might sound like science fiction, but in actuality, the United States is just late coming to the "cell phone as a credit card" party. There are African countries which have been setting up cell phone networks which allow the working poor and impoverished to use their cell phones as credit cards to pay for services and goods as well as safely sending money. And while those African residents are paying a penny or less per transaction, I am sure that we Americans will be paying top dollar for the "benefit" of the same service. 

And, there is another legitimate concern for the average user of these high-tech services - internet security. What obligation does Google have to protect (or not share) our information which we give through Gmail, Google Wallet, Google Search and Adwords? The FTC was wondering the same thing, and put into place some restrictions on how Google can use people's private information for third-party use. In Part II of the FTC order against Google earlier this year:
"before sharing a Google user’s information with a third party in a way that’s different from what the user was told when the info was collected and that results from any change to a Google product, Google has to get that person’s express affirmative consent.  To give people the facts they need to make an informed choice, Google has to clearly and prominently disclose: 1) that their information will be disclosed to a third party; 2) who the information will be shared with; and 3) why it’s being shared.  The order makes it clear that the disclosure has to be separate and apart from any end user license agreement, privacy policy, terms of use page, or similar document."
This is the beginning of a long, drawn out fight between Google, the uber-successful web company of the future and the consumer protection division of the FTC. If Google continues to grow at the same rate which it has for the past two quarters, the sky is the limit. It will be the goal of the FTC to try to keep up withe the pace of change.


2 comments:

  1. 1. Acquired smaller competition in order to squash the threat.

    2. Limit consumer's choices

    Gee, that sounds like Microsoft's standard operating procedure. ;-)

    I haven't heard anything recently, but google is also still in hot water for the massive amount of WiFi Spying they did with their fleet of camera vehicles == Street View.

    ReplyDelete
  2. But unlike Microsoft, Google provides "free" products to consumers that are actually beneficial.

    Google has always been transparent about their privacy, as well as on the side of the user. While they do keep search data indefinitely, after a very short period of time your IP address is dropped from that data. They make it a habit of denying the government subpoenas of information.

    Another reason why I trust Google is because of their annual transparency reports. Take a look here. http://www.google.com/transparencyreport/

    ReplyDelete

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