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Google's growing undisclosed "conflicts of interest" are bearing their teeth

New evidence exposes that Google has much more serious financial conflicts of interest and is much less of an "honest broker" of online advertising than most appreciate. 

  • An outstanding New York Times article by Bob Tedeschi: "A new tool from Google alarms sites" drives this point home. It is a must read article for anyone interested in understanding the depth and breadth of Google's increasing dominance of online advertising.
  • The essence of Google's under-appreciated conflicts of interest are captured in these following quotes in the Times article:
    • "This month, the company introduced a search-within-search feature that lets users stay on Google to find pages on popular sites..."
    • "The problem, for some in the industry, is that when someone enters a term into that secondary search box, Google will display ads for competing sites, thereby profiting from ads it sells against the brand. The feature also keeps users searching on Google pages and not pages of the destination Web site."
    • "Mr. Rimm-Kaufman said the new Google service also diminishes a Web publisher’s role in helping users find potentially useful content. “You may want to editorialize differently when someone searches, and maybe put a premium on certain reporters or content,” he said. “This moves you further out of the loop.”" 

Rather than being a neutral Internet gatekeeper for content that users seek, the new Google "search-within-search feature" -- is essentially saying to the user -- "Are you sure? Do you really want to find the brand or information that you actually typed? Wouldn't you really like to see some other brands that pay us more money?"

  • The undisclosed business conflict of interest here is that Google makes more money by discriminating against the brand/site a user self-selected in favor of its competitors -- because it provides competitors a new opportunity to skim off others' hard earned brand equity because of Google's unique online ad-brokering dominance. 
    • (This is eerily similar to Google's conflicted-practice where it sold companies' owned "trademarks" as keywords to the trademarked company's competitors.)  
  • To make this "search-within-search" conflict of interest easier to grasp, lets drill down.
    • Say Best Buy, which pays Google handsomely for AdSense advertising to be the top listing on the search results, gets a customer lead typing into Google's search bar: "Best Buy"; Best Buy thought their AdSense payment got Best Buy the right for that customer lead to be directed to Best Buy's site, if they indeed clicked on that AdSense link.  
    • But noooooo. Google is adding a second search bar under that link, that encourages the user to navigate Best Buy's website in a way that financially advantages Google, but not Best Buy.
    • But the conflict gets worse than that. The second search bar is the equivalent of Google sending out an immediate email alert to all Best Buy's competitors, informing them that Best Buy has a live customer, and that if they pay Google more, Google will enable them to steal that self-selected Best Buy customer through a second search bar ad auction! 
    • What a deal for Google! Or more accurately, what a great "self-dealing" opportunity for Google!  Google could put a third search bar on the third page... and a fourth search bar on the fourth page... reselling the same "inside information" over and over again to the highest bidder on each page.

But how could such anti-competitive self-dealing behavior be possible? Well it's called market power and Google understands it has lots of it. Google-Doubleclick-Youtube has several hundred thousand more advertisers and several hundred thousand more websites in its online advertising brokering network than even a combined Microsoft-Yahoo could have. 

  • Google brilliantly has exploited the weak under-belly of antitrust law to achieve global market dominance of online advertising by securing approval from the FTC and EU of the DoubleClick acquisition. 
  • As I explained in detail in my Googleopoly.net analysis, and my testimony to the U.S. Senate on the merger, Google-DoubleClick has situated itself as THE global "market maker' for online advertising. 
    • In owning the dominant share of advertisers, website publishers and users, Google is in the uniquely powerful market position to "self-deal" because it "sees" much more of the market's demand (advertiser inventory and users intentions), and much more of the market's supply of content (Website publishers) than any other company in the world by far.
    • It is basic economics that if a "broker" can gain a dominant share of a market's supply and demand information, it has a powerful market incentive to self-deal and front-run their clients' interests, because there is no real competition to discipline this form of anti-competitive behavior. 

Bottomline: This new Google tool and "search within a search" feature is the type of self-dealing and front-running anti-competitive behavior that I warned against in my Googleopoly analysis and in my Senate testimony.

  • Companies that advertise online and the websites that seek those advertisers will soon realize they are like the proverbial "frog in hot water."
  • Google is smart enough to know if they turn up the anticompetitive heat too fast the frog (advertisers/websites) will sense the danger of the increasing heat and try and jump out of the hot water.
  • However, if Google turns up the anti-competitive heat slowly, the frog will be lulled into a false sense of security, fall asleep and get cooked.
    • Online advertisers and website publishers will rue the day that they fell asleep and allowed Google to amass so much market power over their online business futures.

One last scary insight: Connect the dots of this new  Google "search-within-search" feature and Google's "mission to organize the world's information and make it universally accessible and useful."

  • Implicit in Google's "search-within-search feature" is Google obvious belief that most all websites are not organized to be accessible or useful.
  • In other words, Google is arrogantly telling us that their million plus website clients stink at website design, navigation, and marketing.
  • If you take Google's "search-within-search" feature to its ultimate logical extension, Google would become the only portal or website anyone would need to find content on the Internet; or in other words -- all online content would ultimately work for -- Google.

 

   

 

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