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Google's founders understood the conflict-of-interest in its business model from the beginning
Submitted by Scott Cleland on Mon, 2008-05-05 23:00
A consistent theme in my ongoing analysis of Google, has been Google's corporate refusal to overtly disclose the fundamental financial conflict of interest inherent in their business model, i.e that Google does not work for users like they routinely claim, but for advertisers and publishers.
- The best example of the serious risks to users of this undisclosed conflict of interest has been how Google has reacted since early April to the dramatic increase in risk to its users of indentity theft and fraud by cyber-criminals exploiting security weaknesses in Google's search results.
- I personally have seen the consumer devastation that undisclosed conflicts of interest can cause.
- After the collapse of Enron, I was asked to testify in the Senate on how conflicts of interests were integral to Enron's fraud.
- I was also asked to testify on the dangers of undisclosed conflicts of interest in the House during the tech meltdown.
Interestingly, it appears I am not the only one concerned that Google's advertising-based search model has a serious inherent conflict of interest.
- It is very telling that before Google's co-founders, Larry Page and Sergey Brin became dot.com billionaries, they were both seriously concerned about the "particularly insidious" bias of advertising based search engines.
- In the "Appendix A" of their 1998 academic paper "Anatomy of a Search Engine," Larry Page and Sergey Brin were quite candid about the dangers of the conflict of interest that I currently highlight about Google.
- "Currently, the predominant business model for commercial search engines is advertising. The goals of the advertising business model do not always correspond to providing quality search to users. For example, in our prototype search engine one of the top results for cellular phone is "The Effect of Cellular Phone Use Upon Driver Attention", a study which explains in great detail the distractions and risk associated with conversing on a cell phone while driving. This search result came up first because of its high importance as judged by the PageRank algorithm, an approximation of citation importance on the web [Page, 98]. It is clear that a search engine which was taking money for showing cellular phone ads would have difficulty justifying the page that our system returned to its paying advertisers. For this type of reason and historical experience with other media [Bagdikian 83], we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers." [bold added]
"Since it is very difficult even for experts to evaluate search engines, search engine bias is particularly insidious. A good example was OpenText, which was reported to be selling companies the right to be listed at the top of the search results for particular queries [Marchiori 97]. This type of bias is much more insidious than advertising, because it is not clear who "deserves" to be there, and who is willing to pay money to be listed. This business model resulted in an uproar, and OpenText has ceased to be a viable search engine. But less blatant bias are likely to be tolerated by the market. For example, a search engine could add a small factor to search results from "friendly" companies, and subtract a factor from results from competitors. This type of bias is very difficult to detect but could still have a significant effect on the market. Furthermore, advertising income often provides an incentive to provide poor quality search results. For example, we noticed a major search engine would not return a large airline's homepage when the airline's name was given as a query. It so happened that the airline had placed an expensive ad, linked to the query that was its name. A better search engine would not have required this ad, and possibly resulted in the loss of the revenue from the airline to the search engine. In general, it could be argued from the consumer point of view that the better the search engine is, the fewer advertisements will be needed for the consumer to find what they want. This of course erodes the advertising supported business model of the existing search engines. However, there will always be money from advertisers who want a customer to switch products, or have something that is genuinely new. But we believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm." [bold added]
Bottom line: We only need to listen to the pre-billionaire-unconflicted assessment of search engine discrimination/bias to know this is an important concern.
- What is particularly troubling about Google is it is not transparent at all -- Google's algorithm, business and business model is a complete "black box" -- not "open" at all.
- What is most troubling is the outrageous hypocrisy of Google's co-founders in riding a high horse in public that:
- Everyone should be open and transparent when Google is the worst offender (One World trust found Google worst in the world in acountability; and Privacy International found Google worst in the world on privacy as well); and
- Every ISP should be subject to new onerous net neutrality regulation so that they could not discriminate against content providers like Google!
- What's scariest of all about Google is that they can't see, or won't admit, this outrageous hypocrisy and double standard which is called Google's public relations/public policy.