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Can you trust Google to obey the rules? Is Google accountable to anyone?

In monitoring Google as closely as I do, it has become increasingly clear that Google does not believe it has to obey the rules, standards, regulations and laws, that others routinely obey and respect. Google increasingly operates like a self-declared, virtual sovereign nation, largely unaccountable to the rules and mores of the rest of the world.     

  • There is plentiful evidence of Google's unaccountability; see the following analysis peppered generously with source links. 

The impetus for this analysis and documentation was Saul Hansel's outstanding New York Times Blog: "Google fights for the right to hide its privacy policy." 

  • In a nutshell, Mr. Hansel spotlighted how Google is refusing to abide by the Network Advertising Initiative's rule that its members must display a link to their privacy policy on their home page; and that this industry self-regulatory body is expected to bend its rules specifically to accomodate Google.
  • This is no isolated incident, shirking the accountability that most everyone else respects is near standard operating procedure for Google. 

Is Google accountable to anyone?    

First, can public shareholders hold Google accountable?

Google's founders created a two-tier stock voting structure where the founders and their original investors have ten votes per share of stock to one vote per share of stock for public shareholders. When Google's founders had the choice to abide by the widely-adopted standard of shareholder democracy -- they refused. 

  • As Google stated in its IPO letter to the public: "...New investors will fully share in Google's long-term economic future but will have little ability to influence its strategic decisions through their voting rights."
  • Translation: Google's founders cannot be held accountable for their actions by public shareholders who may collectively own a majority of Google shares.
  • Google insiders need not be responsive to shareholders at annual meetings in the case of poor performance or malfeasance. 
  • In short, there is no real shareholder democracy at Google nor any opportunity for shareholder activism. 

True to form, before their IPO, Google founders did not obey SEC accountability and investor-protection regulations; Google had "issued enormous quantities of stock and options without registering the shares or revealing its financial results to its private shareholders." (See p. 184 "The Google Story" by David Vise)   

Ask any institutional Google shareholder, and they will tell you Google provides less investment relevant information or guidance than most any publicly traded company.

  • They are known as a secretive "black box" company with minimal transparency -- by design. 
  • Google appreciates that they are not accountable to public shareholders. 

Second, can users hold Google accountable?

Google does not work for users; Google works for advertisers and website publishers, which provide virtually all of Google's revenues.

  • Google has a serious undisclosed financial conflict of interest, in that they represent themselves as working for users when they do not.
    • The seriousness and potential harm of this undisclosed conflict of interest is comparable to the conflicts that investment banks had during the Enron/Worldcom scandals, when investors thought their research represented investor interests, when in fact, it represented company interests.
  • The recent and most compelling evidence that Google does not view itself as accountable to its users is that Google felt no need to warn Google users of their dramatically increased risk to identity theft and fraud from hackers that had recently compromised Google's search results.
    • Notifying users of their heightened risk would discourage visits to the infected sites, upset Google's publisher customers, and reduce Google's revenue. 

If Google felt accountable to users, do you think it would have been ranked worst in the world in:

Third, can advertisers or publishers hold Google accountable?

The cold reality is that advertisers and publishers know that there is little competition to Google in reaching the global networks necessary for online advertising.

Google-DoubleClick:

  • Reaches a user audience 3-10 times larger than any competitor;
  • Has roughly a million more websites in its publisher network than any competitor; and
  • Has over 90% of advertisers in its network -- an order of magnitude more than any other competitor.

For advertisers and publishers to be able to hold Google truly accountable they would have to have a legitimate competitive alternative to take their business to -- or at least threaten to take it to.

  • They don't have real choice for all practical purposes and Google appreciates that reality.
  • See my Senate testimony and Googleopoly analysis for more in-depth support of this important point.

Moreover, if Google was truly accountable to advertisers, why would Click Forensics be able to measure the click fraud rate at 27% of all clicks -- one of the highest fraud rates of any mainstream industry in the world.

Fourth, does Google consider itself accountable to the Supreme Court definition of free speech?

The Homeland Security Committee Chairman recently asked Google to take down terrorist content intended to promote terrorism and incite violence; Google almost immediately and completely refused to comply with this bipartisan request saying that its guidelines protected free speech. As I pointed out in a recent blog post, the Supreme Court is the final constitutional arbiter of what is protected free speech and they have ruled definitively that inciting violence or encouraging law breaking (i.e terrorism) is not protected free speech.

  • This incident makes it clear that Google has its own definition of what free speech is and does not feel accountable to the Supreme Court/Constitutional definition. 

Fifth, can third party groups, watchdogs, or bloggers keep Google accountable? 

There is no third party audit or review of Google's search algorithm to ensure that their undisclosed conflict of interest is not compromising the integrity and objectivity of their search results.

  • One reason why this is a such a big potential problem is that the third party firm Audit Integrity, ranks Google in the bottom 2% of publicly traded companies in terms of accounting and governance risk." 

Moreover, Google has effectively compromised the independence of most all of the major consumer groups and supposed accountability watchdogs in Washington with:

  • Free advertising through Google Grants: "Google Grants has awarded AdWords advertising to hundreds of non-profit groups";
  • Generous intern or fellowship programs; and 
  • Generous financial support of liberal grass-roots organizations and their pet issues like net neutrality. 

The whole "media reform" movement run by FreePress / Stop Big Media" has been so totally coopted by Google as its chief corporate ally, that while it rails against offline media consolidation, which is heavily restricted in law and regulation, they are totally impotent and de-fanged on the unprecedented consolidation of online media that Google has already accomplished on the Internet.

  • It is the height of irony that in opposing offline media gatekeepers, they have enabled the ultimate online gatekeeper, Google, to consolidate effective and unprecendented gatekeeper control over online content -- the content of the future!  
    • (See my Senate testimony on the Google's unprecedented Media concentration -- page 7 and chart 3)
  • This media reform community is so badly compromised and conflicted that they refuse to acknowlege that they have essentially "looked the other way" while Google has concentrated more "big" corporate power over online media than ever could have been achieved in the offline world.    

Some of the only major consumer or privacy groups that have NOT been coopted by Google are Privacy International, EPIC, The Center for Digital Democracy, and USPIRG.    

Furthermore, most of the blogging community has a financial conflict of interest in covering Google, because Google is the blogosphere's primary source of compensation and monetization.

  • This tends to make many of them cheerleaders for Google.    

Bottom line: Google has practically no accountability or checks and balances from: shareholders, users, competition, regulators, or third parties.

  • History, experience, and common sense tell us that when there is little accountability -- bad things happen.
  • Google's fundamental aversion to following many of the rules, standards, regulations, laws and mores that others are expected to follow -- is a huge red flag... beware.  

 

    

 

 

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