SEC

Does Google warrant the current exceptional leap-of-faith in the integrity of its dominant ad auction model, given its near total lack of openness, transparency, independent auditability, or third party oversight? There is a growing body of evidence that Google does not.

• The New York Times article today by Miguel Helft: "The Human Hands behind the Google Money Machine" is a must read for anyone following Google or concerned about the openness and transparency of public markets. It is also a little treasure trove of fresh information on Google.

Why a lack of openness sullies the integrity of Google's ad auctions.

First, it is widely accepted that public markets operate best when open and transparent.

Google's ad auction model has become one of the world's most important public markets. Google is increasingly becoming the world's primary public information broker. Google brokers: 

There were three proverbial "elephants in the room" that the media and analysts largely missed in discussing Google's stock slide and recent concern over a slow-down in paid clicks. 

Elephant #1 -- Click Fraud: 

I was stunned that no one connected-the-dots with the slow down in paid clicks with Google and Yahoo's "dirty little secret" of addressing raging click fraud. 

The big question for investors is why?

• Why has Google felt the need to rapidly build up a new lobbying operation in D.C. (rivaling Microsoft's in size) and why did Google just unveil, with great fanfare, its new cutting-edge office space in DC with a party that attracted 650 people and many VIPs?
  • What does Google know that investors may not?

Google's Regulatory Outlook:

Federal Trade Commission: 

Antitrust:

Richard Waters of the FT produced a very insightful and newsy article on how Google reportedly passed on buying DoubleClick two years earlier over internal concerns about how that alignment of businesses could clash with Google's famed "don't be evil' highmindedness.

• It's a must read article for Googlephiles.

My big takeaway from this article was an undercurrent of Google's struggle over internal controls to ensure Google's "ethics" are carried out in practice.  

Liberal blogger Matt Stoller of OpenLeft has a post at Save the Internet that lamely tries to rewrite "the history of net neutrality" in his commentary about his interview with FCC Commisioner Michael Copps.

Google turned in another awe-inspring financial performance in 1Q07. Pick your news report for the basics. All you need to know is revenue growth was up 63%. Wow!

• Derek Brown of Cantor Fitzgerald said in the Washington Post today:
• "I am basically convinced that no company in history has put up the type of finanical performance that Google has put up from a growth and financial perspective for as long as they have done it."
• It's hard to disagree with him. There is no other example.
• They are a jugernaut.
• What I questioned in my recent 10-page analysis of the Google-Doubleclick merger, was whether all of that success is legitimate given rampant click fraud and Google's systematic theft of its core inputs -- copyrighted content.

Let me translate some of the earnings call:

Given my recent 10-page white paper which analyzes the antitrust and competitive implications of the Google-DoubleClick merger, I thought it would be helpful public service to pose some questions that reporters/analysts consider asking Google's CEO Mr. Schmidt on Google's earnings call.

1. Does Google have a 50% "antitrust dominant" share of the search market?
2. Is search the new Internet browser?
3. Is search the largest Internet access gatekeeper?
4. Is Google the new Microsoft of the Internet?
5. Would the DoubleClick acquisition foreclose competition in the Internet advertising market?
   

Google made news recently by adopting new privacy measures, which puts a spotlight on a real big public policy disconnect.

What I find most interesting about Google and the subject of privacy, is the glaring incongruity of these facts:

1. Google, as the dominant search engine with ~50% of the market, arguably has more and deeper private and intimate information on American consumers than any other company in America;
2. Google has among the weakest privacy policies of any major corporation in America;
3. Google is not subject to any specific privacy regulations or regulator like other similarly situated major corporations that have lots of sensitive consumer information -- like financial services firms and communications companies.

Let me put that more simply:

Google has no sense of when to keep their mouth shut, because their corporate arrogance and cluelessness appears boundless. 

I could only shake my head at the headline in Comm Daily today prompted by a Google official speaking at a Washington conference.

• "Internet, Google will Sway 2008 Elections: Company Executive" (p.4 Communications Daily 3-16-07)
• "Google sees itself as a force in a political race that could hinge on making the best of Web and other tools, Google Vp-Global Communications Elliot Schrage said Thurs. at the Politics Online conference in Washington."
• "Candidates are starting to see the Web's power, Schrage said: "Already candidates and campaigns are spending tens of thousands on adwords campaigns alone." The company invited declared Presidential candidates to its offices to "talk technology and policy" and will post videos of the talks if candidates permit it, he said. Google is trying to "make services easier to use" through a "special sales and political team dedicated to helping political camps, he said."" 

Generally company's are more responsible and circumspect about bragging about their own company's ability to influence or "sway" and election. The U.S. Government takes Federal Election laws seriously and is attuned to ensuring the electoral process is not manipulated in any way.

In my recent blog post, "Why Microsoft's new Internet 7 explorer browser discriminates against small business" I mistakenly used the incorrect first name in my transcription of a Wall Street Journal quote. The quote should have been attributed to "Greg" Waldron (not "Gerry"), of the Waldron company http://thewaldroncompany.com/index.html.  Greg Waldron is founder of a company which is an online provider of water fountains. Precursorbog regrets the error.