Does “Googleopoly” = Evil ?

by John Rowles

IDX Search Entrepreneur

Author website

I have a running news search going for anything that has the words “Google” and “Real Estate” in it. More often than not, this search returns cookie cutter press releases designed to reassure agents who plunked down a credit card for a cookie-cutter Web site (“Real Estate Agent Ollie Tabooger Adds Custom IDX Tools to his Web site” — film at 11), but it occasionally yields something interesting. Over the weekend, I got a link to a one-sided attack on Google that was published by the Atlanta Journal Constitution, which offered no forum for a reply, so allow me to retort:

The piece, called “Googleopoly darkens future of innovation” was written by Scot Cleland,  a telecom lobbyist that is fighting Net Neutrality. The Net Neutrality debate is really complex, so I’ll boil it down to a paragraph:

As Ted Stevens tells us, the Internet is a “series of tubes”. On one side of the debate, you have the Tube Builders (AT&T, Comcast, Verizon, etc.) and on the other, you have the Tube Users (Google, eBay, Apple, etc.). The Tube Builders are also Tube Users and they want to charge other Tube Users based on what they are putting into the tubes and how much of it there is. The Tube Users are afraid (based on past behavior) that the Tube Builders will take unfair advantage of their ownership of the tubes so the Tube Users want the Government to regulate the Tube Builders. The Tube Builders like to point out that the Interstate Commerce Commission, which was set up to stop the railroads from doing basically the same thing a hundred years ago,  ended up making the problem worse and they say it is best to let the market work things out.

(Where have I heard that before? In other words, we tax-paying consumers and small business owners will eventually get screwed on this deal no matter who wins.)

Cleland is behind a group called NetCompetition.org, which is funded by the Tube Builders. His beef with Tube User Google is that it is displaying monopolistic tendencies because the deal they tried to put together with Yahoo would have put them in control of 90% of the Internet advertising display space. He has a point as well as the brass nuts it takes to cry “monopoly” when you are funded by AT&T.

Where Cleland’s argument falls apart is when he tries to show the harm caused by Google’s hegemony over Internet advertising:

“Suppose that a consumer searched for “Pizza Fairfax Virginia,” or “Ford Taurus snow tires” on a smaller, competing service —- there are no large ones, after all. That service would not likely have ads to closely match those searches. Nor would it have the vast database of previous matches to help consumers find exactly what they wanted on the rest of the result screen. Google, on the other hand, could almost surely provide specific ads targeted to that consumer’s search.“

Right. And, so what? Its that “rest of the result screen” part that makes the difference.

Google has 65% of the search audience because it was the first search engine to give the people what they want: accuracy and relevance. They started doing that long before they figured out how to make a living at it by serving up relevant ads next to those “organic” results. Google’s core offering — Organic Search — was and is free. That’s a useful service that dwarfs anything AT&T or any other telecom ever did for free, let alone as its core business.

Google doesn’t get paid unless users click ads, and only a minority of Internet sessions include ad clicks. To generate ad revenue, Google understands that it needs to build a huge audience so that the subset of ad-clickers gets larger, hence their desire to add Yahoo’s users to the list. Cleland wants us to believe that Google’s attempts to gain a wider audience for its ads are monopolistic and therefore evil, but what if a virtual monopoly on the available display space is required just to aggregate a large enough subset of ad clickers to make the enterprise worthwhile?

If that is the case, then its somewhat reassuring that Google’s corporate philosophy is “Don’t be evil”.

As they get bigger and more powerful, that statement comes under ever-increasing scrutiny, as it should. For example, Google has made some choices when it comes to appeasing the Chinese government that critics have pointed to as proof that Google is just as evil as any other big company.

But what if they really mean it? And even if they fall short, shouldn’t they get credit for at least considering whether or not their actions are evil?

By design, Google has always put user experience first, and then they figure out how to make a profit around that user experience. This is a way of doing business that is utterly foreign to a company like AT&T: Exhibit A: The intentional crippling of iPhone capabilities that would enhance the user experience but eliminate AT&T’s (and Apple’s) ability to charge fees for things an unlocked device can do for free.

I doubt telecom executives can get their heads around the idea that a corporation might voluntarily choose to consider whether or not its actions are evil. They look at the market power Google has amassed and assume that Google will behave the way they would if they had that power. Since Google beat them to the punch when it comes to Internet advertising, its in their interest to point out all the evil things they would be up to if they were in Google’s position.

It is human nature to fear what we don’t understand and its a capitalist’s nature to covet another company’s revenue stream, especially when it flows right through tubes they’ve built. Are monopolies always bad? I don’t know, but even if the “Don’t be evil” thing is lip-service, it is still more evidence of a social conscience than the telecoms display.

Until I see evidence to the contrary (and I am like a canary in the coal mine, since I work with Google technology every day), I am willing to give Google the benefit of the doubt and take them at their word when they say they are serious about running a corporation that goes out of its way to not be evil.  That means, at least for now,  I am willing to give Google more latitude when it comes to what constitutes an internet advertising monoply than I would give to a company like AT&T.