Is Google A Monopoly And Doesn't Know It?, The NY Times explores Options

[eKstreme]

A very interesting read about the case of Sourcetools and its "interaction" with Google. As they sum up:

The problem with monopolists, of course, is that they just can’t help acting like monopolists, even supposedly benign monopolists like Google and even when they are not consciously trying to rub out the competition. They are always right and everybody else is wrong. They have disdain for their own customers, knowing those customers have nowhere else to turn. They tell small fry like Mr. Savage to stop bugging them.

That is how Microsoft acted a decade ago, and that, increasingly, is how Google is acting. Half the time, the company doesn’t even realize how egregious its behavior has become, which is why it feels so misunderstood when it is criticized.

Maybe Mr. Savage’s experience proves that Google has become a company that abuses its monopoly power, and maybe it doesn’t. He is just one small example, and as Google likes to point out, thousands of advertisers are thriving using AdWords and AdSense.

But his story gave me pause, and nothing Google said in its defense defused my alarm. As Mr. Litvack reviews the Google-Yahoo deal, I hope it gives him pause as well.

It could be déjà vu all over again.

Excellent read also as a lens into Google's customer (dis)service.

Pierre

[bwelford]

Certainly a good read and clearly a real problem for us all. Google clearly is now a monopolist and that should force greater responsibility on them to avoid abuses. If not, the FTC should move in.

I was particularly struck by the following:

Mr. Savage shared with me an e-mail message from a Google account executive to someone at another company who had run into the same kind of landing page problem as Sourcetool. The Google account executive wrote back to say that she had looked at the site and found that “there seems to be a wealth of valuable information on the site.” Consequently, her team overruled the algorithm.

I have always found the 'It's the algorithm' defence particularly weak. It really is no defence at all. You can create an algorithm to produce any answer you want. In other words, they're really saying that it is so because they say it is so. That puts a pressure on them to find simple explanations of why they do what they do.

Once more it looks as though they should fund an ombudsperson process to ensure all stakeholders can get the treatment they deserve.

[dazzlindonna]

And it's an article in a major media publication. That makes a difference. Interesting.

[iamlost]

Much as I am wary of Google and use very very few of it's products or services it is because of privacy and data coupling issues not monopoly. Actually I would say that Google is demonstrably not (yet) a monopoly in most of it's markets, i.e. it is only about 40% of search in the US.

That webdevs, especially SEOs, hyperfocus on Google or that most work some variation of the article's Mr. Savage's Google-centric revenue model is, quite frankly, their problem.

What the writer sees as monopolist behaviour I see as the same old Google mantra of the 'algo'. From the beginning Google has preferred to tweek the algo and let the chips (websites and their business models) fall where they may. Human intervention somewhat of a dirty little stepchild hidden in a backroom.

Yes, Google has always put itself and it's services first - look at universal search results - and it's service partners second - MFA crap from them is apparently fine - and those big enough to fight back, third - the BMW difference - but that has been standard for years.

Putting aside Mr. Savage's business and marketing models we are left looking at Google's Adwords landing page model. Which must remain competitive with the organic results or Google's revenue suffers. Google has turned the query return quality about as far down as it can without leaving the competition an obvious advantage so AW landing pages are feeling the sting. Yet if the ppc fanciers page quality rises and their content value increases such that they get better ROI organically...or elsewhere...poor G is somewhat between a rock and a hard place.

[SEOigloo]

You can create an algorithm to produce any answer you want.

I had that exact same thought, Barry.

This article was fascinating, Pierre.

Do any of you feel that Google is able to get away with a lot because people (including judges, govt. officials, etc.) feel intimidated by the technology and don't really understand what it's all about, thereby leading to a "well Google must know what it's doing," position?

I'm afraid, with the U.S. set up as it currently is, government policy has been to allow manufacturers/inventors to dictate whether their own products/business practices are okay or not, rather than actually having an oversight committee which regulates them.

A perfect example of this is genetic engineering which was shoved onto the American people and their food supply, not because it had been rigorously tested and reviewed by 3rd party scientists, but because the people who were manufacturing GE foods were allowed to determine that it was all perfectly safe.

With Exxon writing environmental and energy policies for the government and pesticide manufacturers running the Ag. department, the public is left without a voice or any actual protection from abuse.

If Google writes the book on what is normal in all things Internet, I'm afraid history is showing that no one will stop them, at least in the U.S. Perhaps Europe will handle it differently?

Miriam

[eKstreme]

Great discussion guys and gals

See, I actually think two things of relevance here:

1. Anyone building their business on the back of someone else's, in this case Google, is simply asking for trouble. NEVER build a business that completely depends on someone else for revenue. I honestly believe that for this aspect, Google is in the clear. I guess iamlost and I agree on this front.

2. Is Google a monopoly? Not yet, but soon when it comes to search (in some countries it already qualifies I guess). In terms of advertising, not yet. Dominance does not automatically equate monopoly, but it's a pre-requisite.

So if Google is not a monopoly, is it abusing its position? No, but its customer service is rubbish. Emails take days to be responded to and its corporate communication with its users is awkward. Case in point: I recently wanted to ask AdSense tech support about something. Browse as I may in the help system I couldn't find a contact form that's relevant. Silly me: I should have known to *search* for things - this is Google after all! A search quickly turned up the correct contact form and 2 minutes later the query was sent. 3 working days later I had a bot-sounding-person-signed email reply confirming they dealt with it.

What I found intriguing is what DD commented on: it's the mainstream media grinding the axe now, not just SEOs or grass-roots bloggers. Soon the talking heads on TV will pick it up and then it will get very interesting.

I wonder what the DoJ will do with its review.

So in short: Interesting article but Google got covered unfairly.

Yes, it's me Pierre defending Googs, and no the aliens haven't invaded me and no Google hasn't bought me out with a big AdSense paycheck.



Pierre

[bwelford]

I guess it all depends on whether you decide to skate as close to the line that your lawyers and accountants suggest should be the absolute limit on your behaviour. In other words you make sure you're not doing anything criminal.

Alternatively you could decide to be as ethical as you can. Who knows, you could even adopt a mantra like "Do no evil". Naw, I know I'm dreaming.

Still I wonder on that scale from say 0 to 10 you would put Google.

[iamlost]

I see three big Google concerns:
1. search dominance: a potential concern but not critical. We tend to an English language, especially a US perspective, but while dominant Google is rarely above 50% market share. In other language markets, including both some of the most saturated and fastest developing Google is frequently a distant also ran.

There is also significant room for innovation in search and it remains quite possible that an upstart can do to Google what it did to Alta Vista. The key moment(s) will be as startups prove their worth and gain traction: will they succeed or be bought out. The big difference today, and it is an enormous difference, is the major SEs ability to buy out competition.

Of course one needs to have the vision to see the Google algo (or todays equivalent) being worth the million dollar asking price. Which works both ways: the Google story is a great reason to build out not sell out.

2. online ad/af dominance: Google built the text ad market and has been edging into the af market for years. And the DoubleClick acquisition immediately doubled it's reach. However, it is only recently that 'big business' has significantly begun to move marketing/advertising/sales online.

Not only are the AdWords/DoubleClick options not up to their requirements (based on offline print ads and commercials) but neither is the human 'management'. Google ad managers largely pale beside traditional agencies for big business hand holding - one of the drawbacks of the algo method.

I really do not see Google overcoming such an ingrained culture and that leaves gaping holes for online advertising to bleed away to alternatives.

3. data acquisition, storage, association, and reuse: which includes privacy concerns. And which, to me, is by far the greatest Google concern. Their thirst for data is inherently opposed to the principles of privacy.

It is obvious from just about every statement any Googler of authority has ever made that while they understand the theory of personal privacy they are totally blind to Google, as universal depository, being a privacy concern. Their inability to connect the dots is almost pathological. Evil is in the eye of the beholder...

[projectphp]

Change of direction: mono;polies are bad because they restrict competition and lead to price rises.

Question: in an auction model, is that point moot?

[Andrew.Williams]

Well, not when the auction model can set a minimum bid.

Do you guys think sourcetool adds any value to the internet?
It seems their whole point of existence is ads, there does not seem to be any value added.
Although Google is a giant, there still are things they depend on, such as profits from advertising. If everyone played the system without actually adding any value, then Google would go out of business.

I think Google needs to communicate more and connect more. Yes sure if they are open then people will know how to play them, but it is not like they aren't being played, sourcetool being a case in point.

Google needs to be more responsive towards concerns people raise. Same way as that guy wrote on the board to them business people to not be evil, so too we want to tell Google to not be evil, and more importantly to tell us that it is not being evil.

There was a post some while ago about Google opening up and being more transparent. I see no such move being made.

Is Google a predator? I think it is more of a father figure, taking care of the internet for us. But the interests of father and child conflict greatly at times, and love can very easily be turned to hate if communication breaks down, which seems what is happening with Google thanks to their awesome customer service.

[projectphp]

Well, not when the auction model can set a minimum bid.

Hmmm... really?

Surely there is a minimal return for effort. The processing power for $0.00000001 hardly seems worth the effort! Would that even pay for the storage of a byte?

Seems to me that a fair and equitable market can't be a "monopoly", even when it is. I am trying to grasp how a Google "monopoly", which is in " quotes because it is contentious, is potentially bad such that stoping the monopoly is in societies interest.

I mean, how could / would they do the things that make a monopoly bad (inflate prices)? If someone can answer that, I'm all ears.

I am all for the other issues, privacy, control of information, whatever, but economically speaking, and I am poretty sure monopoly is either the name of a board game or an economic term, economically, seems to me that their model can't create teh bad a monopoly does.

Now, with other things, like banner ads, they MIGHT, but in other areas I am struggling to see the issue.

This post has been edited by projectphp: Sep 14 2008, 07:23 PM

[EGOL]

Google has limited ad space on their website just as I have limited ad space on mine. If they allowed every person on the planet to bid the minimum on every keyword they would not have enough space to display all of the requested ads.

So they implement minimum bidding.

Factors that determine which ads are displayed...

1) bid amount (to maximize income)
2) relevance of ad (to maximize clickrates)
3) landing page quality (to maximize advertiser ROI and minimize crap seen by searchers)

Mr. Savage's advertising was probably showing relevant crap to searchers and delivering traffic to advertisers that did not convert.

Google did not refuse to show his ads. They simply requested a rate that was proportional to the degree that the ads were stinking up their SERPs.

Some people are offended because they believe that they have a "right" to run any ad for the minimum bid... they mistakenly think that Google has no "right" to quality control on google.com

This post has been edited by EGOL: Sep 14 2008, 07:35 AM

[Andrew.Williams]

I mean, how could / would they do the things that make a monopoly bad (inflate prices)? If someone can answer that, I'm all ears

In other auction models there of course is a minimum bid, but that minimum bid is the same for everyone. In the Google auction model the minimum bid is based on individual websites.

Based on the NYtimes article, this minimum bid is based on landing page quality, apparently through some algorithm. The article though seems to be asking why did sourcetools get burned, while business.com a Google partner seems to be fine although according to the article both sites perform the same function.

It would be hard to doubt that Google raised their minimum bid because they saw that they were making no profit and actually loosing money out of sourcetool, and maybe also because they saw sourcetool as a competitor.

In such light, Google is acting like a monopoly because they can set a minimum bid based on individual sites and this minimum bid may or may not be manually selected. If there was some decent competition then maybe things would be different.

Google seems to be comfortable right now, one wonders whether they will stagnate thanks to this comfort. Google seems to be authoritative maybe because it knows that advertisers and publishers alike do not have much other choices.

I read this wikipedia article which had a list of some "laws" and one of them was that if circumstances are right, competition does well in being as identical as possible to each other. I think the circumstances are right for Yahoo to have as identical a business model as google rather than what seems a "merge" in the advertising front.

Who is to say that just because Google does not like me, either for fear of being a competitor or because it sees me making profit off its back or whatever other reason such as some agency has influence with them and seems to not like me, that Google will not raise the minimum bid for me to some level where it makes no economical sense. They might and probably would, because they can, but if there was some worthy competitor then they might think twice about it.

[eKstreme]

A related development via Wired:

The World Association of Newspapers is asking the US Department of Justice, the European Commission and the Competition Bureau of Canada to block the pending Google/Yahoo ad search deal, saying it would cripple newspapers who benefit form the competition.

Sounds ominously like momentum is gathering, rightly or wrongly. This could turn really bad really quickly for Google.

Pierre

[projectphp]

Based on the NYtimes article, this minimum bid is based on landing page quality, apparently through some algorithm. The article though seems to be asking why did sourcetools get burned, while business.com a Google partner seems to be fine although according to the article both sites perform the same function.

But see, here is my issue: that has nothign to do with monopoly pracftices, and everythign to do with an unfair and unjust system. If Google was a small player, it would be just as "wrong".

It would be hard to doubt that Google raised their minimum bid because they saw that they were making no profit and actually loosing money out of sourcetool, and maybe also because they saw sourcetool as a competitor

That's borderline libelous - and I mean that in the legal sense. You are saying Google did this specifically to stop him, and I wonder what proof you have of that.

In such light, Google is acting like a monopoly

Even if I accept that they are stopping sites for bad / unethical / illegal reasons, and I concede no such point, but even if they were, that doesn't mean they are "acting like a monopoly". They are just acting improperly. If they were Yahoo and doing this, it would still be bad. IMHO, bad business != monopoly, and bad/unethical/illegal business practices do not make you a monopoly just becuase it is combined with a large market share.

IMHO we get this monopoly talk for the twor easons that Google are large and the connotation of monopoly is stronger.

IMHO, eBay is a bigger "monopoly" in terms of marketsahre, but an auction format seems to naturally counter that fact to a large degree.

Google seems to be comfortable right now, one wonders whether they will stagnate thanks to this comfort

They'll stagnate for a more simple reason: market saturation.

>>fixed quote - iamlost

This post has been edited by iamlost: Sep 15 2008, 09:23 PM