FTC Report

Google: Good Guy or Bad?

Google searchWhat is Google up to?

In the technology world, Google is mostly seen as a good guy. Of course, its development of the working search was a critical contributor as was Apple with the personal computer and Microsoft with PC software. In none of the cases did any of those companies invent their key products; they just made them useful and lasting.

Google has spread its efforts in a broad range of efforts: Android, Google Glass, Wi-Fi blimps, community internet fiber service, self-driving cars. and who knows what else. The problem is these lines don’t make money and mostly, perhaps all, never will. Even Android, the world’s largest supplier of smartphone software, whose popularity and unprofitability share Google’s decision to give it away. All of these efforts generate lots of support for Goggle among techies.

Search matters. But the thing that really matters is search and its related efforts such as mapping. That’s where most of the revenue and all of the profit comes from. It is an area where Google is not restricted to colorful campus bicycles and cute offices. Google is tough, fierce, and probably just clever enough to stay on the right side of the law.

FTC ReportA great deal of information on Google search opportunity came in a 2012 Federal Trade Commission staff report that was released, sort of, in response to a request by The Wall Street Journal. Sort of because the FTC really did not intend to release the document and what it sent by accident was every other page. (I’m grateful to the efforts of Danny Sullivan of Marketing Land to publish text and comments on the report in a series of tweets.)

The FTC study found a number of cases where Google attacked its competitors, especially the “vertical” searches that focus on specific areas. One section dealt with a feud between Google and Yelp, particularly after Google’s attempt to buy Yelp. “Google agreed to remove–and did remove–Yelp’s content,” the report said. “However, after offering its own review site for more than to years, Google recognized it had failed to develop a community of users–and thus, the critical mass of reviews–that it need to support its local product. In an attempt to gain quick access to a large storehouse …” Unfortunately, the completion of the sentence ran onto a missing page. Other companies whose own search operations were seen as competitors by Google: Amazon, TripAdvisor, CitySearch and others. The staff found the pressure on verticals bothersome, but not enough to justify an FTC action.

Scraping suit. It was more prepared to take on Google’s use of content scraped from vertical searches: “Google’s threat also sent a message to the broader marketplace that Google could, and would, use its monopoly power over search to extract the fruits of its rivals’ innovation.” The FTC staff also found violations in Google’s requirement of “anticompetitive, exclusionary agreements” with web sites for syndicated search and AdSense plans.

The staff wanted to bring legal action against Google, but the FTC commission decided not to go to court and settled for a mild agreement instead. The Journal may have gone a little over the top with the story that suggested the decision may have been the result of close relationships between Google and the Obama administration: “Google’s access to high-ranking Obama administration officials during a critical phase of the antitrust probe is one sign of the Internet giant’s reach in Washington. Since Mr. Obama took office, employees of the Mountain View, Calif., company have visited the White House for meetings with senior officials about 230 times, or an average of roughly once a week, according to the visitor logs reviewed by the Journal.”

Google friendships. There certainly is a great deal of friendship between Google executives and administration officials.  Several Google executives have held government posts and Megan Smith left a vice president’s job at Google to become the White House’s Chief Technical Officer. (( The idea of executives taking a role in the government is hardly new. General Motors CEO Charles E. Wilson declared what “was was good for our country was good for General Motors and vice-versa” when he was nominated as President Eisenhower’s Defense Secretary. Hewlett-Packard founder and CEO David Packard served as Deputy Defense Secretary under President Nixon. )) But the suggestion the FTC decision was a gift to Google buddies won a heated response from the commission. Chairwoman Edith Ramirez and Commissioners Julie Brill and Maureen Ohlhausen issued a response:

Today’s Wall Street Journal article “Google Makes Most of Close Ties to White House” makes a number of misleading inferences and suggestions about the integrity of the FTC’s investigation. The article suggests that a series of disparate and unrelated meetings involving FTC officials and executive branch officials or Google representatives somehow affected the Commission’s decision to close the search investigation in early 2013. Not a single fact is offered to substantiate this misleading narrative.

It could be that Google used its weight to get the statement issued, too. But that’s pretty unlikely. There are a couple of truths. Knowing how to stay this side of the law when you go close is vital. And making friends with the government is a good idea. Any big company with intelligence learned this from Microsoft.

But Google has also proved that, while it and its fans  have a lot of fun with experiments that don’t make profits, remembering that it is tough search that makes the money. Lucky Google competitors get bought; the rest are likely to be eaten.

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Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.

36 thoughts on “Google: Good Guy or Bad?”

  1. I’m amazed that kind of question even gets asked: I’m not aware that profit-seeking has any kind of morality. That goes either way: corps are not good or bad, they’re just greedy. That goes for Google, Apple, MS, IBM, Oracle, Facebook… After the banana wars, Bhopal & its aftermath, etc… that’s kind of obvious.
    They’re kind of reined in by laws and customer concerns, but customers are blinkered and selective, if they can even be bothered at all to think about that stuff, and politicians need campaign contributions and consulting jobs.. hence pizza is a vegetable, kids’ health be damned.

    1. Obviously, there are many ways to skin this. Of course there is a view that says maximize profits at all costs. But I tend to appreciate Adam Smith’s view when he was outlining the advantages of capitalism on how business and individual ambition exist for the common good. We can extend this in so many ways, but obviously the values of the leaders set the culture.

      1. Do you have any example of a big, successful corp that doesn’t have horrendous, often literal, skeletons in its closet ?
        Even churches/religions, who are not (supposed to be) driven by the profit motive, can commit incredible evil for the sake of expanding their power and protecting their own.

        1. Mrs. Palin’s “death panels” exist in many places and organizations, and unlike her famous comment, those who die as a result of corporate actions never get to appear in front of said death panel.

      2. The amazing thing about capitalism is not how well it works, but that it works at all. Think about it, millions of independent economic actors pursuing their own self-interest but together creating a highly functional and efficient system. Amazing.
        That said, companies are notoriously bad at dealing with “externalities”, i.e. where they engage in a profitable activity that has severe adverse consequences for others. There are many examples in mining, oil&gas, chemical industry, semiconductors and food industry; where a profitable company ended up poisoning its workers, customers and/or environment. Usually not as a result of sheer evil, but more a kind of wilful neglect and focus on the money. To understand businesses, I tend to look at incentives because they point to where the behaviour will end up.
        Google, I think, has a very specific problem. They are a very dominant company in providing search, which that has come to be regarded as a utility and is something that businesses and consumers rely on. In anti-trust enforcement that is a very dangerous position to be in because a coalition of businesses, consumers, regulators and competitors might (not so) suddenly emerge to police the behaviour of the would-be monopolist.

      3. Hey, I’m gonna play quoty-guy too: here’s some Adam Smith

        “The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.”
        “I have never known much good done by those who affected to trade for the public good.”
        “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.”

        and a bonus, unrelated one: “Virtue is more to be feared than vice, because its excesses are not subject to the regulation of conscience.”

        1. Quotes out of context, from the worldview that born them at the time (or the world as it was then, but is no longer now), are always fun to play with. Let’s move to the old testament next. 🙂

          Let’s hope the evolution of human consciousness is dynamic and not static.

  2. “And making friends with the government is a good idea. Any big company with intelligence learned this from Microsoft.”

    Funny you bring up a computer company as an example. I think the oil and military/industrial companies are a much more prominent example of the point you’re making. Heck, pharma, and insurance are better examples too. And longer practicing as well.

    1. I used Microsoft for two reasons. One, of course, is that its another tech company. The bigger one was that its failure to establish relationship with the government plaid a significant part in how the Justice Dept. handled the 1998 antitrust case. The suit did enormous harm to Microsoft and forced them to learn.

      1. I see your point. I was under the impression (unscientific) that the government let them off easy and didn’t break them up, due to relationships with the government.

        1. The Justice Department backed off the goal of breaking up Microsoft (which was declared a monopoly) after a change in Presidential administrations.

          You’ll never guess the political party that opted to “let them off easy.” You could say that Microsoft had developed a “relationship” with a particular presidential candidate… then your “unscientific” impression would be correct.

          1. More complicated than that. Remember the settlement was in the after spell 9/11 of the attack. The White House wanted to get rid of the case, which was hidden in the mess of the dismissal of Judge Thomas Pennfield Jackson. Both the White House and the assigned judge, Colleen Kollar-Kotelly, wanted the case settled. Microsoft was able to hold out for a favorable deal. But the truth is the case did Microsoft immense damage without much of a settlement.

          2. The suit damaged Microsoft? Seems to me they merely had to publish some APIs, submit to some monitoring, and collect more money.

            Microsoft engaged in serious anti-competitive behavior, stifled innovation, and dominated a market with second-rate, security-addled bloatware and vaporware.

            While neither you –nor I– will ever know all the reasons why a hard-fought and successful anti-trust lawsuit ended with a wrist slap, the electoral/political timing cannot be dismissed so easily. Clearly the EU didn’t cave.

          3. Yup! They did all those things, and they should have been busted up, er, “deverticalized”. You know who’s worse….?

          4. That Microsoft engaged in anti-competitive behavior, stifled innovation, and announced vaporware initiatives to freeze-out investors in –and/or adoption of– competitor’s products are Finding of Fact in federal/state court records. The bloatware remark is my opinion.

            But I’ll bite: does it rhyme with “Snapple?”

          5. Well yeah. Frankly the only thing stopping something similar happening to “Snapple” is lack of 90% market share. Imagine MS of that era deciding what gets to run on Windows through an “approval process”. It was bad enough they used private API’s in Windows to give Office an advantage. Flat out approval required?


            -One store allowed for tablet and phone SW.
            -Policy that states you can’t “duplicate functionality”.
            -Public position that jailbreaking is illegal.
            -Companies who’s livelihood of depends on Apps must not fall out of favor, lest they not get “approval”.
            Bad as MS was, and they were, they didn’t do that.

          6. Comparing Apples to Oranges (see what I did?).

            iPhone and iOS devices were set up with a walled garden from the very beginning (OK, from the time 3rd party apps were allowed). Apple completely owns the platform and is the sole provider of hardware. By design.

            The situation is completely different from the IBM-compatible world of the PC, which was supposed to be open and agnostic.

            For a better comparison, Apple doesn’t have the same restrictions on the Mac (except for what it sells through the App Store, which Apple owns, so they aren’t forced to carry ALL products anymore than Walmart or Sears).

            But the iOS world is locked down by design. And that’s why we don’t read about viruses and botnets in the iOS world every other week. It isn’t anti-competitive to offer a product that isn’t an open platform. It’s called offering a product.

          7. It’s not as if Apple hired all these developers. The problem is that it’s semi-open, that is third parties are encouraged to invest their time, talent, and treasure, with severe consequences if they don’t “play ball”. Worse! The customer’s options are by necessity limited. This hurts the market. That’s why we have anti-trust laws.

            Still, I accept your argument for now. Thought experiment…will you still believe the same at 90% iOS market share in mobile?

          8. One of my fears is that Apple is becoming the next Microsoft. That and clowns.

            If Apple gets to be that big (and that abusive), I can imagine myself seeking alternatives.

          9. MS tried to make their league and got (rightly) shut down. See, it was market share that did them in, there was no “law” for openness. They too tried to make their own rules. Rules that limited the market, and ultimately the customer.

          10. Well, MS also got paid for PC sales even when Linux was being installed on the box. They kinda abused their position over manufacturers and retailers – dictating what third party software could be preinstalled and arbitrarily modifying pricing structures to punish those who didn’t get the message. And then the arbitrary changes to system APIs that rendered their competitors products inferior, etc.

            It seems to me that Microsoft’s only real innovation was in designing license agreements and sales contracts.

          11. PS- I forgot to mention. Do you not pay for OSX even if you choose to load Windows or Linux? Please don’t tell me that fiction that it’s “free”.

          12. The critical difference, from a legal prospective, if that Apple makes both the Macs and OS X and Microsoft forced Windows installation on PCs made by others. That may not seem like much of a difference, but legally it is the world.

            Probably the most important was the attack on Netscape to promote Internet Explorer. Microsoft left a bad case in a careless record. If Apple were behaving as badly as Microsoft in the 1990s, and I don’t believe it is, it would be careful enough to hide the evidence. I think Google is a lot more likely to make an attackable mistake.

          13. Thanks for the concise reply to this point. Couldn’t have put it better.

            Running Windows is sufficient but not necessary to be “IBM compatible.” But to be a “Macintosh computer” the machine has to have Mac OS; Apple doesn’t hamper your ability to install a different OS. But it’s a hard argument to make that an Apple-deigned computer should be OS agnostic in the interest of fair competition.

          14. I see no evidence of antitrust violation by Apple. There was a time when a company could be punished simply for being too successful–winning a market share too big–but that is long gone.

          15. So then I assume you feel the same about MS then? Other than market share and being too successful and all…

          16. I see no evidence, either. I think the differences between Apple’s walled iOS garden and the abuses employed by Microsoft– in their quest to limit & control the multi-vendor PC world– are vast.

            Apple has never remotely behaved the way Microsoft did with Novell, Netscape, or the host of other companies who found they simply couldn’t compete once Microsoft targeted their domains.

            That’s not fanboyism. Its just reality.

          17. The damage was not the formal requirement of the settlement, which was little but a nuisance, but the impact that the trial had on Microsoft’s top management for years. Worry about a future case is a bad influence on thinking. I saw it happen to other companies including, notable, IBM after winning a case in the 1980s.

  3. By the way, if you are looking for another Google reach to an area where its doesn’t know anything, Business Insider reported today that the company is working with Johnson & Johnson on surgical robots. Hard to see how that fits Google skills.

    1. I do worry about Google’s lack of focus. Their costs are running wild. They seem more interested in pie-in-the-sky projects than they care about their daily bread and butter from the humble advertising business. This is not going to be a happy ending.

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