Google: We’re Not Really That Big But If We Are, We Aren’t Bad
The NY Times offers a broad article about Google’s efforts to define, explain and clarify its place in the market in the face of increasing anti-trust scrutiny (Google Makes a Case That It Isn’t So Big). There are currently three Justice Department investigations pending that involve Google, concerning its Book Search settlement, overlapping directors with Apple (there are two) and hiring practices at a variety of technology companies including Google.
Arguably the most successful internet company today, with roughly 30 percent of all online ad revenue according to estimates the company itself is circulating, Google unquestionably dominates the search market in almost every major country but a small handful (one of which is China). Against this larger backdrop, Google is trying to reframe or at least influence the discussion regarding how the company should be viewed. To that end, Google held a meeting for reporters and media outlets several weeks ago in which it sought to directly address many of the issues underlying the debate over Google’s position and power.
The slides and talking points distributed at that meeting, “Google, Competition and Openness,” remind people that yesterday’s dominant internet and search companies are, in most cases, either defunct or on life support today (e.g., Alta Vista, Lycos). Thus, the argument goes, the market is fluid and no one can assume Google will remain on top several years from now. Among other data, Google also offers an interesting chart where it compares itself to companies such as Microsoft, AT&T, Verizon and IBM. In every category (market cap, revenues, lobbying budget) it is the smallest of the five compared. Google also argues throughout the presentation that the company and its policies are about fostering and facilitating rather than eliminating competition.
On the question of whether its position is unassailable, Google cites lots of third party data and even recent Bing market share gains in support of the notion that most consumers are fickle and willing to switch search engines. And as we said previously the company is gently pushing the notion that the relevant lens through which to view Google is the totality of US advertising, where it has less than 3 percent, rather than simply the internet.
Depending on how jaundiced one is, these arguments can either strike you as cynical and calculated or (somewhat) persuasive. I tend to fall into the latter group, although I use the qualifier “somewhat.”
It’s almost impossible to believe that Google is like Lycos or Alta Vista and that in a few years it will potentially be sidelined by some as-yet-unknown competitor. To date Google has resisted a wide range of would-be “Google killers.” That’s not to say it can’t lose market share or that another entity might not be able challenge it in some unforeseen way. Early on, for example, Google failed to appreciate the importance of social networking. Today the mobile market represents another such opportunity and arena for new competitors to emerge; however in conventional “mobile search” Google already has a lead that parallels its PC search leadership.
There are both technical-legal and philosophical questions behind the debate now surrounding Google. If a company is successful and powerful, but hasn’t manipulated markets or engaged in unfair competition should it still be closely scrutinized and potentially regulated? Some consumer and privacy groups contend that Google simply has too much access to consumer data with the resulting potential for abuse and object to Google accordingly. See, for example, this article in MediaPost about how Google is using consumer credit score data to improve ad targeting:
Google has been testing the ability to lay consumer FICO scores on top of its Google Content Network to identify people with good credit. The strategy will enable the search engine to help advertisers target a specific type of consumer through display and text ads, according to Masha Korsunsky, Google’s senior industry marketing manager, financial services.
The project is one of two initiatives that Google recently explored to help advertisers reach “credit-worthy consumers” online. For both projects, Google partnered with Compete and the research firm’s 2 million U.S. consumers who opt into these types of projects.
Korsunsky says Google’s Content Network can reach 70% of credit card applicants with a high FICO score, 87% of mortgage applicants with a high FICO score, and 90% of the people who visit small business sites who have a high FICO score.
That kind of thing is very scary to consumer advocates. But see also Google Deputy General Counsel Nicole Wong’s recent Congressional testimony on behavioral advertising in which she discusses how Google is more transparent than its competitors:
The issues here are many and complex, sort of like Russian nesting dolls with one inside the next. No doubt we’ll be un-nesting, debating and discussing how Google should be seen and treated for months, even years to come. Is Google too big? If so should that trigger regulation or does it also need to be bad? And what does that mean exactly?
You Know I’m Bad, I’m Bad – You Know It
(Bad Bad – Really, Really Bad)
You Know I’m Bad – You Know – Hoo!
(Bad Bad – Really, Really Bad)
You Know I’m Bad – I’m Bad – You Know It, You Know
(Bad Bad – Really, Really Bad)
And The Whole World Has To Answer Right Now
(And The Whole World Has To Answer Right Now)
Just To Tell You Once Again…
(Just To Tell You Once Again…)
Postscript: Google offered the following clarification and correction to me about how it targets by FICO score on the Google content network:
Google did not get — and does not have — information about the credit scores of individuals. Compete conducted a clickstream analysis on their opt-in panel of 2 million US online consumers, to associate FICO score categories with sites in the Google Content Network. Google received information about the scoring/ranking of the GCN sites from Compete — not any information about the credit scores of individuals. The . . . research has given Google more insight into the demographic(s) reached by GCN sites, without sacrificing privacy; individual data was not tracked or received by Google.