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Ignorance and riches

"Google's ad prices are set by competitive auction, ensuring that prices are market driven," the Google presentation reads. But this isn't an auction where bidders alone determine prices. You can't bid your way to the top of Google's search ads. The company's mystery quality score restricts how high an ad can climb on a results page, and that's an obvious influence on bid prices - especially with new and inexperienced advertisers.

There are good reasons for quality scores. Google hopes to ensure that the most relevant ads appear at the top of the page. But this is Google's definition of relevant. And its spinmeisters overplay the ability of its mystery algorithms to match ads to whims of the world's web surfers.

With its quality scores and its so-called "broad match" tool, Google may change its search ad placements at any time - without approval from advertisers. One day, your ads may suddenly appear alongside search keywords you have no interest in - and you'll pay for those ads. Yes, you can turn broad-match off. But like so many Google ad tools, it's on by default, and you have to wonder how many advertisers know what's what.

The trouble is that Google's riches depend on user ignorance. If broad match was opt-in only, the company's bottom line would plummet. And if Google were equally up-front about its data-retention policies, it couldn't create a second cash cow through behavioral-targeted display ads.

Google's Capitol Hill presentation insists that none of the 2007 fears over its merger with DoubleClick were ever realized, that independent sources hail its new "ad preference manager" as a "giant leap for privacy." But the preference manager is no more than genius PR, a successful attempt to deflect conversation from what really matters.

With its new interest-based advertising behavioral ad system, Google is apparently tracking user behavior across both its DoubleClick and native AdSense sites. But the PR machine won't talk about that.

The real question is: how much of your surf data is Google storing and how long is it stored for? When the subpeona comes or the national security letter or the hack, what will be there? But in this case, Google seems to think, closed is better than open. In September, Google told the world it was "going to anonymize" its search logs after only nine months - down from the current 18. But more than half a year later, the company has yet to say whether this plan has actually been put in place. And even when this nine-month anonymization plan does arrive, it won't actually anonymize after nine months.

As Google points out, both Yahoo! and Microsoft have mimicked its quality-score trick. And its two search competitors play their own privacy games. But Google controls upwards of 60 per cent of the search market. And by some accounts, the combined Google-Doubleclick controls 57 per cent of the non-search ad server market.

For an advertiser, turning elsewhere may not be an option. And for the average web surfer, the privacy threat looms all the larger.

Google says that "competition is one click away," pointing to a famous January incident where a malware tracking snafu put its search engine out of commission for nearly an hour. Yahoo!'s search traffic doubled during that hour, and Google claims this as evidence that its market dominance could vanish at anytime. But once that hour was over, the web returned to normal. In the months since, Google's market share has only grown.

If anything, the great malware snafu proves that competition isn't a click away.

Which is only to say that the DoJ was right to flex a little muscle in response to Google's Yahoo! ad pact - just as regulators in the EU are right to apply continued pressure over its privacy policies. What we need is an open Google. And in claiming it's committed to openness, Google has done nothing but show that it's not. ®

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