Why probe Google for antitrust? It 'does no evil'
Prof: Google ads aren't ads
Supernova For Eric Clemons, Google's oft-echoed claim that it doesn't believe in doing evil is reason enough to investigate the web-dominating search giant for antitrust violations.
Clemons is a professor of operations and information management at the Wharton School of the University of Pennsylvania - a computer-science mind employed by one of the country's leading business schools - and in recent months, he's made quite a name for himself with his ongoing scrutiny of Google's search platform.
This morning, Clemons appeared at the annual Supernova tech pow-wow in downtown San Francisco to present his case for why such scrutiny is so important. As he pointed out repeatedly, he's not arguing that Google should face antitrust litigation or that it would crumble under such litigation. He's simply saying that investigation is warranted - for many reasons. Including the infamous "do no evil" bit.
"Doing no evil. If you say that, you have to be looked at," Clemons told today's conference. "Anybody who argues they're doing no evil while making amazing profits deserves a quick - or a not so quick - look."
What's more, he says, those profits could allow the company to "spend its way out of trouble. They've got enough money to hire a better set of lawyers than the Department of Justice."
The issue, of course, is that Google controls roughly 70 per cent of the web search market. Google can argue that its share of the global economy - or even the online advertising market - is relatively small. But Clemons questions whether Google's position is analogous to Microsoft's boondoggle of the late 90s, when it faced antitrust litigation. As you may remember.
"[A key term is] relevant market share," Clemons said. "Was Microsoft just another software firm with 2 per cent of the software market or was it a near monopoly player in operating systems? Or is it just another form of advertising? Is search an essential utility?"
For Clemons, Google search is not just another form of advertising. In fact, he says, it's not a form of advertising at all. "We know what advertising is. Advertising creates a desire to buy now. It creates a brand trust and brand awareness... What Google does is it hijacks brands."
You know the drill: When you search for a particular brand, you may find several paid links that lead you to sites that don't actually own that brand. "Is this advertising?" Clemons said. "I really don't think so. Advertisers really don't have a choice."
Sure, he says, advertisers can advertise elsewhere. But that's no substitute for search, an essential online utility. "If you lose access to an essential utility, you are essentially dead." The web has become so essential to consumers - and search has become so essential to the web - that advertisers have no choice but to give Google their money.
Google argues that there's no possibility of antitrust violation here because it doesn't set prices, because advertisers bid for the placement of paid links. And it says the AdWords platform is geared to give brand owners prime placement above the knock-offs. But there's a contradiction there, and for Clemons, the setup is merely geared to maximize Google's revenue.
"If you put Marriott at the top [over knock-off sites], it's a revenue enhancer that also preserves Google's reputation," he said. "I'm not saying this is good or evil. But I'm saying that calling it good is actually the same as calling it greedy. It's done because it works."
Google, he argues, has created a system that takes bids when no bids are needed. "It can accumulate a cash hoard of tens of millions of dollars while charging companies to buy back their own names and then listing everything in exactly the order it would have been had no one bid at all."
As Clemons points out, it's a genius business model. Unless the DoJ decides it's not. ®