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Google AdSense Lawsuit Spotlights the Corruption of Unaccountability -- Part 41 Google Unaccountability Series
Submitted by Scott Cleland on Fri, 2014-05-23 17:46
What people don’t know about the recent class action lawsuit filed against Google AdSense’s alleged embezzlement of earned revenues from shutting down of AdSense accounts, is that this lawsuit does not depend on any of the evidence of the high-profile whistle-blower that originally brought lots of attention to this alleged AdSense embezzlement racket a few weeks ago.
Under California law, the class action only needs to show that Google wrongfully pocketed earned-revenues due to its partners under Google’s own contract terms. Let the discovery begin and let the facts determine the outcome.
Google protesteth too much. Google executives appreciate their unaccountable advertising business practices cannot withstand close public and legal scrutiny.
Don’t forget that Google’s advertising practices were so systematically corrupt from 2003-2011 that Google had to pay a near record $500 million criminal forfeiture penalty. The charges in this AdSense class action lawsuit are sadly very much in character with Google’s unaccountable way of doing business – around the world.
Simply, this lawsuit argues that Google’s marketplace application of its AdSense Terms-of-Service is so unaccountably capricious that it is a breach of contract and fair dealing, unjust enrichment, and most specifically, a violation of California law that requires Google to pay out what has been earned under the contract in the liquidation process of a business relationship.
At core, the case alleges that Google routinely terminated publishers near the end of the month and then wrongfully withheld earned payments with no real recourse for the terminated publishers. If the facts show that Google did not in fact engage in a pattern of terminating publishers near the end of the month for the >250,000 publishers Google admits to having terminated, and that Google regularly paid out what had been earned to those terminated publishers, then Google has nothing to worry about here.
Tellingly, Google is obviously very worried. They are doing their best to discredit the claimed whistleblower as a fake, who is pushing a “fake conspiracy,” and part of a “dirty tricks campaign” and a grand anti-Google conspiracy. If there is no truth to these allegations then why is Google defensively engaging in an ad hominem, political smear campaign, rather than just explaining how Google’s process actually works?
So why is Google so worried?
This case threatens to bring the accountability and the legal power of the discovery process under oath to the doorstep of Google’s biggest vulnerability – its unaccountable market power to treat people the way they never would want to be treated themselves.
The epicenter of this issue is the reality that Google advertising is practically a must-have platform for online publishers and advertisers. Combine this with the substantial lack of external competition, transparency, and oversight that Google faces, and also with Google’s own internal culture of unaccountability, and one learns Google is largely unaccountable to anyone, which naturally is a very corrupting power dynamic.
As Lord Acton wisely said “absolute power corrupts absolutely.” Applied to this situation, Google’s profound unaccountability corrupts profoundly. Simply, Google mistreats people because they get away with it.
Let’s start with exposing the opacity of Google’s terms-of-service that Google hides behind to justify its alleged Google AdSense embezzlement racket.
Last fall, scientific researchers from the University of Nottingham determined that Google’s latest Terms-of-Service, including Google AdSense, “are more difficult to understand than the Anglo-Saxon saga Beowulf” and also “more complicated that Leo Tolstoy’s novel War and Peace,” per reporting by the Daily Mail. Simply, opacity is the friend of unaccountability.
Now let’s move on to examine how this alleged Google AdSense embezzlement racket is part of a broader pattern of unaccountability in Google’s advertising operations via AdSense and AdWords.
This alleged AdSense embezzlement racket is far from the first time we have heard of Google acting unaccountably with others whom it should treat fairly in a normal business environment.
To start it is important to understand the source of Google’s unaccountable power. As the only entity that serves most of the world’s online publishers, advertisers and users, Google dominance affords it rare take-it or leave power in most all facets of the business realm of search and online advertising.
Google’s dominant publisher network (>2 million) is the only platform where publishers can go for access to most all online advertisers. Tellingly, Google requires these “partner” publishers to offer Google search, maps etc. by default.
Google’s dominant advertiser network is the only platform where advertisers can go to gain access to most all users. Tellingly, Google limits how advertisers can interact with smaller competitive platforms.
Google’s dominant user network is the only platform where users can go to access all the information. That’s because Google denies its competitors access to Google’s YouTube, Books, etc.
Why it is not wise for Google or its defenders to be so categorical in their denials of potential AdSense corruption here is that this is not the first time Google was accused of widespread multi-year corruption in its advertising operation that later turned out to be true. Google then was forced to admit its criminal wrongdoing in a federal Non-Prosecution Agreement.
Now let’s catalogue some hard-to-refute public evidence that Google’s market dominance affords it unaccountability to its users, advertisers or publisher partners.
In 2011 in a criminal non-prosecution agreement, Google admitted to knowingly and repeatedly violating Federal criminal laws against the “unsafe and unlawfulimportation of prescription drugs" into the U.S. from 2004-2011 by knowingly facilitating advertising for illegal activity. For this, Google paid a near record $500m criminal forfeiture penalty. The Rhode Island U.S. Attorney who led the Google criminal probe said the evidence was clear that current Google CEO “Larry Page knew what was going on."
Has Google cleaned up its corrupt advertising operation as a result of this half a billion dollar criminal forfeiture penalty? Sadly, the answer apparently is no, because corrupt Google advertising practices continue via AdWords and AdSense via illegal advertising on Google-YouTube.
Just last November, Mississippi Attorney General Jim Hood wrote to Google CEO Larry Page in a (11-27-13) letter: “In my 10 years as attorney general, I have dealt with a lot of large corporate wrongdoers. I must say that yours is the first I have encountered to have no corporate conscience for the safety of its customers…” “Although Google claims to be interested in cooperating with state attorneys general, it is unwilling to take basic actions to make the Internet safe from unlawful and predatory conduct, and it has refused to modify its own behavior that facilitates and profits from unlawful conduct,” like advertising illegal drugs and stolen goods for sale.
Even after another serious warning by state attorneys general in the November 2013 letter, a 2014 Digital Citizens Alliance report entitled “Digital Weeds: How Google Continues to Allow Bad Actors to Flourish on YouTube,” shows evidence of how Google continues to present advertising for searches such as these: “Buy Percocet without a prescription;” “buy steroids online;” and “find underage prostitute.” See more evidence of Google-advertising-related-corruption here.
Consider how corrupt Google’s advertising practices have continued to be over the last few years when they did not inform either Gmail advertisers or Gmail users that Google had dramatically changed how it was collecting private information on Gmail users for serving Gmail ads in 2010-2014. Ironically we learned from discovery in another federal class action case against Google involving Gmail wiretapping, that Google has been intercepting and reading all Gmail -- before it was received by the recipient using a device called “Content One Box” -- for over three years without any disclosure to users or Gmail advertisers. This is a classic unaccountable practice, that Google can make major changes in the way they do business with users and advertisers without the knowledge or consent of users or advertisers, and without regard to violations of Federal laws.
Tellingly, when Google finally updated their Terms of Service to sort-of cover this Content One Box practice, Google’s Chairman Eric Schmidt subsequently said on CNBC that “We disclose exactly what we do.” My guess is that the class action plaintiffs in the alleged Google AdSense embezzlement lawsuit do not agree with Google’s Chairman that Google discloses exactly what they do with terminated AdSense accounts.
Finally, consider how capriciously Google treats its publishers and advertisers in updating its search algorithm in its “Panda” updates without warning or appeal. It is eerily similar to how Google abruptly terminates publishers without warning, explanation, or appeal.
Just this week the Google Panda 4.0 update, out of the blue, changed the traffic that Google sends to sites dramatically. Interestingly, a Top 25 Alexa ranked website – eBay.com, experienced a 33% drop in their traffic overnight from the latest Panda update, with little to no warning or recourse except to pay Google for more Google advertising. Panda 4.0 also eliminated 80% of eBay’s best search listings per Business Insider.
To see other sites that were capriciously crushed by Panda 4.0 without warning or recourse, see the U.S. list of sites affected by Panda 4.0 from Search Metrics.
Also this week, Fast Company reported that “online community MetaFilter, home to one of the Internet's most loyal fanbases, just laid off much of their small staff in the wake of a sudden 40 percent dip in readership [from a Google Panda search algorithm update]. Will the traffic ever come back?” Business Insider’s MetaFilter headline was: “Google is killing a beloved site and no one can figure out why.”
For anyone in the online publishing business, these are just a couple of the latest examples of countless publishers that woke up one day to find that the businesses they built up based on Google’s rules have been crushed because Google changed its dominant opaque search algorithm radically without warning, explanation, or appeal by Google’s “partners.”
And with self-serving circular logic, Google says it can’t give publishers any information to help them rectify their situations because that information would allow them and others to game the Google advertising system. This self-serving circular logic ensures no Google accountability to or from publishers, advertisers or users.
In sum, many have been too quick to absolve Google of any responsibility, liability or wrongdoing here, given that Google has acted in unaccountable and capricious ways often in the past.
If Google had a good track record of treating users, advertisers and publishers as Google would want to be treated themselves, this Google AdSense embezzlement racket lawsuit never would have been filed and no one would have any reason to imagine that Google could be engaged in such unlawful, unfair, or unethical business practices as are being alleged in the AdSense embezzlement lawsuit.
Sadly, Google’s well-established record of wrong doing and treating others the way that they do not want to be treated themselves, means we have to take this AdSense class action lawsuit very seriously and let the legal process do what it does in ferreting out what the true facts are and whether or not there has been another Google widespread pattern of corrupt business behavior.
Time will tell.
Google Unaccountability Series
Part 0: Google's Poor & Defiant Settlement Record [5-1-12]
Part 1: Why Google Thinks It Is Above the Law [4-17-12]
Part 2: Top Ten Untrue Google Stories [5-8-12]
Part 3: Google's Growing Record of Obstruction of Justice [6-21-12]
Part 4: Why FTC's $22.5m Privacy Fine is Faux Accountability [7-12-12]
Part 5: Google's Culture of Unaccountability: In Their Own Words [8-1-12]
Part 6: Google Mocks the FTC's Ineffectual Privacy & Antitrust Enforcement [8-10-12]
Part 7: An FTC Googleopoly Get Out of Jail Free Card? [8-30-12]
Part 8: Top Lessons to Learn for Google Antitrust Enforcers [9-14-12]
Part 9: Google Mocks EU and FTC in Courting Yahoo Again [9-26-12]
Part 10: FTC-Google Antitrust: The Obvious Case of Consumer Harm [11-25-12]
Part 11: Why FTC Can't Responsibly End Google Search Bias Antitrust Investigation [11-27-12]
Part 12: Oversight Questions for FTC's Handling of Google Antitrust Probe [11-30-12]
Part 13: Courts Not FTC Should Decide on Google Practices (The Hill Op-ed) [12-10-12]
Part 14: Troubling Irregularities Mount in FTC Handling of Google Investigation [12-17-12]
Part 15: Top Ten Unanswered Questions on FTC-Google Outcome [1-3-13]
Part 16: Top Takeaways from FTC's Google Antitrust Decisions [1-7-13]
Part 17: Google's Global Antitrust Rap Sheet [1-31-13]
Part 18: Google's Privacy Words vs. its Anti-privacy Deeds [3-8-13]
Part 19: Google's Privacy Rap Sheet Updated - Fact-checking Google's Privacy Claims [3-13-13]
Part 20: DOJ & FTC Report Cards [4-12-13]
Part 21: The Evidence Google Bamboozled EU Competition Authorities [4-19-13]
Part 22: EU-Google: Too Powerful to Prosecute? Problems with Enabling Google [5-1-13]
Part 23: Google's proposed EU Search Bias Remedies: a Satire [5-17-13]
Part 24: Google's Antitrust Rap Sheet Updated [5-27-13]
Part 25: Is This the Track Record of a Trustworthy Company? See Google's Rap Sheet [6-6-13]
Part 26: Top Questions as DOJ-Google Criminal Prosecution Deadline Approaches [7-12-13]
Part 27: The Evidence Google Violated the DOJ Non-Prosecution Agreement [8-8-13]
Part 28: Implications of EU Ruling Google Abused its Search Dominance [9-27-13]
Part 29: Google-YouAd is a Deceptive and Unfair Business Practice [10-24-13]
Part 30: EU's Google Antitrust Problems Not Going Away [12-16-13]
Part 31: How the Google-EC Competition Deal Harms Europe [2-10-14]
Part 32: Open Letter to European Commissioners to Reject EC-Google Settlement [2-16-14]
Part 33: Google’s Extensive Cover-up [2-25-14]
Part 34: An Open Letter on Google’s Opposition to Distracted Driving Legislation [2-27-14]
Part 35: Google’s Widespread Wiretapping [3-20-14]
Part 36: The Growing EC-Google Competition Settlement Scandal – an Open Letter [3-31-14]
Part 37: Google’s Glass House [4-14-14]
Part 38: Google’s Titan Spy-Drones Mimic Military Spy Planes [4-17-14]
Part 39: Google’s Anti-Competitive Rap Sheet Warrants Prosecution not Leniency [4-30-14]
Part 40: Google Apps for Education Dangers [5-17-14]