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Is Google’s Algorithm an Honest Broker? -- A new crushed competitor complains to DOJ it is not.

A competitor crushed by drastic changes in Google’s algorithm is formally complaining to the DOJ Antitrust Division that Google’s behavior is anticompetitive as part of the DOJ’s review of the proposed Google-Yahoo ad partnership.

  • Joe Nocera has a great column not to be missed in the New York Times: “Stuck in Google’s Doghouse,” which details how Sourcetool, a business to business directory website, was made and then crushed by Google’s black box algorithm.

Two big takeaways:

 

First, expect this to be the first of many more formal complaints to DOJ against Google for anticompetitive behavior because the ANA, the association of the largest U.S. advertisers, broke the ice in calling for DOJ to block the Google-Yahoo partnership.

  • The willingness of the ANA and Sourcetool to go public will embolden others to come forward who believe Google’s black box algorithm is anti-competitive.
  • There is cover and strength in numbers and also in the newfound glare of media coverage taking the DOJ investigation seriously.

Second, the proverbial light bulb is turning on for many that Google’s black box algorithm may not be the honest broker that Google claims it to be.

  • The Sourcetool example highlights that Google, as the de facto search advertising marketplace, can practically function as an unaccountable business prosecutor, judge, jury and executioner.
  • Companies like Sourcetool or advertisers have no practical recourse but to complain to the DOJ in the context of this deal.
    •  There certainly is not competition to keep this non-transparent ad brokerage system honest, when financially-aligned Google-Yahoo would control over 90% of the search advertising market.
    •  There’s also no third-party oversight or audit to test/ensure that Google’s completely non-transparent auction algorithm and process is or remains honest or neutral.
    •  Google’s mantra appears to be: “trust and don’t verify.”

Bottom line: One of the most fundamental aspects of the American constitutional and free market enterprise system is that no entity, repeat no entity, has absolute unfettered power over individuals, businesses or organizations. The American system always finds a way to check unchecked power.

  •  Is Google actually the honest broker that it represents itself to be?
    • With near zero transparency and multi-billion dollar financial conflicts of interests – that is not an academic question.
  •  It’s up to the external check of the Justice Department to ensure that Google-Yahoo, cannot effectively and illegally cartelize or monopolize the world’s primary economic model for monetizing Internet content.
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