DoubleClick

A consistent theme in my ongoing analysis of Google, has been Google's corporate refusal to overtly disclose the fundamental financial conflict of interest inherent in their business model, i.e that Google does not work for users like they routinely claim, but for advertisers and publishers. 

• The best example of the serious risks to users of this undisclosed conflict of interest has been how Google has reacted since early April to the dramatic increase in risk to its users of indentity theft and fraud by cyber-criminals exploiting security weaknesses in Google's search results.
  • I have blogged on that serious breach of consumer protection here, here, here, here, and here .  
• I personally have seen the consumer devastation that undisclosed conflicts of interest can cause.
  • After the collapse of Enron, I was asked to testify in the Senate on how conflicts of interests were integral to Enron's fraud.
  • I was also asked to testify on the dangers of undisclosed conflicts of interest in the House during the tech meltdown.

Interestingly, it appears I am not the only one concerned that Google's advertising-based search model has a serious inherent conflict of interest.

Dominant #1 Google, in calling #2 Yahoo to discuss a slow competitive search surrender by Yahoo to Google, in order to thwart a purchase of Yahoo by #3 Microsoft, apparently succeeded.

Interested observers in the Microsoft-Yahoo-Google-AOL-Ask.com-MySpace incestuous soap opera called search advertising, would be wise to bone up on the fine line between acceptable industry collaboration and illegal collusion, if recent reports prove true.

• The Wall Street Journal reports that Yahoo may be days away from announcing "an agreement to carry search advertisements from Google.." and that Google feels "that the upside is much greater than the potential downside" from the arrangement."  
• The Financial Times broke the story that the Department of Justice was investigating Google's interaction with Yahoo and that "the prosecution of collusion is a top priority."     

The fine line between collaboration and collusion. 

First, while many may be aware that a Google-Yahoo outsourcing deal "would likely attract intense antitrust scrutiny" there is precious little analysis on this linchpin issue -- hence the genesis of this piece.

I believe the pattern of Google becoming the outsourced search engine for most all of the Internet -- save for a few properties -- is one of the most important and least understood competitive Internet issues.  

CNBC's Maria Bartaromo had a rare in-depth TV interview with Google CEO Eric Schmidt.

The comments that have relevance to net neutrality were how Google's CEO, one of the biggest proponent for Net Neutrality legislation of broadband networks in the world, candidly admitted that all customers were not alike; that they have different needs; and that Google plans to charge those who want higher quality of service -- more money.

• Bartiromo: "What about the corporate customer? I understand that there are tests going on right now. What are you hearing from that customer?"

  Schmidt: "We're working with the corporate customers to do the same thing inside their networks as we do with consumers. Now, corporate customers are
  not the same thing as consumer customers. Corporate customers have a much higher need for reliability, so we'll sign an agreement that guarantees a certain level of service. But then we charge for it. So that's a case where people are willing to pay for something which is free without the level of reliability. They also have other needs. They need greater security, for all the obvious reasons. And they also need better integration with all of the other services that their companies have. This is a long process. It's not a fast process. But it's very deeply valuable. And those customers we will have for 20 or 30 or 40 years as they build into our model. We like that model. It's an enterprise play. It's a business that I've been in for a long time, and one which will ultimately be very, very lucrative through Google." [Bold added]

Google deserves some bona fide kudos from me for blogging yesterday with some very sound and practical advice about how their users or anyone who reads their blog - could avoid getting hooked/scammed by fraudsters.

• As a consumer, I learned a couple of new tips to better protect myself from phishing fraud.
• The advice was clear, practical, informative and useful.

However, I was surprised that they did not choose to link to other sites in and out of government that could also be useful to consumers looking to protect themselves better.

I was also surprised it took a month for Google to say anything about how users could better protect themselves from new fraud scams that were exploiting weaknesses in Google's search engine protections so that Google was unwittingly offering up scam pages as part of their search results.

Tom Sydnor of the Progress and Freedom Foundation has done a brilliant analysis of Professor Larry Lessig's book "Free Culture" in the important context of Professor Lessig's other works. 

• This analysis is outstanding foundational-thinking and a must read for anyone who cares about preserving a free market Internet.  

Let me highlight some gems:

First, his conclusion:

• "The preceding analysis shows that FREE CULTURE does demonize copyright owners and does urge the government to eliminate copyrights and impose "quasi-socialist utopianism." Nor does this pattern stop with copyrights. Indeed, the preceding analysis shows Lessig has already claimed that to Save the Net, the government must nationalize or heavily regulate:

  • The providers of Internet-access services that own the physical network infrastructure, (e.g., net neutrality);

   

  • The providers of commercial internet applications and services, like eBay, Amazon, and Google (e.g., CODE); and

   

I had meant to comment earlier on the FT's front page story last week on: "Google resolve crumbles on 'cookies' pledge."

The intro sentence says it all:

• "Google has failed to make any headway in dealing with one of the most controversial issues of online privacy, despite promising a year ago that it would take the lead in tackling the problem."

I can't say I am surprised -- as the old adage goes, a leopard doesn't change its spots.

• We now know more about two things concerning Google:
  • That Privacy International, a leading privacy watchdog in the world, was very much on the mark in ranking Google worst in the world on Privacy in its privacy rankings and also describing Google as having an "entrenched hostility to privacy."
  • Google's public committments/word (albeit non-binding) during a governmental proceeding aren't worth much.
    • Google is unwisely backtracking on something very important to users and government officials.
    • They thumb their noses at everyone else's privacy at their own peril... 

Anyone who considers themselves religious should read Red State's illuminating and shocking post, which documents an anti-Christian discriminatory bias by Stanford Law Professor Larry Lessig and his extremely close ally -- Google.

• "Obama and Google's mutual advisor: Jesus is gay; wears a diaper and gets run over."

WARNING: Christians will find the one-minute-fifty-second video that Mr. Lessig shows to a laughing Google audience, sacrilegious, offensive, and disturbing.  

National Public Radio's All Things Considered" did a great 5 minute segment on: "Some Libraries Shun Google in Book Battle."

The story is set up as who should control the world's future virtual libraries as libraries and Google rush to digitize the world's books?

• Several public libraries object to Google digitizing all their books and are doing it themselves.
• They worry about a "single corporate entity" having so much power over the world's information.
• If the old adage is true, that information is power, there is reason to worry.

I note this story because these libraries are a spontaneous and very real grass roots response to Google's megalomaniacal mission: to organize the world's information and make it universally available and useful."

• These public library advocates worried out loud about how much more effective censorship could be if "a single corporate entity" controlled the world's main library and how would they respond to political pressure to ban a book or an author?
  • This is a relavant concern because Google has censored search results in China, Turkey and Thailand to name a few known instances. 

Google should take note. Here is a grass roots rebellion brewing from their left flank, which looks un-willing to be bought off by Google to go away. 

The wisdom and clarity of thought prize at the FCC's enbanc hearing at Stanford goes to --- FCC Commissioner Robert McDowell!

I urge you to take a few moments and read the following excerpt from Commissioner McDowell's statement yesterday -- it really gets to the heart of the matter of what the appropriate role is for the FCC in broadband network management issues.

"...In their joint press announcement, Comcast and BitTorrent expressed the view that “these technical issues can be worked out through private business discussions without the need for government intervention.”