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FTC Report Revealed Clash Between Google's Public Statements and Internal Documents

Harvard's Ben Edelman responded to the leak of the FTC Google staff report with an indepth memo comparing available materials (particularly the staff memorandum's primary source quotations from internal Google emails) with the company's public statements on the same subjects.  The result as Edelman details is illuminating:

Google's public statements typically emphasize a lofty focus on others' interests, such as giving users the most relevant results and paying publishers as much as possible. Yet internal Google documents reveal managers who are primarily focused on advancing the company's own interests, including through concealed tactics that contradict the company's public commitments.

The whole memo is worth reading but it's worth highlighting a few key points and evidence cited by Edelman.

  • Google had publicly claimed that its restrictions on third party software being created to facilitate moving data from Google's AdWords platform to competing platforms was for the benefit of advertisers themselves. However

In internal email, Google director of product management Richard Holden affirmed that many advertisers “don't bother running campaigns on [Microsoft] or Yahoo because [of] the additional overhead needed to manage these other networks..Holden indicated that removing AdWords API restrictions would pave the way to more advertisers using more ad platforms, which he called a “significant boost to … competitors” (id.). He further confirmed that the change would bring cost savings to advertisers...n a 2006 document not attributed to a specific author, the FTC quotes Google planning to “fight commoditization of search networks by enforcing AdWords API T&Cs” (footnote 546, citing GOOGKAMA-0000015528), indicating that AdWords API restrictions allowed Google to avoid competing on the merits.

  • When Google began favoring its own services in search results over competing "verticals" Google had publicly stated that this was for the benefit of users to give them more relevant results. Yet internally, the change was seen as for Google's benefit:

Far from assessing what would most benefit users, Google staff examine the “threat” (footnote 102, citing GOOG-ITA-04-0004120-46) and “challenge” of “aggregators” which would cause “loss of query volumes” to competing sites and which also offer a “better advertiser proposition” through “cheaper, lower-risk” pricing (FTC staff report p.20 and footnote 102...Moreover, the staff report documents Google's willingness to worsen search results in order to advance the company's strategic interests. Google's John Hanke (then Vice President of Product Management for Geo) explained that “we want to win [in local] and we are willing totake some hits [i.e. trigger incorrectly sometimes]” (footnote 121)...Preferred placement of Google's specialized search services was deemed important to avoid “ced[ing] recent share gains to competitors” (footnote 121) or indeed essential: “most of us on geo [Google Local] think we won't win unless we can inject a lot more of local directly into google results” (footnote 121)

 The FTC memorandum quotes Google co-founder Sergey Brin: “Our general philosophy with renewals has been to reduce TAC across the board” (footnote 517)..The FTC's investigation revealed the reason why Google was able to impose these payment reductions and fee increases: Google does not face effective competition for small to midsized publishers.

As Edelman argues, "Google's broadest claims of lofty motivations and Internet-wide benefits were always suspect, and Google's public statements fall further into question when compared with frank internal discussions."  

Which makes the FTC Commissioners burying of the staff report all the more a scandal.

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