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Grading Google's Idealism

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If, as James credibly suggests, Google will likely soon have the power to crush used book stores and exact extortionate prices from libraries who become dependent upon ongoing access to Google's e-book collection, we may ask, Is the company likely to press its advantage to the utmost, here and elsewhere? Or will it hold itself back, adhering to Don't Be Evil?

The story of how "Don't Be Evil" ended up on Google's official list of "10 Things We Know" is told in Planet Google---it began as a guerrilla action on the part of engineers who were concerned about the influx of MBAs into the company. Once it became a publicly visible part of the company culture, it became a permanent fixture that will be hard to remove, should the company's executive leadership ever wish to do so----unless, that is, they want to announce, "Hi, don't mind us---we're just taking care of some preliminary business before we go on to do evil!"

The dual-class structure of the company's stock provides Google's ruling troika with the means to be as idealistic as they wish to be, without facing ouster from restive shareholders. It's hard to see, however, any recent instance in which the company has made a hard decision in favor of the most idealistic available option, the one that would most deeply hurt the bottom line. Google has embraced green with unquestionable enthusiasm---but so has everyone else. One thing that it could do that the preeminent company in Silicon Valley did for several postwar decades is declare a no--layoffs policy, which HP had as a core element of the HP Way. Google hasn't done so (though no one else seems willing to subscribe to that policy today, either, not even HP).

I believe it's surprisingly hard to evaluate how idealistically Google runs its core revenue-producing service, search. I came to appreciate this only after I had written a column for The Times addressing the then-pending advertising deal between Google and Yahoo. I was not opposed to the deal because ad prices are set with an auction mechanism, a point that James makes, too. However, after the column appeared, I heard from a few readers who were small businesspeople who relied upon Google's AdWords to bring in traffic vital to their survival and who believed that Google has recently used dramatic increases in the minimum bid, which is set by Google, to effectively raise the bids that they have to submit in order to compete in the auction. They viewed the increases as the direct result of Google's ever-increasing market share. Google says that minimum bids are set based on many factors, but primarily upon the prior history of the advertiser's ads. The point isn't to raise prices but to protect its users from seeing ads that are less relevant by driving those advertisers away with minimum bids that are set prohibitively high intentionally.

How can a neutral observer sort out the small business customers' claims from Google's? One would need to see the past click-through history of the advertisers that Google says it relies upon in setting those minimum bids, data that it is never going to make public, of course. So, to my mind, Google's actions in this case are hidden by a curtain and are impossible to evaluate----they, and only they, have access to the black box, from which the winning bids are announced. Without more transparency here---and in many other parts of the company's operations----Google's actions are not quite in view---and a report card can't be completed.


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Randall Stross writes:

The dual-class structure of the company's stock provides Google's ruling troika with the means to be as idealistic as they wish to be, without facing ouster from restive shareholders.

The dual-class structure always struck me as antithetical to the "don't be evil" mantra.

This seems a bit late after yesterday's news of recruiters being layed off at Google:

One thing that it could do that the preeminent company in Silicon Valley did for several postwar decades is declare a no--layoffs policy, which HP had as a core element of the HP Way. Google hasn't done so (though no one else seems willing to subscribe to that policy today, either, not even HP).
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I believe it's surprisingly hard to evaluate how idealistically Google runs its core revenue-producing service, search.

Not really. They've left it alone. The advertisements are delineated. That, to me, says they are being straightforward and honest about it. Can we really expect more of a business that is both for-profit and publicly held?

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