Google's Latest Trust Challenges: Can It Avoid Evil-Doing?

It has been an incredibly busy year for the world leader in search.  While shares of U.S. search have slipped a little (from 67% to 64%, according to comScore), Google has seen its market cap increase by $44 billion (or roughly the entire value of Netflix).  Now that it is the world’s second most valuable publicly traded company, its ability to generate revenue is a bigger deal than ever.  But among Google’s "Ten things we know to be true," a list the company uses as guiding principles, “You can make money without doing evil” is number six.

This seems like a reasonable principle to evaluate. Is Google living up to this statement?  Let’s look at three recent events and gauge if Google can both make money and avoid doing evil. For each scenario, I’ll add or subtract one point for “making money” or “being trustworthy” and tally up the results at the end.



1)     When Google announced Q2 earnings on July 16, Wall Street really liked what it heard from new CFO Ruth Porat. July 17 was the single largest one-day stock move in history, with Google adding $65 billion to its market cap.  Google has been a really hard stock for money managers to predict, with as much as 30% of the company's efforts going toward non-media activities.  Porat said that going forward, expenditures on these efforts would be subject to “tight governance.”  On Auh. 10, Google announced the formation of Alphabet, a corporate restructuring, breaking out Google’s media unit and those associated with “moonshot” projects.  More transparency and more discipline?  That’s a point for each category: Making Money 1, Trustworthy 1

2)     Like many U.S. technology companies, Google has faced much governmental scrutiny in Europe.  Google is the clear #1 in European search, with over 90% of the search market share, according to an Atlantic story citing a report by market researcher PTG Media.   German companies and the governments in Belgium, France and Spain have tried to exact revenue/taxes from the company.  Google has a pretty consistent record in these situations, which essentially is to withdraw elements under scrutiny or move out of the country. 

It’s a two-sided coin, however.  While there are situations where Google treats others’ content as its own, as I noted in an earlier post, the company clearly benefits the vast majority of websites.  Turn off Google and you’re going to lose a lot of traffic. 

And that’s what has played out in Spain, where small publishers have been significantly punished by Google shutting down its News service in that country.  This European situation has had very little monetary impact, as Google generates no direct revenue through its News service. While harm has been done to small publishers, it’s the fault of the government and not Google itself, so let’s add one more for Trustworthy:  Making Money 1, Trustworthy 2

3)     On an altogether new front, a new study suggests that Google could rig the 2016 presidential election.  Google hasn’t been accused of doing such a thing; the study just points out that search rankings have a big influence on election results.  This is certainly good news for Google, because not only does the study reinforce the value of search, but it also confirms that being ranked on the first page isn’t enough.  In other words, until your pages are ranked first in organic search results, there’s still work to be done.  And based on the keyword in question, being first in organic search might not be enough, either (as the organic listing might be as low as the fifth, sixth or seventh listing overall). 

Google shouldn’t have to apologize for the power of search.  But this article shows that the company is being treated suspiciously, especially the comment referencing Google’s donations and associated influence with the Obama administration.  Taking away one in the Trustworthy column, we’re back to Making Money 1, Trustworthy 1

So despite its detractors, Google does come out as being able to make money while being trustworthy, at least with regard to these three scenarios.  It's clear that Google, now comfortably the second most highly valued company traded on U.S. markets (while still significantly lagging behind Apple), will continue to be in the spotlight of investors, regulatory agencies and companies that see Google as unlawfully profiting from their proprietary content.

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