• by Dan Blacharski , Op-Ed Contributor, July 22, 2016

Google has announced a new policy prohibiting payday lending companies from advertising that went into effect on July 13, 2016. Google's policy will prohibit ads for any loan that requires repayment within a 60-day period, and loans with an APR of 36% or more. The ban affects paid ads only, not actual search results.

Google’s ban, announced on May 11, notes that the new policy is designed to “protect our users from deceptive or harmful financial products.” But Google itself has gotten into the very business it prohibits from advertising on its pages, with Google Ventures making a major investment in LendUp, an online payday lender that offers small loans with an initial rate of about 180%. LendUp is positioned as a more responsible alternative, since it does allow borrowers to “work towards” better rates of as low as 29% for future loans.

“Since the financial meltdown and Great Recession, banks have increasingly moved away from offering loan products to subprime or other underserved borrowers,” said Aaron Ledbetter, founder of LendFu, a peer-to-peer lending organization. “The need for small, short-term loans is critical to many in today’s economy, and payday loans have emerged as an imperfect way to address the need that banks refuse to fill. We think there should be another safer and more affordable alternative. And if banks aren’t going to step up, and payday lenders are going to continue their predatory practices, there must be another alternative that fills the need while adhering to more responsible standards.”

While paid ads will not be allowed for payday lenders, they will still be indexed and visible in the search results. According to Dennis Shaul, CEO of the Community Financial Services Association of America, a trade association for the payday loan industry, “it is one thing for the company to unfairly pass judgment on a legal industry that it does not prefer, but to use its size and influence to clear the playing field for its own preferred small-dollar loan service is a clear conflict of interest.”

There have been no legal challenges to date on the payday lending decision, although legal challenges to Google’s policies almost always result in dismissal. Google claims First Amendment rights, stating that it is a publisher, and free to publish or not publish what it sees fit -- making the lines between more traditional journalistic publishing, and the creation of an algorithmically generated database fuzzy. While the Google algorithm sets out specific rules for what gets indexed and how much weight each Web site is assigned, there are numerous instances where Google has manually banned certain categories of businesses -- and has even targeted specific businesses -- from the index entirely, and not just from paid ads.

In a surprising judicial move, a Florida court recently denied Google’s motion to dismiss just such a case. The plaintiff, e-ventures Worldwide LLC, said that Google de-indexed hundreds of the company’s Web sites subjectively, and Google admitted that the de-indexing took place outside of its standard automated rules and was done manually. “It seemed as though I was personally targeted by Google,” said Jeev Trika, CEO of e-ventures Worldwide. “I would purchase a brand new domain and post nothing more than ‘bye bye world’ and within minutes, Google would de-index that domain too. So, Google’s argument that it was removing Web sites because they were violating Google Webmaster guidelines falls flat. It was not about the website content, it was about targeting the website owner. The fact that Google targets people like this is not something that is consistent with their published policies, or what they tell the public.”

Google, because of its near-monopoly status, operates almost like a public utility, and must be held to a higher standard. Previous court cases have consistently upheld Google’s first amendment claims when the question rested on algorithmic rankings of Web sites. The Florida case takes a different approach, and the courts must now decide whether Google also has the right to manually target a person, a company, or a category of business for deletion from the index; or, as in the as-yet-to-be litigated case of payday lending, whether it has the right to prohibit certain categories of legal businesses from buying advertisements.