Google Secrecy A Blessing And Curse

    May 22, 2006
    WebProNews Staff

Other than the legally mandated SEC filings, only the very top of the Google leadership knows just how the company operates. The LA Times delivered the most apt commentary on Google…

Google Secrecy A Blessing And Curse
Does Google’s Secrecy Hinder Or Help?

…as it cited a comment from Jordan Rohan, a financial analyst with RBC Capital Markets.

“It’s somewhat of a paradox. Google’s whole purpose is to make information easier to access – unless, of course, you want to know information about Google,” he said.

“It makes the rules, and it reserves the right to change the rules,” said Fortune Interactive’s CEO, Andy Beal. “But there’s only so long it can continue to do that before the other kids say, ‘We’re not going to play with them anymore.’ ”

One example of the company’s disdain for convention came when Google CEO Eric Schmidt made the comment that Google wanted to be a $100 billion company. Reporters noted that Google was already worth that much in market capitalization; did he mean market cap or revenue?

“I’ll leave it to you to judge whether that is $100 billion in market capitalization or revenue,” said Schmidt. The flippant comment was not very well received.

But when you’re Google and making billions of dollars in revenue as fast as advertisers can throw it you’re way, there isn’t much motivation to change. Opening up the company’s inner workings is anathema to Schmidt and Google’s well-known billionaire founders, Sergey Brin and Larry Page.

When faced with a federal subpoena for extensive information from its search indexes and databases, Google fought the Department of Justice instead of readily complying as did competitors Yahoo, Microsoft, and AOL. Google’s resistance to the probe prompted DoJ to file a lawsuit against Google, and revealed the widespread information gathering that had taken place.

Google had no desire to permit its operations and technology to be researched by outsiders, even under court seal, and a judge ultimately sided with Google on the matter. Apparently Google feared leaks would happen, with deep-pocketed rivals eager to capitalize on whatever they could learn about the dominant search engine.

Users have propelled Google to that dominance, as its search result relevance to queries has been much more impressive than its rivals. How Google achieves that relevance is one of the many secrets the company maintains.

The lack of transparency has been decried by certain segments of its users, namely the advertisers who enrich the company. Those advertisers pay for contextually-based ads to appear when certain keywords or phrases are entered into Google as a query.

Google operates on an auction-based model, so as more businesses embrace online ads and increase demand for keywords, the prices paid for each time users click on those ads goes up as well. Advertisers don’t mind paying for legitimate traffic; that’s a cost of doing business.

They do object to what has been seen as a growing problem with click fraud in the industry. Automated clicking software visits pages hosting online ads and performs those clicks. In some cases, people employed in boiler-room setups in countries like India visit sites and click on the ads, in exchange for payment made to those running the operations.

Advertisers have called for more transparency into the process, but Google and competitors like Yahoo have stuffed those requests as they are made. Google claims it dedicates a significant amount of resources to fighting click fraud, and it has a process where advertisers can request reimbursement for clicks that Google does not catch as being illegal ones.

Only Google’s top people know how or where they will address issues like click fraud and competition. And they aren’t talking except in very general terms about it.


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David Utter is a staff writer for WebProNews covering technology and business.