Is Google a Monopoly? Is There Internet Freedom?

June 8, 2012

You will want to read the Wall Street Journal hard copy edition’s story “Google Monopoly and Internet Freedom.” (You may be able to access the online version at this link, but no promises where News Corp.’s business model is in action.) The print version is important. The article—more accurately, the “essay,” “op-ed,” or “gentrified blog post”—has price of place. Perched at the top of the “Opinion” page A-15, the four-column item comes with a beefy headline and a color picture. The author is Jeffrey Katz, who is “the CEO of Nextag, and a former CEO of Orbitz Inc., Swissair, and LeapFrog Enterprises.”

wavedistortion copy

Is distortion inevitable or is a part of decision making?

I was not familiar with Mr. Katz. A biography appears on the Nextag Web site. He is a Stanford graduate, and he flew from the airline industry to learning products to Nextag. That company loves shopping. The company says:

Expert deal-hunters since 1999, we make it surprisingly easy for you to find everything from tech to travel to tiki torches all at the price, place and moment that’s right for you. Browse, review, share, get the 411, get the deal: with Nextag, you’ll love the way you shop. 30+ million people consult us each month to make their online purchases, and we use our best-in-class search technology and proven expertise to ensure that each and every one of those shoppers is a happy one. This focus and commitment benefits our partners as well, delivering impressive sales volume and ROI for merchants and a streamlined user experience for search providers. (Source: http://www.nextag.com/about/main)

The background helps because I understand that online ticket agencies and online shopping comparison sites need utility services to allow these enterprises to do business without having to build a global infrastructure, attract and cultivate large numbers of users, and have a business model based on advertising.

Point of view is important.

In the News Corp. essay, Mr. Katz points out that Google is powerful. Well, that’s not much of a surprise. The company is more than a decade old, has an enviable business model, and online technology which works. I enjoy comparing Google’s ability to deliver online services when I sit in an airport waiting for United Airlines to cope with the 300 people stranded in London Heathrow on Friday June 1, 2012. Have you had an experience similar to mine with an airline. I also recall fondly turning up at a hotel with my Orbitz reservation in hand to hear, “Sir, we have no record of your reservation.” I also enjoy the many messages which induce me to compare prices at Nextag.com. In 2009 Nextag filled my Yahoo page with Nextag ads. (See this Yahoo Answers response.) Nextag has implemented an “advertising cookie opt out.” You can learn more here. I, therefore, find the suggestions Mr. Katz offers to Google fascinating.

First, Mr. Katz asserts that “Google needs to be transparent about how its search engine operates.” He believes that Google “hides behind forded-tongue gobbledygook that is meant to obfuscate.” I don’t agree. I have written three monographs based on open source information provided by Google to anyone who takes the time to read it. The disconnect is that Google is a deeply technical company, and it does a very good job of explaining its systems and methods. However, if a person is an expert because he or she can use a browser to surf the Web, that type of knowledge is not going to be particularly helpful. For example, one of the systems and methods in use at Google involves populating missing cells in a database. The approach is clearly explained again and again and again. Most recently Dr. Alon Halevy gave yet another repetitive presentation about this methods at the EDBT/ICDT 2012 Joint Conference on March 26 to 30, 2012 in Berlin, Germany. Of the major information retrieval companies with which I am familiar, Google does one of the best jobs making crystal clear exactly what it does, when, and under what circumstances. The problem is that if one lacks the motivation, resources, or sticktoitivity, the Google information is tough to parse. Want to know how Google search works, read U.S. Patent 628599. There it is. English. Clear. Equations. Background. Functions. What exactly does Mr. Katz want Google to do that it is not doing? Believe me, my relative Vladimir Ivanovich Arnold would have had zero trouble figuring out what Google does, and he would have been able to replicate it. The problem is that some folks are less sharp than Googlers and my uncle. If one does not take time to learn from what is publicly available, why should Google invest time and money in what amounts to remedial education?

Second, Mr. Katz opines, “Google should provide consumers with access to the unbiased search results it was once known for—regardless of which company or organization owns the service. It should also allow users to reduce the number of ads shown or incorporate a user’s preferred services in search results.” First, no set of search results from any vendor or any system at any time has delivered unbiased search results. The decision to use a specific relevancy method, what stop words to use, how to implement a default Boolean AND or OR, or any of hundreds of other key decisions introduces variants in search results. Research itself is not unbiased. As soon as sampling is used within any online system, objectivity is sacrificed. Hey, ask two advisors what to do about a personnel issue and you get non-objective results. Google is upfront and clear about the systems and methods used to determine what gets shown under what circumstances. Pick one of Google’s public disclosures—say, for example, US8065311. Google has dozens of open source publications that explains the exact system and method used to perform a specific task. What Mr. Katz wants is for Google to explain something that most Googlers could not figure out in a month of Sundays. Google uses “smart” software. When inputs change, then the selection of a particular method occurs. Not every method gets selected for every input. As a result, the outputs adapt to inputs. With millions of these decisions made in an interdependent system, exactly what does Mr. Katz want Google to explain? My suggestion. Read what Google has written. The cloud of unknowing is not caused by Google. But asking for an explanation of a particular action within a massively parallel intelligent system is what I would describe as “uninformed.”

Third, Mr. Katz wants one of those categorical affirmatives which I find logically uncomfortable. He says, “

Google should grant all companies equal access to advertising opportunities regardless of whether they are considered a competitor. Given its market share and public commitment to providing users with the most relevant, helpful information, Google has an obligation to provide a level playing field.

My hunch is that in Mr. Katz’s own business operations, there are business processes which are of great interest to consumers; for example, when I run a query on Nextag.com, “Why do I see eBay results at the top of a results list with a big logo?” I don’t want eBay results. How does Mr. Katz implement this specific function? Does it apply to “all” result sets? You don’t need me to write down trade secret type of questions because no executive is going to reveal these unless there are quite specific circumstances and safeguards in place. Why should a company which has an obligation to its shareholders do anything other than focus on delivering value to those shareholders as long as those actions are within the letter and spirit of applicable regulations. I don’t own shares in Google, but if I did, I would expect Google to take appropriate steps to grow the company’s revenue and profits. The reason is anchored in how capitalism works. Is Mr. Katz uncomfortable with capitalism when practiced with considerable skill and finesse?

The final point is an interesting one. Mr. Katz offers:

But mostly, Google should take a good, hard look at its philosophy and business model, and ask if this is the company Sergey Brin and Larry Page set out to build when they chose as their motto: “Don’t be evil.”

Ah, the chestnut “Don’t be evil.” In my research, the phrase originated with another Googler and it ended up becoming the shibboleth waved in front of the bulls running after Messrs. Brin and Page. The current business environment is easy to explain: If you can generate revenue by an appropriate business model, do it. One does not need to flip through Shcumpeter’s or Austrian school economists’ writings for an explanation. Good and evil have zero to do with business. I have experienced the pragmatism of changing a flight using Orbitz. I have to pay. I have experienced the thrill of contacting a merchant, ordering a product identified by Nextag, and then receiving a bait-and-switch in a week. I had to live with the trickery because neither the online service nor the delivery company was “responsible.” Hmmm. Why not do some local investigation into business practices, Mr. Katz.

Now what this News Corp. write up is “about” in my opinion is:

  1. Nextag wants more traffic and preferential listings for its Web pages. I understand the desire to get more from Google’s free service, but why should Google do any more or any less than it is now doing. Google is tweaking its systems, methods, and business models. Are these actions not permitted? “Compete more effectively. Complain less.” might be a starting point.
  2. I believe the News Corp. wants to advance agendas. I hope that the Wall Street Journal is above the alleged criminal behavior associated with some News Corp. properties. But there is Fox News, and it seems to advance an agenda. When I read Mr. Katz-type opinion pieces, I wonder, “Is the Wall Street Journal looking for clicks or just poking Google in the ribs because it is thriving and the Wall Street Journal is dogpaddling in terms of advertising revenue?” Just a question. Nothing concrete. But there is potential for bias when making decisions about what action to take, what story to feature, what numerical recipe to employ.
  3. Writing about Google serves the needs of the readers. I think that the Wall Street Journal is adopting some of the methods which have made Mr. Murdoch’s properties successful for many years. Hard business reporting is expensive and Google is important. I would like to see more analysis of Google’s enterprise strategy as articulated by the most recent vice president responsible for what seems to me a most disappointing market initiative. I would like to see less of the Monday morning quarterbacking.

I don’t have any direct involvement with Google. In fact, I spend less and less of ArnoldIT’s research resources chasing down the company’s innovations. The reason warrants an in-depth article in a newspaper like the Wall Street Journal. Why has Google’s ability to innovate internally become such a problem? What are the management methods Google will use to integrate its recent spate of acquisitions into the firm’s existing service line? How will Google’s dataspace and semantic technology contribute to predictive search outputs; that is, search without search? I at 68, and I think I will go gently into that good night without reading substantive business analyses about an important company in a Murdoch publication. I will have ample opportunities to read baloney about Google. That’s too bad. Who’s being “evil”? Am I? Google? The Wall Street Journal?

Stephen E Arnold, June 8, 2012

Freebie from ArnoldIT.com

Comments

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