+Comment It’s five years since I compared Google to Halliburton, the defence contractor that received large contracts from the Bush Administration, and whose former boss was George W Bush's righthand-man Dick Cheney. Today that comparison looks horribly unfair – unfair to Halliburton.
The Wall Street Journal has revealed America's federal competition watchdog, the FTC, gathered compelling evidence that Google was using its dominance to crush startups, and dictate the terms of trade for an entire industry in its favour. This “industry” is not some obscure business backwater, but advertising: the lifeblood of much of the media.
Ultimately, Google was not charged with any wrongdoing following the FTC's investigation into the powerful California giant. The company insists it broke no law.
One detail out of many in the commission's internal report startles. With a disregard for ownership bordering on the autistic, Google scraped websites like Yelp and TripAdvisor for content, using the material without their permission. When they complained, Google threatened them with the “internet death penalty”: making them disappear from its search results, FTC officials claimed. It was a threat, again claimed by the FTC, that only a dominant player could make, but the startups had little option but to comply.
So the FTC built what appears to have been a compelling case against Google – only for the regulator's masters to decree that consumers should accept Google’s own milquetoast “remedies” instead. Europe’s former competition czar, Joaquín Almunia, attempted the same strategy for three years, before bowing to objections.
Why is comparing Google to Halliburton unfair? Here’s why. Nobody accused the Bush administration of putting pressure on the judicial process to favour Halliburton. But that accusation weighs heavily over President Barack Obama and Google today.
It hangs over the FTC decision and another, little reported case too.
Who needs the Silk Road? Put that Bitcoin down
For three years, the FBI and the US Food and Drugs Administration (FDA) ran a sting operation against Google and its alleged support of the traffickers of drugs and controlled substances. Some of the ads for pills Google was promoting were clinically manufactured prescription drugs “re-imported” from Mexico and Canada. But many were not: they were fake and dangerous substances manufactured in India, China, and Barbados, it has been claimed. Google's advertising network seemingly made acquiring them easy, years after other search engines had cleaned up their act.
As the US Department of Justice explained:
Google ... acknowledged that it was aware that importation of prescription drugs to consumers in the United States is unlawful, because these drugs are not FDA-approved and therefore may not meet the FDA’s labelling requirements; may not have been manufactured, stored, and distributed under proper conditions; and may not have been dispensed pursuant to a valid prescription.
In the NPA, Google also conceded that Canadian pharmacies that ship prescription drugs to US residents are not subject to Canadian regulatory authority, and many sell drugs obtained from countries other than Canada, which lack adequate pharmacy regulations.
The FBI and FDA created a number of fake traffickers and recorded their interactions with Google staff. The sting revealed that Google had created a marketplace by extending credit lines, it's claimed, and advised traffickers how to optimise their Adwords advertisements to reach Americans. It’s arguable whether this shadowy “industry” would even exist without Google’s co-operation.
For comparison, think how difficult it was to acquire illegal substances via the Tor-hidden Silk Road, and similar websites. You needed to know where to look for Silk Road, and how. Then you needed to get hold of Bitcoins, or some other crypto currency. To the average Joe, who never changes the default browser or search page, this was all quite complicated. In contrast to darknets, Google was pushing the traffic right into your face, on the cuddly, colourful best-loved search engine in the world. It had put the dark net into every family’s living room.
According to the US attorney of Rhode Island (a state with a long history of crime fighting), which was a party to the sting operation, this wasn’t a few Adwords sales folk going “rogue”: Google’s top executives had knowledge of the business.
"Larry Page knew what was going on,” Rhode Island’s federal prosecutor Peter Neronha told the Wall Street Journal.
Google was busted in 2009 and in 2011, and a most curious settlement emerged, a “Non Prosecution Agreement” (PDF). The ad giant agreed to pay a forfeiture of $500m – and has subsequently committed a further $250m following shareholder lawsuits. (The NPA made no mention of Mexico, with which most of the trade reportedly took place.)
Things took a stranger turn when the DoJ chief said sorry, in court, for his remarks implicating Google’s top management. Why would an employer working for the citizen need to apologise?
If one political interference is a misfortune, then doesn’t two look like carelessness?
Freeze! Or the internet breaks …
The trafficking settlement has hit the news also for Google’s unusually aggressive attempts to halt anyone else probing into its conduct. Since the 2011 NPA, Google has not used Adwords to promote unlicensed pharmacies.
Google sued the poorest state in the USA, Mississippi to freeze a criminal investigation by Democrat state attorney Jim Hood. Not only that, but it has attempted to arouse the internet mob that terrified law makers two years ago, by evoking the magic word “SOPA”.
US state attorneys often fight on for years after the USA has arrived at a cosy settlement – as Microsoft knows very well. Mississippi wants to know two things: is Google complying with the spirit of the 2011 NPA, or has it simply shifted trafficking to other parts of its empire? And what really lies in those millions of pages of evidence under seal in Rhode Island, that apparently do not, and in no way, implicate Google’s management in condoning criminal activity?
Right now, we don’t know, because Google has sued the state into abeyance. States are forbidden for even enquiring into Google because of its creative deployment of the Communications Decency Act.
Google and Obama are close – perhaps too close for comfort.
But, wait, you are no doubt asking, what’s unusual about this? Large corporations and politicians tend to align their interests. Didn’t President Eisenhower’s defence secretary Charles Wilson, a former General Motors CEO, once declare that, “What is good for the country is good for General Motors – and vice versa”? Isn’t this business as usual in the USA?
Perhaps, but one thing is different here. The internet is a mewling newborn infant, and the Obama/Google relationship requires the rest of the world to develop their economies and networks on Google’s terms. Google’s world – at least in the short-term – is one where the individual has no privacy, and cannot control or own the stuff they use. The “settlement” runs counter to norms that humans have cherished since the Enlightenment. Google has run a ferocious campaign against European data protection laws, which express the desire of an individual to maintain their identity. It runs an equally ferocious campaign against individuals owning and controlling their own photographs, music or poems – and trading rights in these creations. It knows its monopoly position prevents markets being created. For sure, this creates an enormous (on paper) “consumer surplus” of free services. It’s a lot to ask of us to give up human progress for the convenience of any corporation.
There are actually many ways Google can create a richer and more diverse internet economy. But that would require Google to give up being a “big fish in a small pond”, and make the pond bigger.
At some point Google will find a regulator who doesn’t roll over. And increasingly, people who want to look the gift horse of “free stuff” in the mouth. There are many other digital economies possible, other than the one Google demand we all live in. ®