It seems like it was only a matter of time. Google has been the target of a variety of regulatory and investigative bodies over the past few mo
It seems like it was only a matter of time. Google has been the target of a variety of regulatory and investigative bodies over the past few months, and once that ball started rolling down the hill, it wasn’t going to stop until the states got involved.
Yesterday, the Attorneys General of forty-eight states, the District of Columbia, and Puerto Rico announced that they are investigating Google over its dominance of the online advertising market. Speaking on the steps of the US Supreme Court, Texas Attorney General, Ken Paxton, said on behalf of the group that the company “dominates all aspects of advertising on the Internet,” largely due to its overwhelming share of online search.
While the states are only officially launching an investigation at this point, they have issued requests to Google to turn over information related to the company’s search business. The move comes while the company is already facing scrutiny by federal regulators and investigators, with the Justice Department taking a broad look at antitrust concerns in the tech industry.
While the federal government doesn’t necessarily have the greatest track record with massive antitrust investigations (it lost its last big tech antitrust case against Microsoft in the 1990s), state governments have had more luck going up against industries like big tobacco and pharmaceuticals. That means that this probe could be legitimately bad news for Google.
And if it gets bad for Google, it could get worse for you and your business. In fact, I’ve already said that I’m not sure anyone wins this fight.
Here’s why: There’s a pretty good chance your business interacts with Google every day, from using Gmail, to optimizing your website for Google’s search engine, to advertising your business online. In fact, Google pretty much controls three things that matter to all of us.
Google accounts for 92 percent of all searches online, which is why its advertising model is so powerful. To say it dominates the search market is like saying that Disney dominates the movie princess market. Technically, there’s competition, but you’d be forgiven if you hadn’t noticed.
If Google is broken up, it’s likely that the search engine would be cleaved off from other components like GoogleAds or YouTube. That might make sense to government regulators and prosecutors, but the only reason search (and email and Chrome, and others) are free is because of the ad business. Which leads us to the heart of the issue.
If your business advertises online, there are really only three options: Google, Facebook, and Amazon. Amazon certainly has its own issues when it comes to anti-competitive behavior, but it doesn’t really count for this assessment since its advertising is contained to its own site.
Like search, there are other competitors, but none of them have the same scope and audience that the big players have, which means that if you want to reach your customers, you play by their rules. That’s exactly why the states are getting involved: they believe that Google’s influence over online advertising has resulted in unfair practices, including the company’s ability to control where and when ads are served.
As a business, GoogleAds without the search engine or online tracking is pretty much just a crapshoot. It’s the ability to target your audience that makes the service so valuable for businesses. While the current model is broken, I’m not sure we can trust that the government is ever going to be the one to fix it.
Finally, along with Facebook, Google is by far the biggest consumer of your personal information. It knows what you do online, who you interact with, when and where you’re traveling, what temperature it is inside your home, and what you watch online. It tracks everything and uses that information to show you what it calls “contextually relevant ads.”
Really, that’s just a euphemism for those creepy ads that follow you around the internet and show you pictures of the things you looked at on Amazon while you’re reading your local newspaper online. But, as I’ve said before, those ads work, which means that Google is never really going to have an incentive on its own to change anything (despite what it says to the contrary).
In the past, government action usually means paying some kind of fine and promising to do better. We all know that’s just for show and has very little actual effect (see Facebook’s $5 billion settlement). The only question in this case is whether the states are in this to make real change, and if so, at what cost?
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