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Google’s evolution from “don’t be evil” to “win at all costs”

Google’s evolution from “don’t be evil” to “win at all costs”

Illustration by Nick DeSantis / Getty / The Current

Consider how much Google has become a significant part of our lives. Think of how often we “google” something. Think of the deeply personal things we search every day, such as medical conditions or financial advice. Most of us trust Google with our most sensitive thoughts.

Trusting Google Search is only the beginning. Gmail has almost 2 billion active users using 105 languages, and 27 percent of all email opened on the global internet is in Gmail.

YouTube is even more dominant, with over 2.5 billion monthly active users. That’s just over one quarter of the world’s population. According to my Google search (I know), only 53 percent of the world has fast internet. So, if you are alive anywhere in the world with a decent internet connection, you’re probably using YouTube. And most people browsing the internet outside of China use Chrome, Google’s dominant browser.

And we can’t even cover all the other ways Google touches our digital lives with other products, such as Google Cloud, Drive, Photos, Nest Thermostats, Nest Cameras, Nest Smoke Alarms, Android Phones, Pixel Phones, Google Chat, Google Meet, Google Maps, Waze, or Google Calendar. The list goes on. Suffice to say that if you say “OK, Google” out loud, you might awaken some random Google-driven device.

Google recently laid off more than 12,000 employees, some of whom had worked at Google companies for decades. Some were told they had to leave immediately. When employees questioned Google why they were treated so harshly, they were told (among other things) that those terminated had to leave abruptly because they had access to sensitive consumer data.

We’re trusting Google. We’re trusting Google employees – both current and former employees, including those recently laid off.

I have an exceptionally complicated relationship with Google. Like most people, I use many Google products and I worry about how much of my data they have. Additionally, while my company, The Trade Desk, partners with Google’s Ad Exchange, we are also one of their fiercest remaining competitors. In particular, we compete against their lesser-known DV360 advertising platform.

At The Trade Desk, we help advertisers buy digital ads in the most technologically advanced manner possible. We buy billions of dollars of advertising every year, and most of it touches Google in some way.

Right now, governments around the world, including the U.S. Department of Justice (DOJ), are assessing Google’s dominance. When Google competes, does it play fair? Good question. The DOJ has clearly done its homework. Some at Google have tried to suggest they’ve been here before because governments have scrutinized them in the past. Reading the complaint, this one is different. The DOJ seems to clearly understand the problems and that the strength of Google’s search product has enabled dominance in other products too.

Some governments, regulators, and industry insiders are also asking which assets Google should keep and what it should spin off. It is natural to jump to such potential remedies. But I believe such an approach obscures the real issues for what is a highly complex, intertwined business.

Google’s empire of amazing products started out as one thing—a search engine, before it became this meshed portfolio of products. YouTube was an acquisition completed eight years after Google’s founding. Everyone knows Google and YouTube, but some of its most ingenious products are business-to-business advertising tools that most consumers have never heard of. Many years ago, Google leveraged its search engine and built an ad product on top of it, AdSense. Renamed and bundled many times since, it’s a product that enables search buyers to buy internet banner and video ads.

Because of the market dominance of Google Search, when AdSense was launched, it naturally attracted millions of websites to sell their ads. This extension almost instantly turned millions of search advertisers into banner advertisers, expanding the empire. It’s the biggest ad network ever created, and it very likely would never have happened without the Search Engine.

Google’s advertising reach became even more pervasive when it bought a company that selects, measures, and reports on all the ads bought all over the internet —Double Click. It’s like owning the Visa and Mastercard of internet advertising. By owning Double Click, Google now processes most of the ad transactions across the global internet, allegedly with around 90 percent market share. Publishers are extremely dependent on this product.

Google also built a digital ad exchange on top of Double Click. Basically, this is a real-time exchange like NASDAQ, but for digital ads. Because Double Click was so ubiquitous in ad serving and measurement, their exchange also became the market leader very quickly, almost overnight. And then there’s DV360, Google’s ad-buying platform, which buys on the exchange for advertisers.

This aggregation of ad tech capabilities has had many in the industry, including the DOJ, asking if it’s right that one company is essentially the defense, the prosecution, judge, jury, court reporter, the bailiff, and the bondsman for millions of ad transactions every second on the internet – each priced and auctioned in a fraction of a second.

The dangers of such B2B market dominance may be obscure to the consumer, but they are very real. Consider journalism, and the critical role it plays to keep power of all kinds in check, including foreign and domestic governments.

Major news publishers, such as Gannett, may depend on ads for half of their revenue. Smaller publishers often get all their ads and ad services from Google. One can see why many argue that the news media survives at the whim of Google. The fourth estate has always relied on advertising as a critical funding source, and this seismic shift in the dynamics of that funding should concern all of us.

It’s natural to wonder how we got here. The Google Search + AdSense tie is merely the tip of the iceberg.

Until a few years ago, it seemed that every Google division operated separately. The strategic thinking seemed reasonable. If Chrome operates separately from the ads business, it won’t optimize to Google ads, or even ads at all. And to all appearances, it worked. In my experience, Chrome engineers didn’t care about ads. They knew ads pay the bills, but they just wanted to build a better, faster browser.

But for advertisers and publishers, the anticompetitive impact accelerated and became pervasive about seven years ago, with the formation of Alphabet and a re-org. Likely in an attempt to win additional favor with Wall Street, Google decided to break out the profitable businesses from the expensive and highly speculative ventures. So, Google tucked nearly all the ad-powered businesses under one umbrella—YouTube, Search, AdX, Double Click, DV360, the ad network previously called AdSense, and others. With this new structure, today, Google’s enterprise sales teams roll up, bundle and sell a massive suite of products.

This created an incentive to exploit power, for both engineers and salespeople. For advertisers and publishers, it seemed that accountability was distributed, and incentives were aggregated. And somewhere along the way, a company that once prided itself on doing no evil, was seemingly operating with a different mantra—win at all costs.

For example, if an advertiser hits a $10 million minimum of ad spend across search, YouTube, DoubleClick, and DV360—Google could give a rebate or a discount. Or there are examples in our industry of advertisers who buy enough Google products for their company and are promised a personal Google smart home for free. Or a news site might not get access to demand from the ad exchange if it doesn’t allow DoubleClick for Publishers to decide how to allocate every ad on the site. Or, as alleged in recent lawsuits, Google had a series of secret initiatives, such as Project Bernanke and Project Poirot/Elmo, in which Google will penalize you during the ad-buying process unless you support its ad system over the open market system preferred by publishers.

And by giving middle management this incentive and impetus to leverage size and dominance, Google has morphed into something unrecognizable from its origins. It’s comparable to the way that bankers’ individual incentives contributed to the 2008-2009 global financial crisis. Bank employees had individual incentives to take risks that put the system in jeopardy—a cause and effect that only became clear in retrospect. In both cases, incentives created systemic moral hazard over time.

As we look for answers regarding the aggregation of power at Google, let’s not simply focus on the suggestions to perform corporate surgery and extract assets like DoubleClick. With all the source code, the resources and the history, any of these features and products could be rebuilt.

Instead, we should look at how we advance an open internet on a fair, level and competitive playing field for everyone with better incentives. Bad incentives created the financial crisis just over a decade ago. Let’s not repeat history and create an anemic internet built around a few too-big-to-fail companies. Let’s fix incentives to ensure no company, including Google, acts as the judge, jury, defense, court reporter, and prosecution for digital advertising transactions.

The future of entrepreneurship, business growth, journalism—and so much more—depends on us making the internet better.