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Is The Google Honeymoon With The Press Over?

Chris Richardson
Staff Writer
Published: 2004-05-07

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Since its launch in September of 1999, Google's non-portal interface and relevant search results have predominantly received positive coverage from users and press members alike.

Fast forward to 2004. Google's search index is a whopping 4 billion pages; Google is the most used search engine in an industry that has grown exponentially, handling an impressive amount of queries a day; Google is beta testing an email service called Gmail that looks to revolutionize the email industry because of its storage capacity; and last but certainly not least, Google has filed one of the most anticipated tech-stock IPOs since 1999.

These attributes have not only made Google popular, it has made them an institution. Alas, as the search engine's popularity grows, the microscope of the press begins to tighten its focus. The result is increased scrutiny into Google's practices.

When this happens, not all of the company's practices are going to be met with agreement, and therefore, the press Google receives will not always be positive.

The Gmail Furor

Negative press towards Google began in earnest when the company announced its venture into Gmail. One of the "features" that Google announced with Gmail, besides the 1 gigabyte worth of storage per user, is the inclusion of contextually based ads from Google's AdSense program.

Incoming emails are scanned and ads are placed based upon the context of these mailings. Google's intention to place ads has come under significant criticism. The criticisms have reached all the way to legislative branches of the US government.

California senator, Liz Figueroa (D-CA) sponsored a bill that would require member consent in order to place contextual ads within Gmail mailings. This leads to another Gmail privacy criticism. On top of the intentions to place ads within mailings, Google also stated that emails that have been marked for deletion by Gmail members would remain in Google's storage for an indefinite amount of time.

A quick search of Gmail on Google News yields many articles which question Google's Gmail practices and privacy issues. Although, Gmail is not the only reason that Google is receiving criticism and negative press.

Google's IPO

One April 29, 2004, Google announced that it was filing to be a publicly traded company. The filing came on the heels of Google being required by the SEC to release its financial information because the company had grown financially and employee-wise to a point that the SEC requires release of financial history.

It was in this filing that Google stated their intentions to become publicly traded. This news sparked a frenzy in the journalistic world. Every outlet that published any semblance of news had something to say about Google's IPO. Numbers like the $2.7 billion that Google hopes its IPO raises, and the $50 billion the company may be worth were thrown around.

Then people got to Google's intention of offering its stock in a Dutch Auction. This type of offering is, according to GlobeAndMail.com:

"an auction of stock, in which both institutional investors as well as retail investors make bids to buy shares at a particular price, often over the Internet. In a reversal of what takes place during a normal auction, however - in which the seller tries to drive the price up - a Dutch auction is completed at the lowest price necessary to sell all the shares. In other words, the offering company calculates how much money it wants to raise, and then chooses the lowest price that allows that to happen."

The benefit of a Dutch Auction is that it takes the brokerage houses out of the control loop. They don't get to lowball stock prices in hopes that they rise after the initial trading begins. This also ensures that priority clients do not have all the access to the stock.

The negatives surrounding a Dutch Auction is that once the initial stock is traded, the chances of it taking a skyrocket-type of rise in price are much lower. In fact, according the NewYorkPost, Dutch Auctions may cause the opposite of rising prices. "The chances are the price will be much higher at the opening than it's going to turn out to be a few weeks later."

However, Google's intention of having a Dutch Auction is not the only decision to draw fire from the press. Google stated in their filing that there will be 2 classes of stock for the company. The first, Class A, is being offered to the public. Each share of Class A stock will carry 1 vote per stock. The 2nd class of Google stock, called Class B, which is not being offered to the public, will carry a whopping 10 votes per share.

This was done in order to keep co-founders Sergey Brin and Larry Page, who have power over a combined 77.1 million shares, in control of the company. By some news publications, this is referred to has Google's founders wanting their cake (the money from the IPO) and wanting to eat it too (staying in control of their creation).

This has come under heavy fire from a number of financial news outlets.

Another point of contention concerning the press and Google was the release of Google's ‘Letter From The Founders' or the ‘Owners Manual' as its called. Google included this letter within the company's filing with the SEC, and it too has come under some criticism.

An article from News.com was particularly scathing. An excerpt from the article reveals some of the negativity that the press is beginning to have towards Google the corporation.

Bold text is taken from Google's S1 filing, the following non-bold text is News.com's response.

Google is not a conventional company.
"Kudos to Google's public relations office for bamboozling the business press, but the reality is less exciting than the myth… Google can claim that it's not a conventional company, but Apple, Netscape and a clutch of other one-time technology hotshots also thought that they had broken the corporate mold at some point in their histories."

The article also brings Google's designation of stock classes and the votes each class holds:

Therefore, we have designed a corporate structure that will protect Google's ability to innovate and retain its most distinctive characteristics.
"Here's the interesting angle. Google's founders want to have their cake and eat it, too. The real message is: ‘Fork over your money and trust us. We know better, and you don't get to control us.' Who knows? The public has a short memory and may even go along for the ride. So soon after the bursting of the dot-com bubble, dreams of discovering the next Netscape (prior to the Microsoft death ray treatment) linger on."

It seems life as a public company may get rather unpleasant for Google.

Google's Trademark Trouble

Since Google has filed their IPO, they have taken criticism and, in some cases, faced legal action for the company's policy towards trademarked keywords. In the past, a slogan that was trademarked was not allowed to be bid on for Google's AdWords purposes. Only the companies that controlled their respective trademarks were allowed to bid on the related keyword.

Google now allows competitors to bid on trademarked keywords that will be shown in ad copy that is limited to the US and Canada. According to Google's trademark complaint disclaimer page, companies outside of North America are not allowed to bid and/or use trademarked phrases in ad copy OR keyword advertising.

However, it seems that Google is coming under heavy European criticism and legal trouble for violating its own rules. Google has had suits filed against it in France and Germany for violating EU trademark laws. Apparently, Google allowed competitors to use keywords that were trademarked by other companies.

The fallout of these mistakes are unclear as of this time. Google was told to cease its keyword usage in both cases, but in Germany, according to metaspinner media, the search engine has not ceased its use of the trademarked keyword "preisparaten". The German portal plans to file another injunction to stop Google's use of this keyword.

Trademark usage is not the only fire that Google has felt from the European community. The EU also has issues with Gmail's privacy practices. These stories have been reported worldwide, potentially damaging Google's image of "do no evil".

AdWords Click Fraud

As reported in WebProNews, Google has another potentially public image damaging issue on its hands. Google receives 95% of its revenue from its AdSense/AdWords programs. In fact, the search engine related keyword ad sales accounts for 35% of advertising revenue that was received in 2003.

That news is indeed positive. There is another side of that particular coin that needs to be considered. Garrett French, editor of WPN, wrote an article called Click Fraud: The Google Killer. The article pointed out that Google is constantly having to deal with invalid clicks, which advertisers must pay for.

"Google listed click fraud as one of the potential 'worries' that would-be investors should consider. In fact, they admitted to regularly paying refunds because of click fraud and stated that they may have to make retroactive payments."

The problem with this is not so much the click fraud itself. The trouble starts when the mainstream media gets ahold of stories like this and reports them, public perception of Google can and probably will drop.

More on Click Fraud

That is the effect of negative press in economic world today. If the public loses faith in you, public perception of your company has nowhere to go but down.

Just ask Microsoft about that. At one point in time, Microsoft was considered the top company in the US, if not the world. They had literally cornered the market in the operating systems field (and still do). Then the lawsuits and anti-trust filings began. Now Microsoft is seen as the big evil company that is out to take your money while delivering a less than secure product.

Is this the future that awaits Google? Only time and public reaction to the press that Google receives can tell.

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About the Author:
Chris Richardson is a search engine writer and editor for WebProNews. Visit WebProNews for the latest search news.

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