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Google Is Getting Evil

Recently, Google (NASDAQ:GOOG) has been under fire for practices that some rivals think harm competitiveness in the tech sector. Those claims were defused last week as Google won a landmark case with the U.S. Federal Trade Commission, but it’s worth wondering where Google goes from here.

Because it seems like only a matter of time before Google runs afoul of regulators again. That’s because as GOOG becomes increasingly dominant in many areas of technology, it also is becoming more aggressive in its practices.

Consider that …

Does this sound like a company that is sticking to its credo of “Don’t be evil”? Or does it sound more like a big U.S. corporation looking to preserve its piece of the pie?

You can’t fault Google for actually trading like a big corporation, because … well, that’s what it is. The company has a $240 billion market value and will record more than $40 billion in revenue when it reports its fiscal 2012 numbers in a few weeks. It’s a publicly traded stock, and though insiders have great power, it’s still beholden to shareholders in many tangible ways.

As a publicly traded stock, Google is right to try to create a diversified revenue stream. Search and related ads still make up 96% of Google revenues, so it’s crucial for investors to see growth in other areas of consumer technology.

Unfortunately, that means Google isn’t going to be able to be Mr. Nice Guy in Silicon Valley anymore.

There’s a fascinating read out there making the rounds; it’s penned by James B. Stewart of the New York Times and talks about treading the line between “aggressive” and “evil,” between the desire to liberate data and the desire to keep making profits. The article summarizes complaints from competitors — which have gone before the European Union as well as the U.S. — who are worried about Google practices that give its own products and services priority in search. The list of plaintiffs include review site Yelp (NYSE:YELP), travel site Expedia (NASDAQ:EXPE) and especially Microsoft, which remains in Google’s shadow on search, mobile gadgets and a host of other areas.

So how will Google manage itself amid these complaints and amid the clamor for diversified revenue? We shall see.

But expect the gloves to come off as Google looks to protect its turf as well as grow its bottom line. And though GOOG claims it will fight fair, don’t think that means the company will hesitate to throw some haymakers at undersized competitors while it can.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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Comments
  • http://www.facebook.com/people/Mark-Velazquez/502306406 Mark Velazquez

    Google is far from a Microsoft. They are far less a monopoly. We have a choice in service. Years ago, Microsoft and others refused to make software for Mac and Unix. That is a monopoly. You can still use Bing, Yelp and others. People prefer Google because it is simple, easy to use and different.

  • Ed

    Let’s be clear about something here… I don’t disagree that Google is required to act like a mega corporation for it’s share holders sake, especially when it comes to innovation and competition. But when it comes to the general public and the FREE services it offers (services you ARE NOT REQUIRED to use btw), I strongly disagree that Google is evil!! In fact I would suggest they are anything but, and this article’s first point of reference is absolutely untrue.

    The article says… “Google is now mandating participation in its social networking software G+ to access other services such as its Zagat guides, Gmail or YouTube videos.” This is utterly false. NO ONE is required to participate in it’s Social Network. Further, this statement and the referenced article are obviously borne out of ignorance. Google has consolidated all of it’s services under one umbrella, i.e. one login (user account) for everything. Just because you have to create an account (that happens to be tied to all of Google’s offerings) to use a particular Google product does not mean you are required to participate in all of the services they offer. It simply means that you can CHOOSE to participate in the services that are right for you. Shesh!! It’s called a single-sign-on architecture.

    Shesh… stupid fear mongers… As for the rest… I say go get ‘em Google. They clearly have to innovate to stay competitive (which means better stuff for us – the consumer – in the end), and they certainly have to protect their market share so they can continue to fund their innovation. Get it straight people!!

    • http://twitter.com/JeffReevesIP Jeff Reeves

      The Wall Street Journal has a similar report. http://online.wsj.com/article_email/SB10001424127887324731304578193781852024980-lMyQjAxMTAzMDAwMjEwNDIyWj.html You’re right that nobody has to share pictures of their family regularly or comment on articles — that would be silly. But they are required to set up the account. The mere fact that you can’t only Gmail or Youtube and NOT G+ seems like “mandating” enrollment to me. Participation is indeed mandatory, but signing up is not.

      • Ed

        “Mandatory participation” as you put it, implies the act of actively making use of a particular product. When one creates a Google account, one is on required to “participate” in only the product they’ve created the account for. Your example of Gmail or Youtube are shining examples… And let’s be clear… one does not sign up for a Gmail account with out the expectation to use it for the sending and recieving of emails, nor does one register for a Youtube account without the intent to upload videos those are examples of participation. Signing up for one service doe NOT require participation in another.

  • http://pulse.yahoo.com/_QH25RVNTUIAU7HT6DQ7CONEO2U havasu46

    Google’s a socialize technology disease like the borg and will self destruct.

  • Leira Mendez

    uhhhhhh i have nothing to say

  • RobK

    Hmmm, Google is interesting. They give me the creeps. But, I am not use to so much for free. One does not need to use them at all, period. You must elect to use the services. You are not stuck with them, like Windows lets say.
    Google is a game changer. Even M$ is changing the way they are going to offer office.
    Yeah, Google has its problems. I am not saying that it does not. But it has done a lot for a lot of people. And for that, I thank you.