Zacks_Analysts' Blog : Is There an Evil Side to Google? - Analyst Blog

Is there an evil side to Google (GOOG)? The company, which changed the way we define the Internet, appears to be increasingly attracting bad publicity as it enters the 13th year of its eventful journey. A rising number of lawsuits and accusations against the search giant are throwing bad light on Google’s do-no-evil image.



Regulators too have their eyes on Google’s business practices, as the company is repeatedly accused of killing competition and misusing its size and influence to muscle out smaller rivals. Is Google really evil?



Maybe not, because the company was set up with the mission of helping people find what they want. In most cases, it is Google’s growing popularity that seems to be the bone of contention. Save for a few lawsuits that may or may not lack substance, most cases appear to be an attempt to milk Google’s cash-rich balance sheet.



Undoubtedly, Google has set a very high standard for itself and as it gets there it is making some enemies in the process. Users, on the other hand, do not seem to mind when most of the services that the company offers come gratis.



Notwithstanding loudly professed claims that Google’s leanings are not idealistic and that the company tries to put its politically correct foot forward, the quality of its search results, the free email service and free mapping software all help make life easy and smooth. However, that is where some of the problems seem to emanate.



In an attempt to collate the world’s information and offer it through specific searches, the company ends up storing information about users that vexes advocates of privacy. Is it Google’s way of monopolizing the Web or simply its fascination with size?



Google says it is only interested in gathering the world’s information and as it organizes and dishes out information through specific searches, it charges companies for placing their advertisements beside the search results.



However, those using Google search, the Gmail email service or Picasa (for sharing photos) sometimes also accuse Google of storing their IP addresses to track their search behavior. Google says it has put strong privacy safeguards in place but its claims sometimes lack conviction. (Chief Executive Eric Schmidt has even said that if you want to keep something private you shouldn’t be doing it at all.)



A confident Google goes on buying smaller firms, offering free apps and adding new services to its existing applications in an attempt to redefine the Internet, seemingly unfazed by the charges. Perhaps for a company of Google’s size and popularity such accusations are normal, but they come with some downsides. Authorities at the Federal Trade Commission and the Department of Justice have received complaints regarding the company’s is infringement of patented technologies and, above all, attempting to control Internet traffic.



Online travel companies saw red when Google announced in July that it was going to acquire online travel service provider ITA Software in a $700 million deal. Specialized travel companies rushed to antitrust lawyers complaining that Google was trying to move into a new and specialized service, and would become the default choice for searching airfare deals.



In late August, authorities at the Justice Department opened an extended enquiry into the acquisition and started looking into complaints, including allegations that the company was working on a plan to serve travel-related information next to the search results.



The Mountainview, California-based company says some disgruntled competitors are trying to cash in on the popularity that comes associated with Google. Financial stakes aside, in the complex world of the Internet, some of the company’s problems appear to be the results of its own missteps. One of its popular services, Street View, has provoked privacy watchdogs as countries from Spain to Germany have accused the service of unauthorized data collection. Google admits the Street View cars had picked up fragments of communications from unprotected wi-fi networks.



Although the company’s computational elegance places it firmly ahead of its competition, its flagging image is a reminder of that fact that moral compromises are a way of doing big business. Deft algorithms aside, its actions sometimes appear intrusive as the company tries to balance users’ good with that of its own. Google remains the focal point of the Web as it continues to define the Internet.
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