Google Following Microsoft into Regulatory Mess

Rob Enderle
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I’m convinced Google has a death wish.

I watched Microsoft blaze this trail in the 1990s. Before that, you had to go back a long way (to Standard Oil) to see that kind of behavior. At that time, Microsoft first upset the U.S. and then the EU. After billions in fines, it discovered that much of what these governments wanted was actually good for the company.

Google has had Microsoft as an example; the founders probably discussed Microsoft’s problems in school during the period that they were going on, yet the only difference between Microsoft and Google’s approach is that Google looks even more arrogant. Granted, Google is arguably far more powerful than Microsoft was, but just because you can do something more stupidly doesn’t mean you should.

I think it would be good to discuss what is happening and why it is happening.

Google’s Privacy Problem

At the core of Google’s problem is its model, which makes its users into products and the advertisers into customers. In a traditional company, the revenue source and the user are more tightly coupled, so if you keep your users happy, you maintain your revenue stream. But in Google’s case, the user is what Google sells to the advertiser; the user is the product and not one that Google creates. Google, at least for its primary business, sells you to others and your compensation is access to free stuff.

This creates an inherent arrogance with regard to users and partners. You don’t value folks you are giving free stuff. This was said best by one of the Android licensees, describing their relationship: “You’re getting Android for free, you should say thank you or just shut up.” Basically, in Google’s eyes, we and the folks that license Google’s technology for free are dependents, and you don’t respect dependents. And if you don’t respect dependents, you likely don’t feel they need a luxury like privacy.


In contrast, the Google executives themselves are very private. Apparently, the Chairman, while overseeing Google’s efforts to buy drones to fly over our homes, is worried his neighbors will do the same to him. This just showcases the Google executive staff thinks they are a different class of people and when executives of a company separate from their users that much, they’ll do stupid things. It is that elitism and arrogance that is at the core of the company’s problem. They simply don’t think they are like us.

U.S. Privacy Suit

This week, a federal judge rejected a Google bid to dismiss a privacy lawsuit on Google’s alleged comingling of user data and sales of that data to advertisers without permission. This is a high risk because it is already in Federal court and will get substantial publicity. A win by the plaintiff could result in additional class-action lawsuits as law firms start to swarm the company like sharks over a wounded tuna. And, like it did for Microsoft, the action could spread to Europe and encompass most of Google’s massive customer base. The combined damage from the exposure, in the extreme, could move into the trillions if it continues internationally, well beyond any insurance company’s ability to pay and Google’s existing massive reserves. Adding to this is a similar finding by an Italian court that could result in criminal charges against the company and its executives.

All they had to do to avoid this was ask permission properly, but you don’t ask permission of people you sell to others.

Anti-Trust Anti-Competitive

It isn’t just arrogance against users that has become a problem. It is arrogance against the various court systems. For instance, after being forced to implement a “right to forget” rule, Google executed a Malicious Compliance strategy. This is when a firm interprets a ruling in such a way as to drive behavior that is damaging to the very population it was intended to help. In this case, rather than focusing on helping people with malicious reputation problems (folks are badmouthing them for their own ends), Google instead started deleting legitimate news articles on pedophiles, criminals and crooked politicians and then telling everyone it was doing this because it wanted the order overturned. This would be like being told to drive 25 MPH through a school zone and interpreting the rule to mean you were to drive through the kids crossing the street at that speed, and then blaming the deaths on the judge, thinking he or she will reverse the order to protect the kids rather than toss you in jail forever. Judges and politicians don’t find that behavior funny at all and apparently they may be substantially upping investigations into Google’s alleged anti-competitive business practices as a partial result.

Thinking you can play this kind of a game with a government, particularly after what happened with Microsoft in the 1990s when it did pretty much the same thing, makes no sense. But it flows with the belief that dependents, including governments, should either say thanks for the laws that Google chooses to follow or shut up and take the free stuff on behalf of their constituents.

Wrapping Up: Google Is Its Own Worst Enemy

I think Google needs to look into the mirror. It really doesn’t have to worry that much about competitors. If it simply looked at its users and treated them as it would like to be treated and took governments seriously, much of its existing pain would likely disappear. But as long as it thinks itself superior and treats users and partners as dependents, or worse, as property, those agencies funded to protect us will find Google a convenient and popular punching bag.

Learning from the mistakes of others, in this case Microsoft, would have been a far less painful process. But some folks have to learn by doing. I expect things will get far worse for Google in the future if it doesn’t change its behavior.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+



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