How Google has gone to the dark side and why it threatens our social democracy model.

« Advertising income often provides an incentive to provide poor quality search results » Sergeï Brin & Lary Page 1998

The aim of this post is to demonstrate how wrong Google has become and the threat that mega tech companies represent to our society. By focusing on Google we will show how bad monopolies are, we’ll look at the consequences it has on our society and what we should do to avoid it. We’ll analyze thoroughly details of the advertising system to understand Google’s behavior.
This post is exclusively focused on Google but it is an example of a more global problem. It follows a 4-year old article I wrote just after Donald Trump’s election, which explained the threat to our societies caused by highly automated companies like GAFAM and the VC model were creating. 4 years later it is truer than ever.

The current post is structured in 2 sections, the first one describes the current state of Adwords (the Google advertising system) and how Google iterated to maximize its revenue by fooling — small steps one after the other — both the user of their search engine and the advertiser.
The second part is a discussion on the consequences of this behavior, the importance of search in our societies and why the only solution is to split Google into several independent entities and more generally use antitrust law to break monopolies. This is a long post as it describes 20 years of small moves that have led us to the current monopolistic and unlawful situation.

About me: My name is Sunny Paris (for real), I’m French and part of the very first wave of Internet entrepreneurs. I’ve discovered Internet during my science PhD’s thesis and jumped on the bandwagon to create my first website in 1996. One year later, I started Weborama.fr with two friends of mine (François Chassaing and Rodolphe Rodrigues). I have always been obsessed with discovering great content on the Internet and Weborama started with a simple idea: rank websites both by votes from a community and by their traffic in order to discover the most interesting websites in several categories. With time, Weborama evolved from a B2C ranked directory to a B2B adtech company specialized in adserving, anonymous user profiling and even inline text ads. The company went public in 2006.
In 2008 I co-founded with Guven Urganci and Alexis Sukrieh, Yoolink, a web2.0 service that was –again– a way to discover great content, but this time through social bookmarking. I am now the CEO of noCRM.io a Lead Management Software which relies a lot on Google, and Adwords in particular, to acquire customers.
Long story short, there are not that many people with such a long experience of the online search and advertising industries both from a business and technical point of view and I hope my analysis is worth sharing.

How Google has lowered its search experience in order to maximize its revenue

So let’s dive into our subject and look at how Google has screwed its users step by step. When Google search started, it was completely ad free and it quickly gained an incredible (and justified) momentum. The company was looking for a business model and decided to go for an ad sponsored economic model and launched Adwords in 2000.
For those who don’t know about Adwords it’s an advertising platform where you bid on keywords like “Project management software” and if you have the highest bid your ad will be displayed on the result page. Google only gets paid when a user clicks on your link and not when the message is displayed — it’s what we call performance based marketing. Twenty years later Google is now the biggest mastodon in the ad market and the almost monopolistic leader in the search market (except in China and Russia).
What I first find interesting is the evolution of the way sponsored search results were displayed on Google result pages (you can check the evolution on this website).

At the very beginning you had sponsored results on the right of the page and up to two large sponsored results at the top of the page. The sponsored results were displayed in a very identifiable and different way than natural results. They were highlighted in color, and it was easy to identify what was a natural search result (aka organic result) and what was coming from the paid advertising. Depending on your screen size, at that time, from 2 to 5 organic results were immediately visible on the search result page.

As Google needed to grow its financial metrics they step-by-step changed their search result page; Google revenue depends on the number of clicks, increasing click rate increases revenue. So they started optimizing their result page: they first removed the background color of the right column to make it less identifiable as an ad. Then they displayed more ads at the top, pushing a little bit lower the natural results. As a next step they removed the background colors in all ads, stopped displaying ads on the right to add more ads at the top and at the bottom. They replaced the “Sponsored Link” notice by a short “Ad” with a background in a box. Finally they made some ads even bigger with “site links”, removed the box around the “Ad” mention, removed the remaining color and added one more ad result to be sure that no organic result was even visible without scrolling.

See below today’s Google results:

So actually:

- On some competitive keywords not even one organic result is displayed without scrolling (if you want to have fun, check “flower delivery” and see how much you need to scroll to display the first natural result).

- The only notable difference between a paid or an organic result is the two letters word “Ad” before the URL.

In fact, everything on the page is here to fool the user. It is not by pure luck that “Ad” was chosen over the previous “Sponsored link”, it is the shortest and less noticeable word. In French for example the word used is “Annonce” and not “Publicité” or “Pub” or the previous “Lien sponsorisé”. Why? Because “annonce” is ambiguous where “publicité” is not. Annonce’s main meaning is announcement not advertisement, the correct translation using “annonce” should have been “annonce publicitaire”.
If you look closely at the search results you will also notice that the terms you searched for are bolded inside the ads blurring a little bit more the distinction between ads and organic search results. Everything is done to hide the fact that an ad is an ad.

Why click rate and volume is so important to Google

Google has become so big in the search advertising space that increasing their click rate by as little as 1% directly increases their revenue and EBIT by 1 Billion $USD (2019 search revenue). Since almost everyone in western countries are connected to the internet, the number of users connected does not grow as strongly as before, so Google revenue growth can only come from higher price and higher click rates.

Google has built a great search engine that not only finds documents that match your search terms but — using backlinks (and tons of other parameters since the early days) — also finds the “best documents” matching your search request. Being first on Google mean being the “best result” and as a consequence getting the most trafic. Through these 20 years Google has built an incredible brand and a trust relationship with its users based on the quality of its service, but Google is now using this trust to fool its users and increase its revenue.

It’s interesting to look back at the vision the founders of Google had at the very beginning. In the first appendix of their famous paper the anatomy of a search engine, Sergeï Brin and Larry Page wrote presciently in 1998: “we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers » not only where they right 20 years in advance, but they missed that, thanks to a monopolistic situation, this type of search engine can be biased only toward its own revenue and against both consumers AND advertisers. This happens because Google is at the same time the content (the search engine) and that content’s only advertising platform (adwords).

How advertisers are getting screwed too

Let’s now have a look at how Google screwed the advertisers. I will use examples coming from my own experience at noCRM.io. There are 2 ways for Google to work against a vendor, one is by not displaying it in its organic results to force the vendor to advertise on Google, the second is by fooling the merchant on the advertising platform. I will focus on the advertising platform changes even though Google has used both methods. Keep in mind, however, that Larry Page and Sergeï Brin also wrote it in their famous 1998 post “« advertising income often provides an incentive to provide poor quality search results ». I can’t agree more with their vision.

Changes in the bidding platform
Bidding on Adwords, the Google advertising platform, is a complex task full of pitfalls; it’s so complex that it’s in fact a job by itself.
Advertising in general is a constant fight between precision of targeting and volume of ad diffusion. The more precise you want to be the less volume you will have, and the more volume you want the broader your targeting needs to be. To “help” you achieve your goal Google wants to simplify the problem so you merely define a budget, some keywords and then let Google “optimize” everything for you. But for whom will they optimize for, the user, the advertiser or their own revenue?

If you’re a desktop software editor advertising on Adwords, there are a few things that you want to avoid: you generally don’t want to bid on mobile phone users and you don’t want to bid on people using terms like “free”. This is something you learn quite quickly and that Google knows perfectly as well. If Google was on the side of its advertisers it would warn them immediately. We have one partner in Vietnam that was surprised to have a very low conversion rate, I told him that he was probably advertising on mobile phone without knowing it. After checking we found that 90% of its traffic was coming from mobile phones paid at a high price for its value.

Of course we can argue that it is not Google’s job to warn you of this, and that it is your job as a bidder. Fair enough. But if Google doesn’t warn you on those kind of things, are you really sure you want to let them “optimize” your budget?

Now let’s have a look at one fact that led me to write this post. When you bid on a keyword like “lead management” or “sales CRM” as there are so many possible little variations around you might want to choose to do “Broad Match” it means that Google will display your ads on similar search. What was not my surprise to discover that our Ad was appearing on request like

“chatsilo”, “liondesk”, “jobnimbus”

You don’t know those names … me neither. They are distant competitors of noCRM in the CRM space. So why do we appear on those terms? Google has identified terms related to those names so it decided that searching for “liondesk” was the same as searching for “CRM for SMBs”. So there were occasions where people searched for one of those products and were displayed noCRM.io as one of the top results (if not the top one). You might see this as unimportant but you’re wrong. It’s extremely important. I’ll explain why.

There are two kinds of search on the internet, the real search such as “lead management software” where you’re searching for lead management product or info on the subject and the “navigation search”. A navigation search is a search where you know the result you want to go to. For example if you search for Ebay, Netflix, or CNN, most of the time you just want to go to their website, you’re not searching, you’re navigating. Those types of requests represent more than half of the searches. Also, if you remember what I wrote earlier about backlinks and casting a vote, each time a website has a link to the Netflix website with the word Netflix in the link, it tells Google “this is the address of the Netflix website”. So Google perfectly knows that when you type “Netflix”, “noCRM” or “Liondesk” the first result should be their website (in the user experience perspective). The problem is that adwords are displayed above organic search results. So if you search for LionDesk and see an Ad for noCRM it means that LionDesk has to pay too for being in the first spot, which is the place they deserve for this request.

We’re in a situation where your competitors can appear as top results on search on your own brand without bidding explicitly on your brand, forcing you to pay to be first. In fact Google is setting a tax on the Internet by fooling the advertiser at the cost of the final service to the end user. You need to pay for your name.

So now, do you really trust Google to optimize your ads?

Hiding the machinery
Last but not least, is its most recent move Google decided to stop displaying in its advertiser reports, search terms with too small a volume for “privacy” reasons. Basically, they’re hiding from me, as the advertiser, some of the queries on which my brand appears, forbidding me for example to expressly exclude search terms I find irrelevant and thereby taking away from me a way of verifying what is happening. In some campaigns up to 70% of the searched terms used by people clicking on our ads where hid to us and those requests had a lower average click rate that the one displayed, so probably full of irrelevant terms we can’t remove.

Google wants their advertising platform to be a complete black box where you just put a budget in at their only benefit.

The question is now should we do something about it, why and what?

We need to break the de facto Google monopoly

As unlikely as it may be, it is a remark from Steeve Banon, the far-right activist, that caught my attention. He said that Internet search should be a public service. I agree with that. Today the Internet has taken such a big part in our life that access to it is as essential as access to water, electricity, and communications. You can’t have one private company holding the keys to the only access to all Internet content. Google is actually so powerful that it is taking a stake in all businesses thanks to a monopolistic position, and everything shows that Google has the intent to use its dominant position to generate as much revenue as possible.

It’s not only that Google takes an advertising slice on all the funds raised here and there in the world, it’s not only that Google optimizes its taxes not to pay what it should in each country where its ads are displayed, it’s also that ranking is a choice.

There is no “best ranking” or “fair ranking” and you don’t want only one company to have the right to choose what is the good ranking. You don’t want a unique company dictating to content writers how they should write to appear in the search results.

Today starting a new search engine from scratch is almost impossible, the costs are too high and the habits of the users are too strong. The only possible contender could be Apple due to the size of its mobile business but even then, they’d have far fewer users than on Android (the Google operating System).

Google has a de-facto monopoly in the search business and as a consequence in the ad business. You could argue that we could stop advertising on Google but it’s the unique point of entry when searching for billions of people. Can companies take the risk of not being mentioned in the place where all the traffic flows? The risk of never appearing when some asks: “What software should I buy for this or that?”, “Which hotel should I go in here or there”

Splitting Google is the only solution
To fight that situation and foster innovation we need to break Google into at least 2 pieces. One part should be a technology company that provides a search toolkit - let’s name it GSearch - and the other a company managing the Google brand (ie the google.com website and its local declinations) as well as the advertising on those properties. May be the second part should also be split in two but that’s less critical.

What does it means? GSearch would provide a search architecture for the world which should be organized around several components:

- Crawling

- Indexing

- Ranking

- Spam detection

- Full search service…

These services would be sold to Google.com and to anyone else who needs it. Any private company or government would be able to buy any of those services in order to provide a search powered by GSearch.

Each customer of GSearch would be able to tweak the ranking and create it’s own result pages and add custom services. The financial conditions between GSearch and Google.com should be public in order to ensure a fair competition.

Doing so would reopen the competition on the two side of the market: search technology and advertising.

New services would be able to create their own results page that could differentiate from Google.com’s one in a lot of important ways:

- Results display

- Difference between sponsored results and natural results

- Free vs Paying (who knows ;-)

- Track or do not track users

- Additional / local services

It would also let technical innovation flourish by giving companies entry points in the search stack. It is almost impossible to challenge Google as a whole on the search but you can challenge pieces of technologies. You can create better crawling technologies, better query analysis technologies, better ranking, better additional services… Piece by piece a new ecosystem could emerge. Some local search portals (or aggregation of local search portals) would grow and generate enough traffic to become interesting alternatives to Google.com in terms of advertising reintroducing a competition that would benefit the end users.

Technological capitalism in its current form is a dead end

This post was entirely focused on Google but Google is part of a more generic problem related to the concentration of profits in a limited number of mega companies who employ a minimum amount of people.

One of the core ideas of capitalism is that, in the very large majority of cases, private initiatives are more efficient than public ones. Competition and financial incentive push people to give their best efforts to solve problems, innovation goes up and prices go down.

With current capitalism we have 5 companies representing 25% of the S&P500 value which is crazy. We all know that once a monopoly is secured, prices go up (either in terms of cash paid or data collected) and margins are recreated at the cost of the final consumer.

Besides, those companies are based on automation, and as I discussed it there, they change the structure of our societies, having on one side highly educated and skilled people with a high salary and on the other side low skilled independent workers providing services to the first ones. As a result, these big companies, generally ruled by people who identified themselves as progressive tolerant people will push our societies into the hands of populist leaders. The number of low skilled workers is far greater than the number of high skilled ones and these workers need to be involved in the building of our society and not being left apart.

Fighting these mega corporations is not only a matter of fair competition; it’s a matter of saving our social democracy model and avoiding future wars. It’s been more than 20 years that no big anti-trust process has taken place, the last massive company breakup being AT&T in 1982. This needs to change and we need to push our politicians to act strongly.