“Do No Evil” Should Avoid the Arbitrary and Capricious – It Invites Regulation…for Us All

by Mike Wendy on February 24, 2011

The Wall Street Journal reported today that Google penalized Overstock’s search results because the retailer had gamed its search rankings – working to artificially boost them – in violation of Google’s policies.

Says the WSJ:

…Internet search experts say that sites associated with educational institutions, which come with “.edu” in their Web addresses, are often considered by Google’s search algorithm to be more authoritative than commercial sites…

…In Overstock’s case, the retailer offered discounts of 10% on some merchandise to students and faculty. In exchange, it asked college and university websites to embed links for certain keywords like “bunk beds” or “gift baskets” to Overstock product pages…

This activity kited Overstock’s search results.  That is, until Tuesday.  Notes the WSJ:

…Overstock’s pages had recently ranked near the top of results for dozens of common searches, including “vacuum cleaners” and “laptop computers.” But links to Overstock on Tuesday dropped to the fifth or sixth pages of Google results for many of those categories, greatly reducing the chances that a user would click on its links…

While I do not have a problem with Google protecting its brand, the second sentence in the last paragraph could be troubling for the company…and beyond.  The indication of control – i.e., dropping Overstock’s rankings to the bottom – and its effect on Overstock (or other similar “transgressors”) – i.e., reducing the odds that people will see the page – cannot reflect well on their efforts to look like a “do no evil” corporation.

It makes the company look arbitrary, capricious.  And where this happens – with such a ubiquitous, and arguably important, technological tool – it’s bound to raise eyebrows among the regulatory class.

More specifically, many of those watching the space – like Frank Pasquale of Seton Hall – believe Google’s search engine is basically an essential facility.  For them, this means it should be regulated by the government to ensure fairness and equitable outcomes for search and related platform activities.

This would doom “Search.” It would also lead to other regulation throughout the ecosystem, using similar principles to deal with “important” companies that affect the public interest.

Competitors brought Overstock’s activities to Google’s attention.  It is good that Google addressed the issue on its own, without government involvement.  But, the self-policing will not go unnoticed.  Other competitors will be sure to do the same to other competitors.  And, at some point, government will step in.

Why?

Because government regulators don’t like “black boxes” (like Google’s search algorithm) that so many depend upon, which look like they can be arbitrarily rigged to the benefit, or detriment, of any given party.

Each time we see stories like this, it reminds regulators of all the black boxes on the big, magic Internet that “need opening,” not just Google’s.  Needless to say, the global medium presents a target-rich environment for regulators and competitors alike.

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