CEO Sundar Pichai defends Alphabet (GOOGL - Free Report) -owned Google, French regulators get angry, the Looker acquisition falls under antitrust review, Google’s search market share shrinks and Google products are refreshed in this iteration of the Google Roundup. Here are the details-
Defending Its Legal Stand
Ahead of the congress hearing at which CEO Pichai said that the company has platform-specific groups responsible for moderating content and designated channels/avenues and people for addressing related concerns, the company, along with Reddit, the Electronic Frontier Foundation and others stressed the importance of Section 230 of the Communications Decency Act.
With a view to enabling free speech, the section provides immunity to online platforms like Google, Twitter (TWTR - Free Report) and Facebook (FB - Free Report) from objectionable content shared by users on their platforms. But some including Senator Josh Hawley think the protection under the section has been stretched beyond its original intention.
The senator is looking to bring new legislation that will require companies with more than 30 million active monthly users in the U.S., more than 300 million active monthly users worldwide, or who have more than $500 million in global annual revenue, to “prove to the FTC by clear and convincing evidence that their algorithms and content-removal practices are politically neutral," while "preserving existing immunity for small and medium-sized companies."
Katherine Oyama, Google's global head of intellectual property policy said that the section actually incentivizes these companies to self-moderate and that the company has 10,000 people on the job. Reddit CEO Steve Huffman said that "all-or-nothing moderation simply isn’t feasible," given the volume of content passing through the platforms.
Other matters lawmakers took up with Pichai include-
The manipulation of search results and pro-Trump content tagged as hate speech (Pichai said: there were issues with the sample size and methodology used by the government)
The work done by Eliana Murillo, Google’s head of multi-cultural marketing, and the company’s efforts, including monetary compensation to Latino voters in California and Texas (Pichai said he was not familiar with her work, but that there are no company funds or initiatives earmarked or provided for the cause. One the other hand, employees did do their own activism.)
China was a big issue with many. The questions were about how working with the Chinese government for a censored Internet was in line with Google “core values”, whether there were currently any employees working on the project, if not when did they stop working on it, who was heading the effort, whether there were ongoing discussions with the Chinse government, and if such a product would likely be introduced during his tenure as CEO.
(Pichai maintained that there were no current plans to launch such a product; he avoided mentioning the number of people currently on the job although at one time they numbered 100+, avoided mentioning the person heading the effort but said that it was through distributed efforts by Google search teams; he said that there were no ongoing discussions with Chinese government officials; and that if launched later, it wouldn’t be without a lot of thought and engagement.)
On the attempt by Russia to increase racial tensions during the last election campaign in 2016, Pichai said that this kind of behavior was limited on its platforms because they didn’t connect people socially but that they are vigilant and would be happy to share any findings.
EU Tech Regulator
France believes Google has flouted the “the spirit and the letter” of a Europe-wide copyright law that requires large tech companies (and targets Google) to compensate content creators for the snippets they display in search results. EU members had two years to bring their national laws in line with this law and France was the first to jump on board.
Google has held that it sends 8 billion visitors to publishers’ sites in Europe. So instead of paying publishers for the snippets, it has stopped displaying the snippets in France. Earlier, German publishers found that traffic to their sites falls when Google stops displaying snippets.
So Google’s measure has angered France, which believes it can force Google to both display the snippets and pay publishers. So it is pushing for the creation of an EU-wide tech regulator to treat Google like a systemic organization and regulate it heavily like a bank.
A French official was quoted as saying that "Over the short-term, we would like the European Commission... to look into whether legal action (against Google) is possible." France and Germany are getting together on this.
Google's Looker Data Deal
The U.S. Justice Department's antitrust division has started an intensive investigation into Google’s proposed $2.6 billion acquisition of Looker Data Sciences. The acquisition was announced in June.
Looker offers a platform-agnostic business intelligence solution that Google can sell its cloud customers. Its technology will help its customers analyze their data across Google Cloud, AWS and Azure, building upon its in-house Big Query data analytics tool and the capabilities it acquired through Alooma’s ETL tools and Cask Data’s data pipelining tool. It also fills a gap in Google’s own offering so it can now offer customers a complete, industry-specific analytics solution from data ingestion to visualization of results and the integration of that data and insights into daily workflows.
Looker has grown rapidly in the seven years since its inception, picking up 1,600 customers and reaching the $100 million revenue mark. It will benefit from Google’s scale. Google helped fund the company and is already in partnership with it, jointly serving over 350 customers. So integration should be smooth.
Gartner reportedly places Looker’s cloud computing infrastructure sector market share at 4%, which could be the reason for the antitrust scrutiny. However, the existence of larger players like Amazon (AMZN - Free Report) with its 32% share and Microsoft (MSFT - Free Report) with its 13.7% share (Canalys estimates) means that there’s a strong likelihood of the deal going through. Google’s 7.6% share places it well behind the top two players.
Google refreshed its product line at its annual hardware event:
Pixelbook Go: This is a mid-tier laptop weighing around two pounds, with a 13 mm thickness and 13.3-inch touchscreen, quick charging (2 hours of battery on 20 minutes of charging and 12 hours total). A textured bottom panel is intended to improve the grip. The starting price is $649, down from $999 for the current Pixelbook. It’s clearly meant for people on the go.
Pixel 4 and 4XL: The highlights of the new flagship smartphones, which come in “clearly white,” “just black,” and “limited-edition oh-so-orange” color options, include camera upgrades with a telephoto lens and night mode (for low-light nature scenes); a custom neural engine powering the phone; a radar-based motion-sensing option allowing you to snooze alarms, skip songs and issue other commands by waving your hand across the screen; a voice recorder app transcribing messages in real time; and a personal safety app than can among other things notify the police in case of a car crash. The phones will work with all major U.S. carriers. The starting price for Pixel 4 is $799 and for 4XL, it’s $899.
Pixel Buds: These are wireless earbuds launching next spring in the U.S. for $179. The company reportedly "scanned thousands of ears to create a design that's comfortable for as many people as possible."
Nest Mini: This is an improved version of its entry-level smart speaker, featuring better audio quality (louder bass) and better voice recognition (understanding commands over household noise, with adjustable volume control of Google Assistant).
Nest Wifi: With built-in Google Assistant, 25% better coverage and up to twice the speed of its predecessor, the new router facilitates better parental control, easier guest network setup and WiFi password exchange through the companion app. You can buy the two-pack option (router that plugs into the modem and a point that extends coverage) for $269 or the three-pack option that includes an extra point for $349.
Search Market Share
If eMarketer’s numbers are to be believed, Amazon is coming to eat Google’s lunch.
The research firm expects the search advertising market to grow around 18% this year. It expects Google to take a 73% share, followed by Amazon at 12.9%, Microsoft at 6.5%, Verizon Media at 2.0% and Yelp (YELP - Free Report) at 1.8%.
However, Amazon is poised to take major share from Google as it grow its business at a 30% clip this year. By 2021, the online marketplace will own a 15.9% share with Google dropping to 70.5%.
Amazon is winning on the strength of its product listing ads that the company can place suitably, when there’s a high intention to purchase, and when consumers are buying a competing product, based on its experience with and knowledge of its huge user base.
This may be happening at an opportune time for Google because it is currently up for antitrust scrutiny by the Justice Department, House of Representatives Judiciary Committee. The regulators are investigating alleged claims that Google misused/abused its dominant market position. The estimates at least show that while the company is dominant, it is not immune to market share erosion and so not anti-competitive.
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