Litigation has fascinated me for most of my life. At various times, I've planned for a career an attorney, spent a number of years on litigation strategy and worked in IBM's legal department.
One of the most iconic moments I covered was Microsoft's response to the call to separate Internet Explorer from Windows. Microsoft, in its then-arrogance, essentially went to war with the United States government.
You know how that turned out: Billions in judgments and settlements against Microsoft, the resignation of Bill Gates (since the process took the fun out of the job for him) and close government oversight for much of the last decade. All this hurt Microsoft's independence, competitiveness and financial performance significantly.
Well, I just watched a video from the recent meeting of the National Association of Attorneys General, and it looks like Google has inadvertently gone to war with this entire group. As with the Microsoft antitrust case, I don't expect it to end well.
Death by Arrogance a Painful Way to Go
Companies that grow quickly generally don't understand the limitations to the power they've achieved. It makes sense—you have people who, over a short period of time, go from trying to figure out how to pay rent to being able to buy pretty much whatever they might want. They suddenly start to think they can do anything. The results range from substance abuse to infidelity to privately flouting rules, and laws, which they feel don't apply to them. In many cases, they're right. But not all the time.
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Microsoft, for example, concluded that it could do whatever it wanted with its products. No one had the power to tell it what to do. That's virtually never the case—governments that have standing armies will always have more power than a company—and executives who forget this tend to find their careers, and companies, going through avoidable pain.
Eventually, Microsoft adopted a practice of cooperating with governments. For Google, it appears this process is only just beginning.
Google's War with the U.S. Attorneys General
Among the videos from the June 2013 NAAG meeting, the one to watch is called "Intellectual Property Crimes Online: Dangerous Access to Prescription Drugs and Pirated Content." In this talk, moderator Mississippi Attorney General Jim Hood describes Google the same way an AG would have talked about the mob decades ago. I'm not exaggerating.
For example, the attorneys general asked Google about illegal behavior—namely, promoting the sale of drugs without a prescription through auto complete text options in search boxes. Google "lawyered up" in response to letter after letter from Hood and, finally, threatened litigation. Granted, it wasn't the mob's horse head in the bed, but threatening an attorney general is never a good idea.
What's interesting is that, when the AGs made the same request to Yahoo (powered by Microsoft's Bing), Yahoo complied within three days. Years ago, AOL likewise complied when AGs asked the ISP to crack down on child pornography.
Google, on the other hand, fought the AGs on auto complete since November, Hood says. Only after putting Google under litigation hold, meaning that Google has to retain all emails and documents related to the issue, did the search engine change its auto-complete options. It also removed many, but not all, of the YouTube videos that explained how to buy drugs online without a prescription.
That said, Google still displays ads from questionable online pharmacies, and Hood and his team were able to anonymously buy generic Viagra, "bath salts" and oxycodone from these sites without a prescription.
Much of the talk presents example after example of illicit behavior tied back to Google. It's a fascinating talk but, at the end, you may have a hard time seeing a much of a difference between Google and a criminal organization.
Hood, who is the co-chair of the Department of Justice's Task Force on Intellectual Property, has put Google under litigation hold.. In addition, Hood asks the California AG and other AGs to join him in going after Google investors and advertisers and suggests a broad media and legal campaign against Google.
A Costly Teachable Moment for Google, Its Customers
It's clear that Google, no more than Microsoft did over a decade ago, is completely unaware that some see it as a criminal organization with the capability to effectively buy its way out of prosecution.
This is actually a bigger problem for Google than it was for Microsoft, as bundling IE with Windows wasn't connected to child and adult safety. Google's behavior is being tied to drugs that can cause injury or death. This could certainly damage Google's public image and potentially result in expensive class action litigation. In addition, while the feds targeted only Microsoft, today's AGs are planning to go after Google investors and advertisers, too.
There's a teachable moment here. In contrast to Yahoo, Apple and Microsoft—all of whom were touted as "good guys" during the NAAG talks—Google has decided to go to war with the attorneys general. As a result, Google's on the cusp of having its brand trashed and its advertisers flee. No advertiser wants to be connected to underage prostitution, human trafficking or date rape drugs—all mentioned in the panel presentation—and as things stand they are certainly vulnerable.
If these AGs follow through, then anyone doing business with Google may be connected to illicit behavior. The NAAG video is worth watching for two reasons: It points out how not to behave as a company and, in a very real sense, it suggests that you might want to distance yourself from Google until this all settles. There's even an example of Google's ad process connecting Mazda to terrorists. What if that was your brand?
Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.