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'Ransom': Google faces antitrust probes — and that's emboldening some of its critics

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People walk in Google's main campus in Mountain View, Calif. on May 1, 2019. -
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Critics of Google are beginning to come out of the shadows after years of quietly brooding in the corners of the tech industry, emboldened by the possibility that government authorities and the public are ready to bring Silicon Valley's biggest players down a notch.

Small tech firms frustrated by Google's power in the online advertising and search markets are adding their voices to the company's long-time rivals, such as the review website Yelp, speaking up against the quirky giant that is a consumer favorite for its ostensibly free and simple products.

Some small businesses use words like "ransom" and "shakedown" when talking about Google, while Google says it's acting in the best interest of consumers.

Those complaints were given a fresh jolt on Monday when attorneys general from 48 states announced an investigation into whether Google has used its power to hurt rivals or consumers. Google's parent company, Alphabet, confirmed on Friday that it's being investigated by the Justice Department's antitrust division and that it expects more states to open enquiries.

"Is something really free if we are increasingly giving over our privacy information? Is something really free if online ad prices go up based on one company's control?" Florida Attorney General Ashley Moody, a Republican, said at a news conference in Washington.

Google has long seemed immune to criticism in the U.S., fighting off an investigation into alleged monopolistic practices by the Federal Trade Commission in 2013 and cultivating goodwill among political figures and would-be rivals in the tech sector.

But as Google's power grew, particularly in the web search and online advertising markets, some companies began to allege that the company was favoring its own content at a cost to competitors. Now, those complaints could help form the basis of action by antitrust enforcers, privacy regulators and lawmakers, making Google the latest tech corporation — after Facebook recently and Microsoft years ago — to face the concentrated firepower of government authorities and rivals.

However, not every tech company is keen to speak out on Google, citing its power as well as its importance to many smaller tech companies.

The CEO of Basecamp, a small software firm in Chicago, helped set off the newly skeptical questions this week when he blasted Google for its policy of allowing anyone to buy ads related to a brand name; if someone searches Google for "Basecamp," they might first see an ad for the company's rivals.

"When Google puts 4 paid ads ahead of the first organic result for your own brand name, you're forced to pay up if you want to be found," Basecamp's CEO Jason Fried said on Twitter on Tuesday. "It's a shakedown. It's ransom."

The tweet went viral, with more than 34,000 likes by Friday, but it also prompted other companies to tell similar stories, going public with their frustration over how much of their advertising budgets they see as being wasted on Google's search ads — with no real alternative.

Nick Francis, the Boulder,Colorado-based co-founder of the software company Help Scout, volunteered that his company had spent $25,000 last month "on this ransom," a five-fold increase from a year earlier. "It's bonkers," he said.

Tech startups have long grumbled about how much of their budgets they burn on ads to acquire customers. Especially in Silicon Valley, where the focus is often on growing quickly, new companies sometimes spend big on internet ads, which typically means ads on Google and Facebook.

In the past, though, they've often kept those complaints quiet.

In an interview, Fried said he felt comfortable speaking out for several reasons. His company has only three owners, so there aren't venture capitalists around to push faster growth or try to try maintain ties to Google. They're also not based in California.

"We're not part of the scene," Fried said.

(One of Basecamp's owners is Amazon CEO Jeff Bezos, who competes with Google in online shopping, cloud services and other markets. He bought a minority stake in 2006, Fried said.)

"I think it's the right thing to do," Fried said of criticizing Google's ad business. "Things have to change, and it takes someone with some sort of a platform to begin to get the word out."

Ad buyers in general have not alleged that Google is acting unlawfully by allowing firms to buy ads against rivals' names, and there'sa long tradition of buying ads near a rival's listing in a phonebook, for example.

Google said in an email that it tried to strike a balance in its policy. "Like other search engines, we allow competitors to bid on trademarked terms because it offers users more choice when they are searching. However, if a trademark owner files a complaint, we will block competitors from using their business name in the actual ad text," the company said.

Last year, the FTC held that a group of advertisers — in that case, contact lens sellers — could not legally agree among themselves to stop buying internet ads on one anothers' brand names, because doing so might raise the price of lenses or otherwise harm consumers.

U.S. antitrust law is primarily focused on protecting consumers and fostering innovation through competitive markets, not on helping out specific competitors or small businesses.

Yelp, the local business search service that for years has complained about Google's business practices, has focused its criticism on how Google has changed over the years: Rather than directing users to the web's wide variety of independent sites, Google provides more information directly — everything from business hours to health information to word definitions — on its own pages, keeping eyeballs on Google ads.

"It positioned itself as a turnstile: We want to get you onto the web as quickly as possible; we don't want you to stay on Google. And now it's a portal," said Luther Lowe, Yelp's senior vice president of public policy, who has been among the most consistent Google critics.

But an antitrust case doesn't need to end in a company breaking apart for it to have an effect. Microsoft reportedly became a more cautious company after the Clinton Justice Department sued it over its actions in the market for web browsers.

For Google, watching customers complain openly about their ad spending may be damaging on its own, said Josh Pigford, founder of Baremetrics, an eight-person software company. He said his company stopped spending on Google ads after deciding it was unsustainable "ransom."

"If more and more people share it, that gives some quantitative info on how absurd it is," Pigford said. "What do they have to lose? Worse case scenario: They have to keep spending $25,000 a month."

Antitrust complaints about its ad business aren't Google's only worry, and tech firms are coming forward with what they call evidence of other problematic behavior.

This month, Brave, a small San Francisco company that makes a web browser to compete with Google's widely used Chrome browser, provided information about Google's ad business to Ireland's data regulator, which oversees Google's business in Europe and is investigating the company's handling of users' personal information.

Brave filed a complaint with the Irish Data Protection Commission a year ago but said it had found supplementary evidence that Google was secretly using hidden web pages to collect personal data on users for advertising purposes.

Brave's browser blocks many ads by default and this year launched a rewards program for users who opt in to seeing ads, explicitly marketing itself as different from Chrome.

Its decision to take on Google wasn't a close one, said Johnny Ryan, Brave's chief policy and industry relations officer. "We did not hesitate to do so. And Google is not our only target," he said. (Its complaint also covers the Interactive Advertising Bureau, a trade group.)

Others in tech aren't ready to speak, even if they think Google should make changes.

One CEO of a tech company said that although he appreciates what Google has done for his business, he believes it should change its ad policies and discourage ads against a rival's trademarked brand name.

But the executive said he still did not feel comfortable criticizing Google openly, because doing so might create turbulence with Google, a big source of customers, and he believed Google could retaliate in some way if it wanted to.

How many other tech companies and executives join the anti-Google chorus remains to be seen. Many companies still owe their success to Google, either because its search engine drove internet traffic their way or because they used another service.

"It's taken a while for people to catch up to this," said Tariq Farid, founder of Edible Arrangements, a fruit-bouquet company that is in litigation with Google over the ads question. "I'm hoping now that a swell happens, that people start to wake up to it."