Google’s Evil Secret

“Don’t be evil,” Google’s informal corporate motto used to be a refreshing breath of fresh air in a scene dominated by lawsuit-riddled Microsoft. Lately however, things have begun to smell. Well, perhaps I can be the one to begin clearing the air.

In the next few articles I will detail the MAJOR flaws in Google’s moneymaking system and provide a few examples. Then, you can be the judge.

First, a bit of background, it’s no secret that most of Google’s revenue comes from Adwords advertising. Advertisers pay to place ads on Google’s search pages as well as millions of other “publisher” pages in Google’s Adsense network. The Adsense program allows website owners to publish Google ads on their pages and get paid when someone clicks those ads. Adword advertisers pay Google for each click and Google passes a percentage on to the Adsense publisher.

The system has made Google millions but, by placing a value on each click, Google has popularized “Click Fraud”. The simplest example of click fraud is someone repeatedly clicking on an ad in order to spend a rival advertiser’s money or increase their own earnings. According to Google: (taken from http://www.adwords.blogspot.com/2006/03/about-invalid-clicks.html)

What is click fraud? I often hear the term “invalid clicks,” too. What’s the difference — or are they the same?

The term “fraud” implies deliberate deception. Our aim in fighting invalid clicks is broader and includes clicks that we suspect may have been deceptive or malicious, as well as clicks that we deem invalid for other reasons, such as accidental double clicking on an ad. The usage of the word “fraud” in this context has caused a great deal of confusion, as it’s practically impossible to “prove” that an impression or click was caused by deliberate deception. Our servers can accurately count clicks on ads, but we cannot know what the intent of a clicking user was when they made that click. When we identify a click as invalid, it simply means a click we won’t charge for, in order to deliver the best ROI to advertisers.

Whatever the motivation, click fraud has become the single biggest threat to Google’s business model. People have even written programs that simulate clicks on an automated basis. According to some sources (http://www.clickdefense.com/click_fraud.html), up to 35% of the clicks made in Google’s system are fraudulent. While Google disputes these numbers, they have yet to offer numbers of their own. When asked how large a problem click fraud is, Google responds by saying:

We take it very seriously and have devoted significant resources and some of our best talent to this. By far, most of the invalid clicks we see are detected and discarded by our automatic filters even before they reach advertisers accounts. If an advertiser is monitoring click activity, these automatically filtered clicks may show up in an advertiser’s logs, but not in their bills. When invalid clicks are detected after an advertiser is charged, we reimburse for them. Because of our detection efforts, losses to advertisers from invalid clicks are very small.

Very small huh? Google recently proposed a $90 million settlement in a lawsuit brought against them by Adwords advertisers alleging rampant click fraud. I guess $90 million qualifies as “very small.” Google goes on to say:

When considering the validity of this exaggerated 30% figure, you should also consider who is most aggressively using it: it is those who have the most to gain from hyping the problem. Those who are throwing around this figure are doing so as part of their marketing efforts to sell products they claim detect click fraud. The more they can convince others that click fraud is a problem, the more they hope to see increased sales. In other words, these companies have a huge financial incentive to make people believe invalid clicks are a larger problem than they really are.

Wow! I hardly know where to begin. Using Google’s own logic, consider who has the most to gain by claiming the 30% figure is exaggerated. Google depends on Adwords for the bulk of its income. If advertisers believe one third of their clicks are fraudulent, do you think it will give them pause? I do! So, the more Google can convince others that click fraud is NOT a problem, the more it will gain in profits. In other words, Google has a HUGE financial incentive to make people believe invalid clicks are a smaller problem than they really are.

Even if the truth lies somewhere in the middle of the two extremes, click fraud IS a big problem. Obviously Google has to fight click fraud to protect their business model and that’s where things get interesting…