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RI Strikes at Google

Well, if you think Google is evil, you have reason to be pleased with your home state today. Rhode Island US Attorney Peter Neronha has announced a mammoth settlement with the search engine. The company will forfeit $500 million after profiting from ads that prompted US consumers to illegally import prescription drugs. From the ProJo:

Google has agreed to forfeit $500 million for allowing online Canadian pharmacies to place ads on its site targeted to U.S. consumers, resulting in the illegal importation of controlled and prescription drugs, federal and state officials announced Wednesday at the Providence office of the U.S. Attorney's Office, which led the investigation.

Officials said it is one of the largest forfeitures ever in the United States. The amount represents the gross revenue received by Google through this ad arrangement plus the gross sales revenue made by Canadian pharmacies.

U.S. Attorney for Rhode Island Peter Neronha said the settlement sends a "clear message" to those that contribute to Americas "pill problem" will be held accountable.

Is this, indeed, further evidence that Google has betrayed its "Don't be evil" motto? I have a hard time getting agitated by those who would seek inexpensive medicines - and those who would lead the way - despite the safety and intellectual property issues that arise with drug importation.

But the righteousness of Google's broader advertising model is an interesting question. James Gleick, author of "The Information," recently wrote a great piece in the New York Review of Books that tackles the Google Goliath, focusing in part on the advertising engine that fires the company. Is Google evil? You decide.

The evolution of this unparalleled money machine piled one brilliant innovation atop another, in fast sequence:

1. Early in 2000, Google sold “premium sponsored links”: simple text ads assigned to particular search terms. A purveyor of golf balls could have its ad shown to everyone who searched for “golf” or, even better, “golf balls.” Other search engines were already doing this. Following tradition, they charged according to how many people saw each ad. Salespeople sold the ads to big accounts, one by one.

2. Late that year, engineers devised an automated self-service system, dubbed AdWords. The opening pitch went, “Have a credit card and 5 minutes? Get your ad on Google today,” and suddenly thousands of small businesses were buying their first Internet ads.

3. From a short-lived startup called GoTo (by 2003 Google owned it) came two new ideas. One was to charge per click rather than per view. People who click on an ad for golf balls are more likely to buy them than those who simply see an ad on Google’s website. The other idea was to let advertisers bid for keywords—such as “golf ball”—against one another in fast online auctions. Pay-per-click auctions opened a cash spigot. A click meant a successful ad, and some advertisers were willing to pay more for that than a human salesperson could have known. Plaintiffs’ lawyers seeking clients would bid as much as fifty dollars for a single click on the keyword “mesothelioma”—the rare form of cancer caused by asbestos.

4. Google—monitoring its users’ behavior so systematically—had instant knowledge of which ads were succeeding and which were not. It could view “click-through rates” as a measure of ad quality. And in determining the winners of auctions, it began to consider not just the money offered but the appeal of the ad: an effective ad, getting lots of clicks, would get better placement.

Now Google had a system of profitable cycles in place, positive feedback pushing advertisers to make more effective ads and giving them data to help them do it and giving users more satisfaction in clicking on ads, while punishing noise and spam. “The system enforced Google’s insistence that advertising shouldn’t be a transaction between publisher and advertiser but a three-way relationship that also included the user,” writes Levy. Hardly an equal relationship, however. Vaidhyanathan sees it as exploitative: “The Googlization of everything entails the harvesting, copying, aggregating, and ranking of information about and contributions made by each of us.”

By 2003, AdWords Select was serving hundreds of thousands of advertisers and making so much money that Google was deliberating hiding its success from the press and from competitors. But it was only a launching pad for the next brilliancy.

5. So far, ads were appearing on Google’s search pages, discreet in size, clearly marked, at the top or down the right side. Now the company expanded its platform outward. The aim was to develop a form of artificial intelligence that could analyze chunks of text—websites, blogs, e-mail, books—and match them with keywords. With two billion Web pages already in its index and with its close tracking of user behavior, Google had exactly the information needed to tackle this problem. Given a website (or a blog or an e-mail), it could predict which advertisements would be effective.

This was, in the jargon, “content-targeted advertising.” Google called its program AdSense. For anyone hoping to—in the jargon—”monetize” their content, it was the Holy Grail. The biggest digital publishers, such as The New York Times, quickly signed up for AdSense, letting Google handle growing portions of their advertising business. And so did the smallest publishers, by the millions—so grew the “long tail” of possible advertisers, down to individual bloggers. They signed up because the ads were so powerfully, measurably productive. “Google conquered the advertising world with nothing more than applied mathematics,” wrote Chris Anderson, the editor of Wired. “It didn’t pretend to know anything about the culture and conventions of advertising—it just assumed that better data, with better analytical tools, would win the day. And Google was right.” Newspapers and other traditional media have complained from time to time about the arrogation of their content, but it is by absorbing the world’s advertising that Google has become their most destructive competitor.

Like all forms of artificial intelligence, targeted advertising has hits and misses. Levy cites a classic miss: a gory New York Post story about a body dismembered and stuffed in a garbage bag, accompanied on the Post website by a Google ad for plastic bags. Nonetheless, anyone could now add a few lines of code to their website, automatically display Google ads, and start cashing monthly checks, however small. Vast tracts of the Web that had been free of advertising now became Google part- ners. Today Google’s ad canvas is not just the search page but the entire Web, and beyond that, great volumes of e-mail and, potentially, all the world’s books.

Search and advertising thus become the matched edges of a sharp sword. The perfect search engine, as Sergey and Larry imagine it, reads your mind and produces the answer you want. The perfect advertising engine does the same: it shows you the ads you want. Anything else wastes your attention, the advertiser’s money, and the world’s bandwidth. The dream is virtuous advertising, matching up buyers and sellers to the benefit of all. But virtuous advertising in this sense is a contradiction in terms. The advertiser is paying for a slice of our limited attention; our minds would otherwise be elsewhere. If our interests and the advertisers’ were perfectly aligned, they would not need to pay. There is no information utopia. Google users are parties to a complex transaction, and if there is one lesson to be drawn from all these books it is that we are not always witting parties.

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