Executive Compares Google Search to Addictive Substances
The search advertising business of Google has been compared to selling drugs by a high-ranking executive, who hailed it as an exceptional business model that allows the company to prioritize revenue generation from advertising while disregarding user concerns.
Michael Roszak, CFO of Alphabet Inc.’s Google, wrote the notes at a July 2017 training offered by Google on communications.
“Search advertising is one of the biggest business models the world has ever created,” Roszak wrote, adding that there were only “illegal businesses (cigarettes or drugs) that could compete with these economies.”
Google’s business can effectively “ignore one of the basic laws of economics,” Roszak wrote, in terms of supply and demand. This allowed the company to “ignore the demand side of the equation (users and queries) and focus only on the supply side of advertisers.”
Because Google “made smart marketing/distribution investments to get our product everywhere,” Roszak wrote, “we can basically rip the economics textbook in half.”
The document was used as evidence in the Ministry of Justice’s antitrust case against Google. It is challenging a series of agreements in which Google pays web browsers and the smartphone market to be the default search engine. The government is trying to prove that Google engaged in anti-competitive tactics to maintain its dominant position. Google denies the allegations.
Roszak testified at a Justice Department trial last week, but the government took public access to emails, charts and internal presentations online after Google protested. The agency resumed publishing the exhibits on Wednesday after Justice Amit Mehta struck a compromise to create a procedure for sending them. Roszak’s notes were not made public until late Thursday.
The notes were created for a communications course, Roszak said last week, though he could not recall whether he gave a presentation on the topic. Roszak said he never sent the document to anyone else at Google.
“This whole document is full of exaggeration and exaggeration because there was no business purpose involved, it was part of an introductory course and we tried some of the tips they offered there,” Roszak said, adding that he “said things I don’t believe in the presentation of this course.”
Google’s lawyers repeatedly objected to the document being used in court, arguing that it was not a business record. Mehta agreed to hear Roszak testify about the exhibit in closed session.
A Google spokesperson said the statements did not reflect the company’s opinion, noting that they were prepared for public speaking, where the guidelines were to say something hyperbolic and attention-grabbing. The witness testified that he did not believe the statements to be true, the spokesman said.
“He was playing Gordon Gekko,” Google lawyer Edward Bennett said, referring to the infamous character in the 1987 film Wall Street and comparing it to a “skit” that Roszak was asked to rehearse.
The fight over the document spread more widely in a case where the Justice Department removed all the exhibits it had previously made public.
Mehta ruled that the exhibit be admitted and expressed frustration that Google had put him “at a disadvantage” by insisting that testimony that would have provided context be held in camera.
“This does not contain anything confidential,” he said. “I understand that it is somewhat embarrassing for the witness.”
“Here’s some CFO who, although in training, decided to do a mock presentation,” Mehta said. “These are not statements that would be out of his wheelhouse.”
The next day, Google lawyers tried to redact part of the document, but Mehta denied their request and said he would unseal part of Roszak’s testimony related to it.
