Google brand damaged
Search giant Google's brand has been damaged after one of the company's subsidiaries was caught scalping Kenya-based search engine directory Mocality's database.
Although the global giant was quick to issue an apology and indicate it was not aware of the incident, and did not condone it, market commentators say it will have suffered some brand damage.
On Friday, Google was accused by Mocality's CEO, Stefan Magdalinski, of engaging in a “human-powered, systematic, months-long, fraudulent attempt to undermine our business”. The posting sparked a worldwide Internet storm.
Mocality, Kenya's largest business directory with more than 170 000 verified listings, is owned by JSE-listed Naspers. The company has been in existence for three years and built up a database of Kenyan businesses through crowd-sourcing.
However, the firm has accused Google's Kenyan operation, Getting Kenyan Business Online - a rival service that launched last September - of pilfering its database to grow its business. Google says it takes the matter seriously and is investigating how the issue arose.
Senior VP for product and engineering in Europe and emerging markets, Nelson Mattos, says the company was “mortified to learn that a team of people working on a Google project improperly used Mocality's data and misrepresented our relationship with Mocality to encourage customers to create new Web sites”.
Mattos says in a statement: “We've already unreservedly apologised to Mocality. We're still investigating exactly how this happened, and as soon as we have all the facts, we'll be taking the appropriate action with the people involved.”
The company, which has more than 20 000 employees globally, saw its share price close 0.74% lower on Friday, at $624.99.
Google turned over $9.72 billion in the three months to September, a 33% increase year-on-year. It reported net income of $2.73 billion, a gain on the $2.17 billion it reported in the third quarter of 2010.
New media lawyer Paul Jacobson says the issues is a “big deal, because, basically, Google was competing unfairly”. He notes that the Kenyan-based company may be able to take action against Google.
[EMBEDDED]Asked whether Mocality would take legal, or other, action against GKBO, Magdalinksi stated: “We're obviously considering all options. I'm sorry if that's a vague answer.”
However, says Jacobson, the bigger issue is the damage to Google's reputation. He explains many businesses trust Google's platforms to run their businesses.
While Google reacted quickly to acknowledge the breach and did not try to hide the issue, which will help mitigate any brand damage, “you can't unscramble the egg”.
Google is a company that is already seen as too powerful and there are concerns over its dominance and the fact that it supplies content and search, says Jacobson. The search giant has been viewed as having the potential to abuse its power, he adds.
There are views that Google is too big and that some action must be taken before it does something bad; the incident with Mocality plays into the view that Google is evil, adds Jacobson.
Google has previously come under fire over concerns about whether its customers' privacy is sufficiently protected. Earlier this month, the Electronic Privacy Information Centre (EPIC) said it is considering filing a letter of complaint with the US Federal Trade Commission over Google's new “Search Plus Your World” or “Search Plus” algorithm.
The EPIC argues the new search features, which foreground social content from Google+, violate privacy and raise anti-trust concerns.
Mike Sharman, owner of digital communications agency Retroviral, says the incident will have dealt a blow to Google's reputation, although the company reacted quickly to prevent the rumour mill from kicking in.
Sharman says the news will definitely have an impact on Google's brand, although it will probably blow over in the next few weeks as a new crisis unfolds globally.
Google is meant to be the “don't be evil” company, but there have been concerns in the media over its business practices, says Sharman. People are becoming much more aware of the implications of Google's mammoth Internet presence.