Google Is Destroying The Economy Because It Believes In Efficiency?

Overhype

from the at&t-deserves-more-for-their-money dept

Ron Rezendes was the first of a whole bunch of you to send over PC World’s coverage of Scott Cleland’s latest attack on Google, though, bizarrely, Tony Bradley at PC World, fails to (a) fill in the details on Cleland’s history and current job or (b) challenge any of the many false assumptions Cleland makes. He does question the overall conclusions, noting (accurately) that the tech world is littered with “monopolies” that were killed off by upstarts, but there’s a lot more worth questioning in Cleland’s piece. Cleland, as we’ve discussed in the past, is known throughout DC policy circles as the official attack dog of every anti-Google company out there. He’s literally paid to make up attacks on Google, no matter how ridiculous. Now, I’ll be the first to admit that there are many things Google does that deserve further scrutiny or complaints. The company has been getting especially sloppy when it comes to privacy lately, and that’s a huge concern. However, if the companies paying Cleland actually want bang for their buck, you’d think that they’d hire someone who actually makes credible claims — rather than the easily debunked claims and notoriously laughable math that Cleland is famous for.

So what’s this new report that Bradley insists is “seemingly well-researched”? It’s one of the most laughable reports I’ve seen to date, claiming that Google isn’t just a monopoly, but that it’s destroying jobs and the economy (pdf). Get ready for Cleland’s brand of ridiculously factless assertions combined with his notoriously bad math.

The report starts out by blaming the Justice Department for not blocking various Google acquisitions or filing antitrust charges against the company. Cleland seems to not realize that the purpose behind antitrust actions is to protect consumers, not just break up big companies for the hell of it (that’s what Europe is for). The presentation then goes into all sorts of consultant-speak charts that don’t say anything actually significant but scream “oh no, Google is evil,” without actually providing anything to back that up.

There’s an amusing slide where Cleland then takes a bunch of quotes out of context to actually suggest that efforts to make the web surfing experience better for users is somehow evil because it also benefits Google. In Cleland’s world, apparently, all things are a zero sum game, and there’s no way that something could be both good for users and Google at the same time. In fact, that seems to be the key to the entire presentation: what’s good for Google must be bad for the world… because it’s also good for Google. How else can you explain why Cleland highlights Hal Varian’s comments about how a “fanatical” focus on customer service (along with scale, speed and data analysis) is somehow a bad thing?

Amusingly, Cleland then goes back to the debunked well by suggesting nefarious Google “human raters” push down links to competitors. This is one of Cleland’s pet theories that he just discovered a couple months ago, and thought he was brilliant for it. The only problems is that it wasn’t (as he claimed) a new admission from Google, nor was it what Cleland claimed it was. As Danny Sullivan pointed out all the way back in 2007, Google has been public about its “human raters” since 2004, and it’s a standard QA job — not some nefarious job of someone quashing the competition. If you run a search engine, wouldn’t you have people on staff whose job it was to look at results and make sure they were actually good for users?

On the areas where Cleland is accurate — that Google’s real customers are advertisers and that the current workings of Google are something of a “black box,” that just seems to me to be a huge opportunity for other companies to step in, rather than some dangerous situation that requires government intervention.

But where Cleland really goes off the deep end is his “economic” analysis of the situation, where he claims that Google is creating a deflationary spiral. It kicks off with an almost amusing font-based attack on the concept of “free” (highlighting each time the word is mentioned) as being some evil concept made up by those who seek to destroy the world. It’s as if we’re back in the ancient Greek civilization and Cleland has just come across the concept of “zero” and declared it to be heresy. And then there’s this:

There’s no net economic growth, job creation or property value creation in a “free” Internet sector model, only a deflationary price spiral; net negative growth, property devaluation, job losses, and monopolization.

No, really. Stop laughing. The above statement is about as economically clueless as they come. It suggests absolutely no knowledge of basic economics, the economics of growth, the economics of innovation, the basic concepts of complementary goods and market equilibrium. It assumes, like many in the entertainment industry — despite massive evidence to the contrary — that when the price of an information good is pushed to zero, that it somehow leads to less overall economic output, rather than more. Tragically for those who believe this, there is no evidence to support such a claim. That’s because they never seem to take into account the ancillary markets that are aided by information reaching its equilibrium point.

Cleland then goes on to claim that Google “reduces employment.” How?

“because Google views people as inherently inefficient relative to Internet automation, and because Google views customer service personnel as unnecessary, and most sales and marketing personnel as redundant.”

Where to start? I think pretty much any company views automation as more efficient than people when that’s the case. But, unlike what the Luddites predicted, automation actually resulted in more jobs. Perhaps Cleland should ask the telcos who pay him his salary about their views on automation. After all, AT&T used to employ tens of thousands of operators to physically connect lines when anyone wanted to make a phone call. And they automated that away — obviously killing off so many jobs. Oh wait… actually, automated switching was so much more efficient that it created millions of new jobs, and entire new industries… including the internet.

As for Google’s dislike of customer service, I’ve hit Google hard on that point multiple times, because I believe that it’s a big Achilles’ heel for Google, and a huge opportunity for others to woo folks away from Google. But just because Google doesn’t like to hire customer service people, it seems like a massive stretch to suggest that this automatically means Google reduces employment. Furthermore, last I checked, Google’s sales and marketing force is ridiculously large. It’s hardly “redundant.” In fact, I’ve often wondered why Google needed as large a sales force as it has. A year or so ago, I was on a panel discussion with some other bloggers in front of Google’s sales and marketing team, and I’m pretty sure it’s the largest audience I’ve spoken to — and I’ve spoken to some pretty big audiences. Honestly, it feels like they could make a few more people “redundant.”

And, um, why does Cleland ignore the tons of jobs that now exist in the world because of Google who are not actually employed by Google? There are entire industries who exist in large part because of Google. Cleland then accuses Google of “double and triple counting” its own economic impact, but this is especially laughable from the same guy who tried to count internet connections multiple times in one of his attacks on Google.

All in all, this “report” given away for free (oh wait, did Scott Cleland just devalue research and kill off jobs?!?) is just the latest in Cleland’s self-debunking charade of ridiculous arguments. The thing is, there are plenty of legitimate complaints about Google, but wrapping them all up in such a ridiculous and easily debunked report actually does significantly more favors for Google than anything else. It suggests that the companies who pay Cleland can’t come up with any serious arguments, so they have him come up with such laughable ones. This is really unfortunate. It would be good if more people actually held Google to account for its mistakes and problems with the way it’s done business at times. But these exaggerations hide those real issues. Unfortunately, for whatever bizarre reason, Congress keeps calling on Cleland to present at various hearings — and today, Cleland will be pitching this garbage to the House Judiciary Subcommittee on Courts and Competition Policy. DC politics as usual. You don’t need facts, you just need to smear others louder and more ridiculously than anyone else.

Filed Under: economics, jobs, monopolies, scott cleland
Companies: google