Is Google Bad ... or Wicked Good?

This article is part of our Rising Stars Portfolio series.

When I purchased shares of Google (Nasdaq: GOOG  ) for my Rising Stars portfolio, I contended that, "Despite its occasional difficulties in avoiding 'evil,' it manages to stay largely positive in often surprising ways." Does the Federal Trade Commission's recent move to formally probe Google on antitrust grounds mean the search giant isn't so socially responsible?

There are few details of the complaints or allegations that the FTC plans to lodge against Google, although we all know of the company's powerful presence in online information. The Wall Street Journal recently cited the infamous "people familiar with the matter," who believe the FTC is probing whether Google has abused its power in Internet search and advertising.

"Abuse" sounds pretty evil -- until you remember that the FTC has gotten this sort of thing wrong before. In 2007, when it tried to block Whole Foods Market's (Nasdaq: WFM  ) acquisition of rival Wild Oats on antitrust grounds, I seriously wondered whether FTC regulators actually resided on a different planet. The situation simply made no sense in a real-world context.

Even with Whole Foods' acquisition of Wild Oats, consumers still have plenty of options for buying organic and natural foods, including private companies like Trader Joe's, Safeway (NYSE: SWY  ) , and even Wal-Mart (NYSE: WMT  ) . Oppressed consumers aren't exactly starved for choice.

Similarly, people who want to conduct Internet searches have plenty of options from big, well-known companies like Microsoft (Nasdaq: MSFT  ) and Yahoo! (Nasdaq: YHOO  ) . It's not like Bing is so very far away; in fact, it takes fewer key strokes to go Bing something. Google's argument that competition "is only one click away" sounds solid to me.

Google isn't a perfect company -- I give much greater credence to privacy concerns about its trove of user data. But I still contend that its positive attributes far outweigh negative ones. The FTC seems to be punishing this company for having a good search product that people choose to use, not protecting users from one market player that forces everyone into its service because there are no other choices. There's nothing evil about having a wicked good product.

Let me know your thoughts on Google's good or evil nature in the comments box below, or participate in my Foolish colleague Tim Beyers' poll: "Does Google Need to Be Broken Up?"

This article is part of our Rising Stars Portfolio series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).

The Motley Fool owns shares of Wal-Mart, Yahoo!, Microsoft, Whole Foods Market, and Google. Motley Fool newsletter services have recommended buying shares of Yahoo!, Whole Foods Market, Google, Microsoft, and Wal-Mart, and creating diagonal call positions in Wal-Mart and Microsoft. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Whole Foods Market in her personal portfolio. For more on this and other topics, check back at Fool.com, or follow her on Twitter: @AlyceLomax. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 01, 2011, at 4:45 AM, kariku wrote:

    Google is evil, it amazes me that so many people still haven't understood that.

  • Report this Comment On July 01, 2011, at 10:22 AM, don1941t wrote:

    "one click away" is a bogus argument if ever there was one. EVERYTHING is one click away ... from the search engine you use. Getting the FIRST CLICK is where google has the mindshare monopoly. It did not build overnight. It built via having the best results. Consider the USFL. Even though they lured the best college players of the time with higher salaries, they had little impact on the NFL. The brand was in place. The relationships were in place. The fans were in place. Expansion include a couple of new teams but the USFL folded because it couldn't compete with ingrained habits.

    Google should be allowed to innovate and compete with new techology. They should not be allowed to compete by using their size and cash hoard to simply buy the competition and quash it.

  • Report this Comment On July 01, 2011, at 12:03 PM, rrlemur wrote:

    Search is free.

    Are you not allowed to have a monopoly on a free product?

  • Report this Comment On July 01, 2011, at 1:43 PM, Gregeph wrote:

    I think the complaint may contend that Google services such as Google Maps and Places are adjacent products and that Google is using its monopoly power in search to compete unfairly in these other areas.

    Google contends that these are simply another type of search result and, as such, are simply providing users with a better result. Other potential problem areas could be Android where Google gives the software away in order to blunt the risk that the on-ramp to its search castle is preempted by other players such as iPhone.

    I own shares and think the moat is formidable. This latest development is a risk but the Googler's are very smart and have a large legal team that is focused on this issue. They got a wake-up call when they looked at buying Yahoo! Also, Schmidt is now focused on regulatory issues.

    For my take on Google's moat see http://gregspeicher.com/?p=2570.

  • Report this Comment On July 01, 2011, at 6:45 PM, whereaminow wrote:

    Whatever Google is, it's certainly less evil than the FTC. Just read a few of these links. It may open your eyes to the real reason for the FTC, which is to decide winners and losers in the marketplace, expand its power, and call in political favors:

    http://blog.mises.org/17160/ftc-lies-ignores-monopolistic-pr...

    http://blog.mises.org/17324/ftc-yes-we-actually-do-know-best...

    http://blog.mises.org/16977/ftc-well-police-online-reviews/

    http://mises.org/daily/5007/The-FTC-vs-the-FTC

    http://blog.mises.org/12350/ftc-thinks-concealing-informatio...

    David in Qatar

  • Report this Comment On July 02, 2011, at 2:10 PM, johnstalberg wrote:

    To be defined as being evil demands some evil action in practice, now or in the past. Their evilness seems to be more about people absorbing other people repeatedly saying 'evil' about Google?

    No company has any responsibillity to avoid becoming an alone monopoly player in it's particular market. It is therefore nothing evil about having a market share somewere between very large share and all of the market. The evilness has to come from either the practices to achive this large cake or the practices made with the power that comes from it. Monopoly is just not any more evil than success is as an isolated parameter.

    So what is it Google have done or are doing today that isn't allowed or morally wrong? If there is just their size that bothers it is something for regulators to look into. It is not Googles job to regulate any market to make it as good as possible in the interest of everyone. That is why we have rules and laws to tune the markets and it is a delicate job of blend things to achive the best arena for the market as a whole to grow with freedom for the players to do their best and compete, and to hold back tendenies of the opposite outcome.

    That is, the regulation of market, is not nessecarily about stopping evil actions, but could be about regulate phenomenon that just is to far from being optimal. But it is of course most often about about laws of very simple matters which therre is a general consencus about. It is not ok to steal for example.

    Google, or anyone else, doesn't become evil just because they are repeatedly accused of being evil. The first post in this row of comments is unfortaintly very common. Repeat a thing enoygh and people starts to belive it. And the belivers will the sheer in with the choir.

    Put forward some facts about Googles actions that are evil and there won't be any doubt anymore. Until this is done Google can just be thought of being potential of being evil, as anyone is. Googles size makes this potentiallty worth to keep an extra eye on and to perform some risc analysies is very much the sane thing to do! This doesn't mean Google have gone the wrong way and it doesn't mean they ever will. It is just the fact that the future is somewhat unknown that makes it nessecary to be certain about being one step ahead, if some evilness should come out of this search gigant.

    I think Microsofts evil history have made many to think companies must be alike somehow and in comparison small misstakes done by Google fits their ideas and they put it as matching Microsoft evilness. Some sort of justice one could say. If one company has gotten so much attention for it's evil action the others need it too? That is just the opposite of justice if the other company doesn't deserve this negative attention for the in compare smaller misstakes they make.

  • Report this Comment On August 06, 2011, at 9:47 AM, boscharun wrote:

    One of the bad things about Google+ is Google's strictness. Many accounts are getting deleted siting naming convention guidelines :( ... too bad.

    The good side is that the social integration is much more enriched with maps, video conferencing, circles and other compared to Facebook.

    Personally, I hope there would be a just competitor for Google+. Google has incorporated it's search, maps, places and many other things into Google+ that there is no suitable complete competitor.

    The good thing is Google allows to <a href="http://www.skipser.com/p/2/p/how-to-permanently-delete-googl... your Google+ account</a.. I didn't want a Google+ profile as I want to have separate profile visibility for mail, social networking and other sites I use.

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