Alphabet Inc (NASDAQ:GOOGL): Google Inviting Scrutiny with Unenforced Content Standards

James West
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Alphabet Inc (NASDAQ:GOOG), the parent of Google, is flirting with disaster in terms of its long term market share if the incremental deterioration in content standards happening at the search engine giant erodes overall user experience quality. The proliferation of barely comprehensible, machine-generated content that is automatically configured and deployed by software to capture search for the sole purpose of displaying ads is reaching epidemic proportions, and Google appears to be complicit in the problem, content standard statements to the contrary notwithstanding.

In fact, it is arguable that Google is exposing itself, and more importantly, Alphabet shareholders, to losses potentially if Google/Alphabet is sued on a class action basis by publishers who are financially harmed by the practice. Midas Letter content, as you probably can tell, is not the output of machines, nor the product of cut-and-paste plagiarism, nor an advertisement. It is original content that is the product of its writers’ and authors’ original opinions and thought. But the number of views each of our content iterations receives each day is negatively impacted when content that violates Google’s own quality standards is returned in search results at a superior ranking.

What Exactly Are Google’s Content Standards?

Google maintains guidance for producers of content seeking exposure in its news feed at a page called Getting into Google News. As a news search aggregator, Google is often the arbiter of who lives and who dies among publishers of news. In fact, Google is so much the ultimate judge of who is search-worthy to the point where there are numerous publishers who have made a cottage industry of deploying ‘articles’ that are qualifying as top-rated news, when in fact, they are either a) machine-generated content creators that are essentially Google ad farms that earn incremental revenue from Google; or b) Copy and Paste maestros who cobble ‘articles’ together by cutting and pasting sentences and paragraphs from pre-existing content from multiple sources that are essentially Google ad farms that earn incremental revenue; or c) original articles of minimum length that serve as a marketing pitch for a subscriber service only, while also acting as a Google ad farm that earn incremental revenue.

In any event, all three examples are blatant violations of Google’s stated standard qualities, and yet all three are common to the point of ubiquity in search results. Legitimate publishers who adhere to the news guidelines are negatively impacted because it is impossible to compete with news items that are not news items, but whose creation is financed by a violation of Google’s
quality standards.

Machine-generated Articles Erode the Global Minimum Standard of Content Quality

The company’s standards policy warns against the creation of content through automatic processes in its quality guidelines, but there is no enforcement.

For example, here are a series of examples of machine-generated content that nonetheless wins top placement in Google Finance searches of the subject companies when searched by their trading symbol:

1. http://www.capitalcube.com/blog/index.php/emera-inc-value-analysis-torontoema-january-5-2016/

2. http://www.vanguardtribune.com/2016/01/23/earnings-projection-for-barrick-gold-corporation-nyseabx/83523/

3. http://www.octafinance.com/yahoo-inc-bearish-signal-filo-david-decreased-stake/342467/

These examples are the top-rated search results when you punch in the symbols associated with their (ostensibly) subject companies into the search box at http://finance.google.com. Read the text: the telltale signs of machine generated content are horribly incorrect placement of sentence components such as articles, conjunctions, and prepositions. That, and the dead giveaway of the explosion of banner and graphic ads on every square inch of the page tells you that there is absolutely ZERO enforcement of Google’s standards going on here.

The policy linked to above explicitly and prominently states,

“Stick to the news–we mean it! Google News is not a marketing service. We don’t want to send users to sites created primarily for promoting a product or organization, or to sites that engage in commerce journalism. If your site mixes news content with other types of content, especially paid advertorials or promotional content, we strongly recommend that you separate non-news types of content. Otherwise, if we find non-news content mixed with news content, we may exclude your entire publication from Google News.”

The worst offender in this category by far is MotleyFool.com. Every single published article is a thinly disguised pitch to get you to sign up for one of their paid subscriber services. It starts off with a few paragraphs of discussion on the subject company, but invariably morphs into a blatant marketing pitch. They have utterly mastered the art of this practice, and have learned that they can subsidize the cost of such advertisements with Google Ads.

Here are three examples that all score top placement by Google’s algorithm:
1. http://www.fool.com/investing/general/2016/01/24/3-questions-investors-want-answered-when-freeport.aspx

2. http://www.fool.ca/2016/01/22/could-cameco-corporation-be-a-top-stock-in-2016/

3. http://www.fool.ca/2016/01/22/imperial-oil-limited-is-ready-to-pounce/

The pernicious aspect of this kind of Google News Quality Standards violation is that it ultimately undermines the value of Google search results. That it publishes standards at all is evidence of the fact it is fully cognizant of the importance of quality in its search generated content in preserving its search engine market lead. Should it compromise this through a willful abdication of enforcement of its own terms of service, investors could likely seek class action certification if a degradation in quality is correlated to a deterioration in share price over time.

Copy-and-Paste Plagiarism and Slightly Rewritten Pre-existing Content

The act of copying and pasting paragraphs and sentences from disparate sources is described in Google’s quality standards as ‘Scraped Content’, and specifically bans ‘slight’ modification of existing content. Again, enforcement is minimal.

Here are 3 examples of only slightly rewritten content derived from online documents:

1. http://www.emqtv.com/reckitt-benckiser-group-plc-adr-rbgly-position-sold-by-lenox-wealth-advisors/154403/;

2. http://www.emqtv.com/oakmont-partners-holds-position-in-procter-gamble-co-pg/157068/;

3. http://www.iramarketreport.com/estee-lauder-companies-inc-el-position-maintained-by-fruth-investment-management/3443/.

In each of these examples, its obvious that these are barely modified sentences and data from SEC filings of the subject companies. Nothing original, or useful, is added. Yet there it is at the top of the search result by symbol.

Is Google Complicit?

Searching for company news via Google News or Google Finance by symbol increasingly results in lists of results whose status as news item fails according to Google’s own quality standards, and in many cases, ALL of the top results are from one of the three offending categories described here.

What would motivate Google to participate or accommodate such schemes? Well obviously, ad revenue. Each of these violation types has more ads per square inch by far than any legitimately produced news item. Everybody depends to some degree on advertising, but when the quantity of advertising outweighs dramatically the quantity of news content, it’s no longer news: its advertising. And when its repeated again and again, its worse: it’s spam.

The risk for Alphabet Inc. /Google shareholders is that legitimate news providers such as Midas Letter may be left with no other avenue to preserve readership than to join forces in a class action suit.

For Google, its reputation is being willfully and irreparably harmed. For its investors, they too might end up being inclined to sue if Google’s deteriorating search quality results in a decline in share price.

Could Google’s Behaviour be Deemed ‘Anti-Competitive?

Further risk to investors from successful litigation as a result of Google not enforcing its content standards comes from the potential that such a willful un-enforcement of its own policies that ends up deprecating legitimate news content in favour of ad-generating machine generated, plagiarized, or marketing content could be deemed ‘anti-competitive’ – especially on an international basis.

Imagine if it we were able to prove in court that the allegations in this article are in fact accurate. And what if, furthermore, we could make a case in court to the North American Free Trade regulators that such behaviour was basically a case of GOOG protecting its ad revenue through the preservation and promotion of what is then an advertising monopoly?

Does this, in fact, make Alphabet Inc. a good short candidate? Hmmm…..

UPDATE:

Other publishers who are experiencing anti-competitive behaviour from Google, or are suffering decreased traffic due to the issue discussed in this article are encouraged to write to [email protected]. For a description of what legally constitutes anti-competitive practices, please visit http://www.mccarthy.ca/pubs/antitrus_overview.pdf

James West

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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