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Google Roundup: Regulatory Matters, Waymo, GM Deal, Employees

Sejuti Banerjea

Alphabet’s GOOGL Google is up against a lot of scrutiny from U.S. regulators, which overshadows its legal win in Germany, self-driving prowess and strategic wins at traditional automakers. Here are the details-

U.S. States Against Google

Fifty state Attorneys General led by Texas along with the U.S. Department of Justice are behind the investigation into Google’s online advertising business to see if it resorted to anticompetitive behavior.

For too long, regulators have looked the other way and it seemed like technology companies could do no wrong. That’s how key acquisitions that solidified their market positions were approved, helping to build their dominance in the first place. In Google’s case, these acquisitions would be ad buying platforms DoubleClick and AdMob and video sharing site YouTube. In Facebook’s FB case, it would be WhatsApp and Instagram. Apple AAPL and Amazon AMZN have largely grown on the strength of their own products and business models.

Acquisitions aside, Google offers very attractive bundles of its ad tools that publishers just can’t afford to ignore, especially because of the way they connect up with its advertising marketplace.

Then again, as a result of its control over its ad buying platform for YouTube and search, rival platforms that target only limited audiences are less attractive to advertisers. This in turn increases its dominance.

As things stand now, it’s likely to be very messy for Google as regulators expand their investigation to other areas as well. But there doesn’t seem to be any immediate solution to the problem. Unlike Facebook, Google’s ad buying platform and marketplace are integral to its core business and splitting them could destroy the company altogether. Keeping them together would require constant regulatory oversight.

Google denies its dominance. "Ad tech is a very crowded field, and Google competes with hundreds of companies, including household names like Adobe ADBE, Amazon, AT&T T, Comcast, News Corp and Verizon," company spokesman Josh Zeitz said. "Publishers and advertisers mix and match technology partners to meet their different needs, creating both competition and innovation."     

Fined For Evading Taxes In France

Google settled its tax dispute with French authorities that have been investigating it since 2016, when they raided its French offices. A French court ordered it to pay a €500 million fine, in addition to the €465 million in back taxes it had already agreed to pay. That adds up to more than a billion dollars. The finance ministry was looking for 1.6 billion euros, so it was much better than what it could have been.

Legal Win Against German Publishers

In April, the EU changed its copyright rules, requiring Google to pay publishers for news snippets and other copyrighted material used and Facebook to filter out copyrighted content. The 28 member nations are required to implement the changes within two years.

Google’s legal dispute with VG Media, which is a consortium of about 200 publishers, was earlier referred to the European Court of Justice because the latter was looking for a billion euros in copyright fees based on violation of a German law that came into force in August 2013. The EC ruled that the law was not enforceable because it was made without prior notification to the EC.

VG Media, alleged that Google used text excerpts, images and videos produced by its members without paying them.

YouTube Fined for Kids’ Data Collection

Google’s YouTube is paying $170 million to settle with the Federal Trade Commission (FTC), of which $34 million will go to the New York attorney general's office.

The FTC found that Google collected information of viewers of children's channels using cookies, and then using them to target a million dollars’ worth of advertisements at them. What’s more, all this was done without parental consent.

The law banning the collection of children’s (under-13) data that came into force in 1998 was amended in 2013 to include cookies.

Apple Arcade Competitor

Google tweeted about a new subscription service called Google Play Pass that it has been testing with users willing to shell out $4.99 per month for unlimited access to games. Like Apple’s service, it may not require additional in-app purchases. It’s hard to say who’s following who in this, but it appears clear that the two tech giants are looking to go head to head.

Waymo Trucking

The Frankfurt motor show saw Waymo CEO John Krafcik talking about the application of its self-driving technology dubbed Waymo Driver to trucks. Germany and other aging populations are expected to see a sharp decline in truck drivers, so this could be a viable alternative, if it gets on the road.

"Our technology can also make trucking safer and stronger, and fill a pressing need for more drivers in many parts of the world,” he said. Road tests of the Waymo Driver in Class 8 trucks across the U.S have been conducted and the company is currently working with shippers, truck makers, and Tier One suppliers to ensure successful deployment.

Uber UBER is also in the race.

GM Deal

General Motors has signed up for Google’s embedded technology for navigation, voice activated controls and other vehicle infotainment functions starting in 2021 for all the cars that they sell outside China. So Google Assistant will take care of commands within the cars. The deal follows similar ones with Renault-Nissan and Volvo, and underscores the robustness of its technology that helped it move past Amazon.

The scope of the deal, according to media reports, is 3.6 million cars for the GM alliance and 10 million for the Renault-Nissan one. Google says that fears of snooping are overblown, as it won’t have access to driver information. And Apple’s CarPlay and AndroidAuto will continue to enable the projection of consumers’ smartphone screen onto the dashboard screen for GM cars.

Restricting Employee Communication

After Fox News aired the story last month and President Trump jumped in to claim that Google would try to influence the 2020 election against him, the company settled with the National Labor Relations Board (NLRB). So it will now post notices reminding employees of their federal rights, which include communicating with each other about workplace conditions and pushing for changes, such as pay raises and safety improvements.

The controversy was sparked by a former employee, Kevin Cernekee, whose complaint said that Google had violated his rights to engage with other employees about workplace issues. Before that, he said that he was fired for expressing a conservative view on company chat forums. Google disagreed, saying it was for downloading confidential company documents onto a personal device.


Google shares carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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