Froogle creating controversy

June 9, 2004

Search engine Google placed its reputation as the Web's first search engine, delivering relevant and fast search results, untouched by humans, or so it seems.

But with Father's Day approaching, Google Inc. is experimenting by promoting its own shopping site ahead of other online search results and ads.

That has prompted criticism from some industry experts who say that the giant search engine company appears to be compromising the unusually high standards that it has set for itself just as it prepares to sell stock to the public.

Danny Sullivan, editor of Search Engine Watch, said this was the first time he had noticed Google promoting its shopping service, named Froogle, by placing it at the top of the list of advertiser-supported search results.

For example, when computer users typed the phrase "Father's Day gifts" into Google earlier this week, Froogle often came up as the first listing. Google previously has said its ad rankings were based entirely on formulas combining the prices paid for ads and the popularity of Web sites among searchers.

"It is weird when Google shoves its own stuff in there," Sullivan said. "It is wrong, in that Google has taken a spot an advertiser was expecting to get. If you are an advertiser, you have a right to be upset. They ought to come up with something better."

Google declined comment about the recent promotion, citing the quiet period companies customarily enter leading up to their initial public offerings of stock.

Federal securities laws prohibit companies from saying anything that would hype the offering during the quiet period. Google has recently taken a liberal approach to that directive, talking openly about a number of new product initiatives, though it has been careful to avoid making revenue projections.

In another recent practice that is drawing criticism, Google manually altered the mathematically generated search results for certain products -- such as golf clubs -- that might typically be purchased as gifts for Father's Day so that the first thing coming up in a search under ads was a link to Froogle.

In this case, Google did not identify Froogle by name, choosing instead to label the result under the heading "Product Search Results." Only when users clicked on the link did they find it led to Froogle.

While Google considers this an experiment, some industry analysts said it appears to violate Google's own standards about disclosure and its description of how search results are derived. Andy Beal, vice president of WebSourced Inc., a search engine marketing firm, called Google's practice misleading since it makes it appear that the Froogle link came up because of its relevance, rather than because Google officials decided to list it on the top.

"If Google thinks there is nothing wrong with showing Froogle at the top, why are they not clearly labeling it?" Beal asked. "They should at least have a button that explains what it is and where these results are coming from."

Google's practice contrasts with that of Yahoo Inc. (Nasdaq:YHOO - news) Type "Father's Day" in its search engine, and the first results that come back are labeled "Inside Yahoo" to distinguish them from search results for the rest of the Web.

"Google does hold itself to higher standards, and they are vocal about trying to establish guidelines and standards for others to live by," Beal said. "A case in point was their recent guidelines about software. If Google is going to set the standards, then by Google's own definition, they should have those results labeled as Froogle, and make it clear what those results are for."

Other industry experts said they saw nothing wrong with Google's promotion of Froogle, noting that the company was simply attempting to provide computer users with the most useful links for buying gifts. Fredrick Marckini, chief executive of iProspect.com Inc., a search engine marketing firm, said that with product searches becoming a more important task for search engines, Google is making life easier for online shoppers.

If Google decides to routinely favor Froogle in directing people where to go when they shop, Marckini said online retailers may be forced to take Froogle more seriously, marketing their wares through the service as they do on the search engine. Google allows businesses to list their products for free on Froogle. Google will apparently seek to profit from Froogle, as from its main site, primarily by selling ads.

"They seem to be true to their word. I don't think this is inconsistent with anything they have said," Marckini said of Google. "I think they are doing it in a clear attempt to improve the value of their search results."

Dennis Pushkin, chief executive of marketing firm MoreVisibility.com Inc., said Google appears to be laying the foundation to ramp up Froogle, which has been in a test phase, and make it an engine of profit. While Google is immensely popular and enormously profitable, its Froogle service is relatively small compared with other Internet sites and search engines specializing in product comparison, Pushkin said.

"This is the next stage of Google, and they are presenting the beginning of Froogle," Pushkin said. "The advertiser in due course is going to have the opportunity to advertise on Froogle."

Scott Kessler, an analyst with Standard & Poor's, said Google needs to develop Froogle and other services if it is to continue growing amid heightened competition.

An April survey commissioned by S&P; showed that Google remained the undisputed leader in search and that Yahoo was a distant second. Among 1,000 people surveyed, 48 percent said they used Google most, followed by Yahoo (20 percent), MSN (14 percent) and AOL (7 percent). Kessler said that it is likely the gap between Google and the others will narrow and that the leading search engines will increasingly come to resemble one another.

"We think Google will have difficulty replicating Yahoo's success in consumer content and services," Kessler wrote in a new research report. "With Froogle, Google has extended its search capabilities to comparative shopping.

But users of Google search somewhat less for information about products and services than those of other major search services. While Froogle is an application, Yahoo offers similar search functionality, as well as browsing capabilities, a shopping marketplace, and payment offerings."

Source: Yahoo News

        

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