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Was Google’s Disastrous January A Passing Storm Or Sign Of Things To Come?

It’s a little stunning to contemplate how wrong things have gone for Google (NSDQ: GOOG) in just the first month of 2012, as the company hopes to put a disastrous January in the rear-view mirror with perhaps another tear-jerking Super Bowl ad this Sunday. Larry Page and Sergey Brin haven’t turned into Jim Balsillie and Mike Lazaridis or anything, but Google just endured the worst month in the company’s history and nothing will get easier as rivals and the government take aim at what used to be such a delightful fuzzy little tech success story.

To be sure, the former CEOs of Research in Motion (NSDQ: RIMM) would gladly trade places with Page, who last year regained control of the company he founded and brought new focus, and Brin, who is probably living out an alpha geek’s dream by working on Google’s most secret and far-out projects. But even since Michigan–Page’s alma mater–beat Virginia Tech in the January 3rd Sugar Bowl, not much has gone right for Google.

A quick recap:

Tarnished Chrome: Google was caught participating in a “sponsored post” scheme involving advertising for its Chrome browser, in which bloggers were paid to write favorable reviews of the browser that in some cases included the Web page for Chrome. It blamed outside agencies and reduced the rank value for the Chrome Web page, as buying links through ad campaigns is a no-no for everyone else.

When Google+ Is A Minus: Google managed to out-CES CES with its breathtaking decision to incorporate Google+ pages directly and prominently into its crown jewel: search results. The Search Plus Your World rollout generated a huge controversy that overshadowed any one single event that happened that week in Las Vegas, troubling both internal employees and former Googlers unable to recognize a company that would alter its search results to favor links to a half-baked social network.

Caught Red-Handed: After a local-business directory in Kenya noticed that some of its customers were calling it for support on building Web sites–a product the company didn’t offer–Mocality set a trap for Google employees who were systematically accessing its database and attempting to poach its customers. A “mortified” Google fired its country manager for Kenya and apologized.

A Short Quarter: Google missed financial analysts’ expectations for its fourth quarter, and observers began to wonder if the cash machine that is Google’s AdWords and AdSense had started to wane. Google’s stock has fallen nearly 7 percent since those earnings were released amid a rise in the Nasdaq over the same period.

Dealing Drugs: Google had already admitted to improper behavior involving ads for drugs sold by rogue pharmacies, but details emerged from a Wall Street Journal (NSDQ: NWS) report in January that showed Page was aware of the fact that Google ad executives helped those operating such pharmacies circumvent review policies designed to exclude such ads.

Transparently Murky: In a public-relations decision borrowed from a desperate company’s playbook, Google chose to reveal sweeping changes to its privacy policy at almost the exact same time that Apple (NSDQ: AAPL) released its fourth-quarter financial results on schedule. While the tech press was pretty busy dealing with the impact of Apple’s surreal quarter, Congress was not, and Google was forced to explain its conduct. The company said the changes were designed to simplify policies across multiple products, but they also had the effect of letting Google see your online activity across a host of its products–from Gmail to YouTube, Google+ to search–and form an aggregated picture of your potential buying habits.

When It Rains: In a sign of just how far Google has fallen in many people’s estimation, an obscure change to a technical policy involving the Galaxy Nexus phone–the best Android device yet released–briefly convinced many that Google was removing that device from the special Nexus category, which allows people owning those phones to receive software updates unencumbered by their wireless carrier. Google exacerbated the problem by botching its initial public-relations response, and outrage flew at the speed of Twitter before it was able to clarify that nothing had changed from a consumer’s perspective.

Meanwhile, Google’s biggest rivals are living it up.

Facebook is the new darling of the tech and investment communities following its plans to file for what will probably be the biggest initial public offering ever raised by a tech company. Tim Cook is attempting to prove he can run Apple without Steve Jobs, and has taken a big step with a huge quarter and a new interest in charitable giving. Microsoft’s collaboration with Nokia (NYSE: NOK) probably won the week at CES, it is preparing to launch a new operating system that will help bridge the chasm between the company’s PC era and what it hopes is its mobile era and it gleefully jumped all over Google’s missteps.

Google’s unlikely to have a month like that again, this year anyway. But it’s kind of shocking to contemplate just how uneasy the company has made a lot of people by its decisions around social search and privacy. Perhaps more troubling, its responses to those big questions have been tone-deaf and almost defiant, traits one did not associate with Google until recently.

January could easily be a blip in the long run for Google. The economy seems to be improving, which could boost search advertising spending. Android remains a vital part of the mobile story, and Apple could have a hard time sustaining the pent-up demand for the iPhone 4S (it would be unfair to expect gains like that every quarter). And if Google+ really does turn into a service on par with Facebook or Twitter, Google could have both pieces of the modern online data puzzle–search and social–at its disposal.

So why then do many people I talk to about Google–both tech insiders and regular Joes at the bar–feel uneasy? Maybe it’s because a lot of those people finally realized in January that Google has turned into a conventional company–one that pushes the line wherever possible to maximize revenue and profit even at the expense of users and customers–something it swore it would never become.

Once you’ve gone down that road, it’s pretty hard to go back, and all the driverless cars and mysterious entertainment devices in the world won’t necessarily help.

9 Responses to “Was Google’s Disastrous January A Passing Storm Or Sign Of Things To Come?”

  1. Wilhelm Reuch

    People have always overlooked the real Google. That enormous office-building with thousands of phone-salesmen making cold-calls to corporates to get them to buy ads on the web. This is the real Google. The Google that rakes in 97% of the revenue.

    The Google store-front with happy nerds playing with their pet-projects and water-guns is just that. A storefront to feed the public/press.

    Now, the nerds have just one strategic mission within Google. And that is to keep any startup in check by attacking the same market and provide a free copycat service.

  2. The initial 80% of this article is a steaming pile of Apple fan-boy nonsense. Anyone with a deeper understanding of these issues knows that they amount to nothing. People hate changes, especially ones that are misreported and over-hyped by a lazy press that loves stirring up controversy and knocking down the big guys.

    The shorter version of this article could be this: BREAKING: Google is a large public company with a fiduciary responsibility to its shareholders to make money and evolve.

  3. Forgot at least one more bit of bad news: Motorola posted a $70 million loss for the 4th quarter of 2011. The company Google paid a whopping 30% premium of $12.3 Billion for.
    It’s the beginning of the end for Google.
    Expect it to be looking for a buyer by this time next year.

    • modelportfolio2003

      Agree.  And Tom Krazit makes a bunch of assumptions that bear little resemblance to fact.  While some of his comments are made tongue in cheek, it seems with others, the tongue got caught in the cheek! 

      “unable to recognize a company that would alter its search results to favor links to a half-baked social network.”  No. Make search results more relevant as social signals play an important part in personalizing the answer to the search.  Google + has more than 100 million users in 6 months, is the fastest growing social network ever, is a pleasure to use and is hardly “half-baked”. FB keeps stealing ideas from G+.

      “a public-relations decision borrowed from a desperate company’s playbook”:  what does the simplification of Google’s privacy policies have to do with Apple’s quarter?  Talk about a non-sequitur!  Hardly desperate.  Suggest you read the Google public blog on why the changes were introduced for some fact on that bone. Of course if you prefer to read Microsoft’s interpretation, I can understand why you believe it.

      “observers began to wonder if the cash machine that is Google’s AdWords and AdSense had started to wane.”  You mean the quarter which missed analyst expectations (Google never gives guidance so whose fault is it?) based on a higher than expected PPC, a lower than expected CPC a non-deductible tax charge for Clearwire investment write-off, an adverse foreign exchange movement, a larger than expected cap ex spend and Google’s first $ 10 billion + revenue quarter ever? Google blew away estimates in the previous quarter.  Does one quarter mark a big change in Google’s future based on incorrect assumptions by some analysts and just because some analyst told him so? Google is well placed in search (growing 20% plus pa) and mobile (Android is the world’s leading smartphone OS) and display (YouTube, AdExchange,DoubleClick) and is increasingly well placed in local and social.  

    • invitedmedia

      yeah, ‘adapt’ is what companies who are trying to keep up with the ” changing conditions in the internet” do.

      what ever happened to google actually INNOVATING?