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Canadian Regulators Place Google’s Business Model Under Microscope

Among the many Internet success stories of the past two decades, Google stands alone. The undisputed king of search, hundreds of millions rely on it daily, supporting an Internet advertising business model that generates tens of billions of dollars annually.

My weekly technology law column (Toronto Star version, homepage version) notes that kind of success invariably leads to legal and regulatory issues, though most of Google’s legal fights have focused on content, such as the inclusion of controversial websites in its search index, the digitization of millions of books through its book search initiative, and the removal of links that may lead to websites that host infringing content.   

Until recently, Google’s Internet advertising business model has, with a few notable exceptions (including a large U.S. settlement involving pharmaceutical advertising), been spared much regulatory scrutiny. That has started to change with high profile actions in the U.S. and European Union and the prospect of similar investigations in Canada.  

In the U.S., the Federal Trade Commission conducted a two-year investigation into Google’s business practices that wrapped up last year with a settlement featuring several commitments for business practice changes. The settlement stopped short, however, of finding anti-competitive bias in Google’s search results.

While the U.S. settlement was widely viewed as a win for Google, European regulators are conducting their own investigation and may demand greater concessions. In fact, European officials recently warned the company that time is running out to settle claims of abuse of its dominant position.

The U.S. and European Union may have been active on the Google front, but Canadian officials have generally remained on the sidelines. The federal privacy commissioner has examined privacy-related issues, with action involving Google Street View (its popular street-level mapping service) and Google Buzz, but broader investigations into the company’s business model have been largely absent.

That too is changing, as in recent months both the Competition Bureau and the federal privacy commissioner have either launched or concluded investigations involving Google’s business model. Both investigations were complaint-driven, suggesting that competitors or disgruntled users may increasingly turn to those regulatory bodies to address their concerns.

The Competition Bureau investigation mirrors the actions in the U.S. and Europe. According to court documents filed in December, the Bureau has worked with Google’s competitors to identify the information the company should be ordered to disclose as part of a competition law investigation. Last month, the Federal Court of Canada issued an order mandating disclosure of information related to the company’s business activities, which the complainants claim rise to the level of anti-competitive behaviour.

The investigation remains at an early stage with no indication that the Bureau is close to reaching a conclusion. However, the Bureau’s interest in Google indicates that the company is now firmly on the Canadian radar screen and competition watchers will be looking closely to see whether Canada follows the U.S. example or adopts the more aggressive European approach.

The federal privacy commissioner has also waded into Google’s business model. Last week, the office concluded an investigation into online behavioural advertising that arose from a complaint by a Google user who was uncomfortable with health-related targeted advertisements that suggested his Internet usage was being tracked. After he searched for medical devices for sleep apnea, he began receiving advertisements on random sites for the devices.

The reality is that website usage is tracked, hence the mounting demands for do-not-track legislation that would provide users with greater control over the data generated by their Internet activities. In this case, the privacy commissioner concluded that the advertising breached Canadian privacy law as the tailored advertisements involved sensitive information that required an explicit opt-in consent.

Google agreed to several changes in response to the finding, including increased monitoring of its advertising programs to ensure compliance with company policies and the law. Given the heightened interest from Canadian regulators, the company is apparently no longer alone in the monitoring of its advertising practices and business activities.

7 Comments

  1. Michel Tremblay says:

    Google’s business model
    Government acting as a looter again. Who’s John Galt?

  2. Chris Brand says:

    I find the sleep apnea case bizarre
    The information Google is using is just that this user (or more likely somebody using this computer) search for sleep apnea devices. It has no idea whether the person suffers from sleep apnea, sells the devices themselves, heard about them recently and was curious, or something else.
    It’s creepy, sure, but a lot of this tracking stuff is. Doesn’t seem to me that it should fall afoul of privacy legislation, though.

  3. I have installed Abime’s DoNotTrackMe, and Ad Block Plus. Both seem very helpful.

    No amount of legislation will be as effective as the pro-active efforts of a computer’s owner.

  4. Seriously?!
    I hope Google fights that lawsuit about sleep apnea. It’s like saying if I’m sitting in the cafeteria talking to my co-workers and I mention when I get anxious a bit of tea helps me and the next a co-worker brings a tea catalogue from his wife’s business – I can sue him now for health-related targeted advertising!

    It’s not like Google crawled his doctor’s notes, made the correlation, and used the information to help a 3rd (4th?) party. He literally searched for “sleep apnea” and Google answered, every way it could!

  5. NSA NSA NSA CIA CIA
    ya ya ya look hard ok

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  7. York University Student
    Mr. Geist,
    Your article provides some important key points on the issues of Google Corporation and the way it has been impacting the users. I will agree with you regarding the fact that Google does a little more than it is supposed to. This is the way it makes money by supporting advertising agencies, including some controversial websites, providing electronic copies of millions of books, tracking all the individual searches by the consumers, creating a visual map of various places. All or at least some of this is illegal in the United States of America as well as Canada. All the issues that you have mentioned are of course negative, and should be taken in consideration by Google, but there is one important aspect that you have missed.
    Of course Google is a Major Corporation that has some sort of business model through the internet. It makes its money from the consumers, everyone who uses the internet, and that does include you and me. However, despite all the above issues which Google is involved in, there is one which should have also been mentioned – the internet search personalization. This has been introduced by Eli Pariser who has plenty of knowledge about this problem, and who has conducted some research. Search personalization, or as Pariser calls it – “The Filter Bubble”, prevents the consumers from being able to access all the information on the internet. Google has a digital filter that selects the material it thinks individuals are looking for. Don’t you think that with the help of a filter bubble, Google controls what consumers’ access on the internet? I would totally agree with you that the examples you have mentioned are really important and go against the rules, but the search personalization stands above all of them. As it is argued by Eli Pariser, internet should be available for everyone without limitation, but it does not work that way. The digital filter takes everything in consideration, the location of the consumer, what he/she does on the internet, and the previous searches of the consumer. The internet pre-determines what the consumer is looking for, therefore limiting his access to information. This limited access to information establishes a control over that consumer, and the information he/she can view through the internet. How is that fair? Wouldn’t that be considered as a form of oppression? According to the World Internet Usage Statistics, about 79% of the whole population in North America use internet for information. If all of those 79% of consumers are being denied the idea of accessing any sort of information, this means that they are being controlled, and Google plays an important part of it, as it is one of the major Corporations that conduct their business through the internet. As it is known, Google established control over many internet websites, and is able to generate income of that. Search personification is one of the important parts of how Google is able to control what kind of information the consumers’ access.
    So, the issues which you have described are also very important, but the concern which was left out is the internet personification. The internet is something that is used by many individuals, and every one of them has the right to know about how Google and other internet corporations control their access to information.
    With respect,

    Roman Pasternak