Google's "don't be evil" mantra tested

Formal complaint filed against search giant at Competition Commission.

Cape Town-based e-marketing company Entelligence has filed a formal complaint with the Competition Commission against Google South Africa.

The complaint alleges that Google abused its "dominance in terms of Section S8(d)(i) of the Competition Act 89 of 1998, which prohibits a firm from ‘requiring or inducing a supplier or customer to not deal with a competitor'."

The crux of the complaint is that certain actions by Google South Africa are alleged to have made it "impossible for Entelligence to service its customer, so Google can win the account by default".

Sean Riley, MD of Entelligence says: "We don't really have a choice [about going to the commission]. We tried to mediate it, and the relationship is key to our business." Riley says it has reached the point where they don't even get responses from Google South Africa anymore.

He feels that "some kind of precedent needs to be set".

"We're quite happy to compete, but when Google abuses their position", Riley feels that something needs to be done. "How do we know with piece of mind that this won't happen in future?"

The alleged action by Google South Africa seems to fall in direct contrast to the company's "don't be evil" mantra (the informal corporate motto for the company). The company states that its code of conduct "is one of the ways we put ‘Don't be evil' into practice ... We expect all of our employees and board members to know and follow the code".

Entelligence says it was awarded a one-year contract in June by Telkom-owned TDS Directory Operations to provide "online marketing services for the Yellow Pages website". As part of this contract, Entelligence was to manage a Google AdWords advertising campaign for Yellow Pages. AdWords is Google's flagship advertising product. The service offers pay-per-click advertising, as well as advertising for text and banner ads targeted to specific websites. Google holds approximately 98% of "all revenue relating to pay per click search advertising in South Africa".

Entelligence is a so-called "Qualified AdWords Company" which means it manages a minimum of $100 000 on the AdWords platform every 90 days. Riley confirmed that the company was at this level prior to the TDS contract.

Entelligence says it met with Google South Africa at the end of June to discuss "the maximisation of traffic to the Yellow Pages website". The company adds that "clear actions were agreed upon to jointly cooperate in increasing advertising performance".

Entelligence then alleges that Google manipulated the price per click in the AdWords system for keywords which matched terms Yellow Pages had bought, as this was raised to R2 per click. It claims that Google acted in an "unauthorised and unethical" way. Entelligence says it then rectified the amount it was willing to pay per click the next day, and raised its concerns with the country manager for Google South Africa, Stafford Masie.

Entelligence then said it discovered that Google's local office was "pitching for the account to manage the Yellow Pages advertising on Google's AdWords system". The marketing company also says that up until that point, Google had not communicated to Entelligence the fact that Google considered the Yellow Pages a "named account" which it intended to "service directly".

Entelligence says the MD of TDS intervened last month and requested "Google South Africa to respect the agreement in place between TDS and Entelligence". It alleges that the global search company "indicated that the contractual relationship between TDS and Entelligence is of no relevance to Google South Africa".

Riley confirmed to Moneyweb today that Entelligence's Yellow Pages account has been switched off.

The Competition Commission confirmed that the complaint had been filed today (case number: 2008SEP3956).

It says Google South Africa has "informed Entelligence that they will inhibit our ability to continue servicing Yellow Pages by refusing to renew our accounts held with Google and they will prevent us from creating any new accounts in an attempt to service Yellow Pages".

However, Entelligence says that what it calls Google South Africa's "bullying tactics and ruthless approach" does not fit with it's interactions with Google internationally.

Google's code of conduct also states that "most countries have laws designed to encourage and protect free and fair competition. Generally speaking, these laws prohibit 1) arrangements with competitors that restrain trade in some way, 2) abuse of intellectual property rights and 3) use of market power to engage in unfair price discrimination and other forms of unfair practices."

Stafford Masie, country manager for Google South Africa, did not answer calls from Moneyweb on Friday. He also did not respond to an e-mailed request for comment.

It has been reported that Google South Africa would only comment "once the Competition Commission has ruled".

UPDATE: Google released the following statement in reponse to questions from Moneyweb: "Google has strict professional protocols for working with agencies and clients in South Africa and around the world, these were developed specifically to ensure that a fair and open business model continues to be in operation. The claims put forward are without merit."

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