BAE Business Report on Google: Critical Analysis

The purpose of this report is to evaluate the ethical and financial performance of Google for an investor to make a decision on whether this company should be invested. This report will discuss Google's ethical issues about monopoly and Google’s share price from 2015 to 2019. According to THOMSON REUTERS WESTLAW report in 2019, its client was not satisfied with the solution because of Google's virtual monopoly position in the search arena. In terms of the share price, the overall trend is upward. In a comprehensive consideration, it is not recommended to ethical invest in Google. The limitations of the report are that this report only shows partly the share price history and ethical issues of Google.

1. Introduction

The purpose of this report is to make recommendations on Google's ethical and financial performance for an ethical investor. Ethical investment can be defined as ‘an activity in that investors use their own ethical principles as the main filter for selecting companies to invest (Kenton 2018)’.Ethical company behavior can be described as Microsoft. This means companies that practice fairness, honesty, and environmental sustainability nurture society and the planet in such a way that attracts ethical people and ethical investment. For example, Microsoft devotes itself to empowering every person and every organization on the planet to achieve more.

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Google began in January 1996 as a research project by Larry Page and Sergey Brin when they were both Ph.D. students at Stanford University in Stanford, California. Google indexes billions of web pages to allow users to search for the information they desire through the use of keywords and operators. Internationally, Google has over 78 offices in more than 50 countries. except for Google's core search engine (Google Search)， it also offers services designed for work and productivity, email, scheduling and time management, cloud storage, instant messaging and video chat, language translation, mapping, and navigation.

2. Outline

This report will provide three parts of information for ethical investing clients, including ethical performance, financial performance, and recommendations. Firstly, in the ethical performance part, this report will show the description and evaluation of ethical issues. Also, it will involve a court case which is ‘Dreamstime.com, LLC v.Google, LLC’ (THOMSON REUTERS WEATLAW 2019). Secondly, financial performance will contain the description and evaluation of a particular financial indicator and data of share price from 2015 to 2019. Finally, according to the evaluation of the ethical and financial performance, this report will provide recommendations about whether to invest in Google or not.

3. Evaluation of financial performance

Business ethics not only are virtue, integrity, or character, but also it involves one’s understanding of morally right and truthful when it is in an ethical struggle (Lewis 1985). Further, ethical behavior in business can be defined as a behavior, which happens in a business sector, and it involves business ethics (Lewis 1985). There is a general ethical issue that affects Google, which is the internet monopoly.

3a. Ethical performance

For years, Dreamstime had been near the top of every search engine’s search results. Starting in approximately 2015, however, Dreamstime’s ranking significantly dropped on Google’s search engine. This drop coincided with a licensing agreement Google had entered into with Dreamstime’s main competitor. Subsequent efforts by Dreamstime to return to the top of Google’s search results did not succeed and Dreamstime remains practically irrelevant on Google. Dreamstime’s competitor, by contrast, remains at the top of Google’s search results.

When Dreamstime increased its advertising on Google to help compensate for its lost search ranking, Google obstructed Dreamstime’s efforts. For example, Google purportedly canceled Dreamstime’s most successful advertising campaigns without notice or explanation, suspended Dreamstime’s account based on unfounded accusations of policy violations, and prevented Dreamstime from running its advertisements altogether (while simultaneously allowing the exact same advertisements to be placed by Dreamstime’s competitor). Dreamstime’s mobile applications faced similar conduct. Google allegedly removed Dreamstime’s mobile application because it featured lingerie photographs. By contrast, Dreamstime’s competitor remained active despite featuring explicitly nude photographs.

3b. Company responses

Google even conceded that online search results can form the basis of legal action. Specifically, Google admitted that if Google “had promised to rank Dreamstime in a certain way, and then broke that promise, that conduct theoretically could state a claim for breach of contract or promissory estoppel” (Dkt. No. 79 at 9). The basis of the breach of contract claim remains that Google broke its contractual promise to Dreamstime. It makes no difference that Google did not make any specific promises related to search results.

Google argues that Dreamstime must aver more than a mere subjective belief that it should rank higher. Yet, an issue of material fact exists as to the reason Dreamstime had formerly been highly ranked on Google, remains highly ranked on other search engines, and has become practically non-existent on Google despite engaging in a mishmash of attempted fixes. Perhaps the reason is that Google torpedoed Dreamstime’s organic search ranking to boost advertising revenue. Perhaps it is not. Discovery will tease out what occurred here.

4. Financial performance

For investors, the share price history can reflect directly whether this company has the ability to make profits or not. Also, it is an important factor to evaluate whether the company is appropriate to be invested. Figure 1 shows the share price of Google between 2015 and 2020. The x-axis indicates the year and the y-axis represents the share price in dollars of Google. In Figure 1, the overall trend is upward.

Figure 1: share price for Google from 2015 to 2019 (Yahoo! financial report, 2020)

It can be seen that the share price was not only raised between 2015 and 2016, but also between 2017 and 2018. These increases which are quickly than its from 2015 to 2016 may because of the global share market downturn. There was a volatility increase between 2018 and 2020, reaching around $ 1368.68 in 2020. Overall, this Figure shows that Google’s share price trend was upward yearly, which means that it had a sound financial position and it can be invested in the long term.

5. Recommendation

An issue of material fact exists as to the reason Dreamstime had formerly been highly ranked on Google, remains highly ranked on other search engines, and has become practically non-existent on Google despite engaging in a mishmash of attempted fixes.What Google did in those cases were not ethical. Although their share price trend is upward yearly from 2015 to 2020 and the share price may rise constantly in the future, this report focuses on the ethical performance of Macquarie Bank. Therefore, according to its ethical performance, it is not a wise choice to invest in Google. The limitations of the report are that it only shows partly the share price history and some ethical issues of Google.