Early Google executive Tim Armstrong told CNBC on Wednesday he believes the company did not do “evil things” to amass its dominance in online search. Rather, Armstrong said it was Google’s deftly executed strategy that has grown the business to a position where it faces antitrust scrutiny.
On Tuesday, the Department of Justice sued Google for what it claims are unlawful practices that helped the search engine obtain monopoly power. The lawsuit also alleges Google cut off competitors from key distribution channels to maintain its market dominance in search and search advertising.
“When I read that document, the first 10 years of it, I look at a company that basically had almost perfect execution on one side,” Armstrong said on “Squawk Alley.” “And, on the other side, was competing against some of the largest companies in the world and some of those companies probably didn’t make the right decisions in terms of the focus.”
“I was at Google when we were 13 out of 13 search engines,” added Armstrong, who joined Google in 2000 and was instrumental in growing its direct advertising business. He went onto become CEO of AOL and now leads a company focused on the direct-to-consumer space. He does not own shares of Alphabet, Google’s parent company.
Tim Armstrong speaks onstage during the Building Brands People Love: A Fireside Chat with AOLs Tim Armstrong on the Times Center Stage during 2016 Advertising Week New York on September 26, 2016 in New York City.
John Lamparski | Getty Images for Advertising Week | New York
Armstrong said he wasn’t going to weigh in specifically on what the outcome of the Justice Department’s lawsuit should be. But he repeatedly sought to portray Google’s growth as the result of building a quality product that users found helpful.
“I think Google is an incredible company … but it’s not because I don’t think they were doing evil things. I think they had incredible execution and they ended up in a position where they were able to do deals,” Armstrong said, referencing Google’s agreements with companies such as Apple and Samsung to become the default search engine on their mobile phones.
According to the DOJ lawsuit, Google’s “exclusionary agreements” with companies account for almost 60% of all search queries. Overall, the agency contends Google has had in recent years almost 90% of search engine queries in the U.S., including 95% on mobile.
Google has called the Justice Department’s suit “deeply flawed,” and argues people use its search engine because they want to, “not because they’re forced to, or because they can’t find alternatives.”
“Everybody wants to win in business, and they’ve done a great job winning,” Armstrong said of Google. He added that the DOJ’s lawsuit is “void of the larger context” of the competition the Mountain View, California-based company faced as it grew from scrappy start-up to tech giant.
“Having been there really early and watched the competitive set, Google just did a really, really good job — which any business, by the way, that has done that good of a job of execution, to some degree, having the DOJ come after you means you’ve been successful,” Armstrong said.
Google and Facebook to be scrutinized by new U.K. unit from next year
Mark Zuckerberg, Chairman and Chief Executive Officer of Facebook, arrives to testify during the House Financial Services hearing on An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors on Wednesday, Oct. 23, 2019.
Bill Clark | CQ-Roll Call, Inc. | Getty Images
LONDON — The U.K. on Friday said a new government unit will work to tackle ongoing concerns about a concentration of power among a small number of tech giants.
The Department for Digital, Culture, Media and Sport said it plans to create a Digital Markets Unit (DMU) to enforce “a new code to govern the behavior of platforms that currently dominate the market, such as Google and Facebook.”
The code is designed to ensure that consumers, small businesses, and news publishers aren’t disadvantaged by actions taken by tech giants, the government said.
Under the new code, some of the world’s biggest tech companies may have to be more transparent about the services they provide and how they use consumers’ data. They may also be forced to give consumers a choice over whether to receive personalized advertising, and they won’t be able to place restrictions on customers that make it difficult for them to use rival platforms.
The DMU, which will be part of the Competition and Markets Authority (CMA), will start work in April 2021.
The government said the DMU may be given the unit the power to suspend, block and reverse decisions made by large tech companies. The DMU could also order them to take certain actions to achieve compliance with the code, and impose financial penalties for non-compliance, the government said.
Digital Secretary Oliver Dowden said in a statement: “I’m unashamedly pro-tech and the services of digital platforms are positively transforming the economy — bringing huge benefits to businesses, consumers and society.”
“But there is growing consensus in the UK and abroad that the concentration of power among a small number of tech companies is curtailing growth of the sector, reducing innovation and having negative impacts on the people and businesses that rely on them. It’s time to address that and unleash a new age of tech growth,” Dowden said.
In July, the CMA called on the government to give it more powers and set up the DMU, saying it was necessary to rein in big digital advertising platforms. The regulator said it was concerned about how tech giants like Google and Facebook use digital advertising to fuel their business models.
Though the CMA’s recommendations had a domestic focus, the watchdog said the problems it had identified were “international in nature” and that it would look to “take a leading role globally” as part of its digital strategy.
“Through our examination of this market, we have discovered how major online platforms like Google and Facebook operate and how they use digital advertising to fuel their business models,” Andrea Coscelli, chief executive of the CMA, said on July 1. “What we have found is concerning – if the market power of these firms goes unchecked, people and businesses will lose out.”
Ronan Harris, Google’s vice president for the U.K. and Ireland, said in a statement at the time: “Advertisers today choose from a wide range of platforms that compete with each to deliver the most effective and innovative ad formats and products.”
He added: “We support regulation that benefits people, businesses and society and we’ll continue to work constructively with regulatory authorities and Government on these important areas so that everyone can make the most of the web.”
Facebook has previously said it would engage with U.K. government bodies “on rules that protect consumers and help small businesses rebuild as the British economy recovers” from the coronavirus pandemic.
“We face significant competition from the likes of Google, Apple, Snap, Twitter and Amazon, as well as new entrants like TikTok, which keeps us on our toes,” a spokesperson for the company said in a statement on July 1. “Giving people meaningful controls over how their data is collected and used is important, which is why we have introduced industry leading tools for people to control how their data is used to inform the ads they see.”
— CNBC’s Ryan Browne contributed to this story.
Amazon gives front-line workers a $300 holiday bonus
An Amazon warehouse
In a blog post, Dave Clark, Amazon’s senior vice president of retail operations, said full-time operations staff who are employed by the company from December 1 to December 31 will receive a $300 bonus. Part-time workers employed within the same timeframe will receive a $150 bonus.
“I’ve been at Amazon for 22 holiday seasons and this one is definitely unique, to say the least,” Clark said. “I’m grateful to our teams who continue to play a vital role serving their communities.”
Amazon said it will spend more than $500 million on the one-time holiday payments. In June, Amazon also spent $500 million on “Thank You” bonuses for front-line employees who continued to come to work amid the coronavirus pandemic.
The company has spent billions of dollars since March on coronavirus-related investments, including wage increases, safety gear and enhanced cleaning measures, as well as on building out testing capabilities. Amazon issued temporary wage increases and double overtime pay at the height of the pandemic, but both of those incentives came to an end in June.
Since then, warehouse workers have expressed frustration that their hazard pay was being cut even as the pandemic has persisted and they still face increased health and safety risks in the workplace. In October, Amazon disclosed that more than 19,000 of its front-line workers in the U.S. contracted the coronavirus between March 1 and Sept. 19.
Amazon defended its decision to end the wage increases and double overtime pay, saying these pay premiums were announced to “help meet increased demand” from online orders, which has since stabilized.