Google co-founder Sergey BrinROBERT GALBRAITH
Google's carefree youth is behind it.
Using a strategy that balanced world-beating technological innovation and financial success with a mandate of good corporate citizenship, the Mountain View, Calif., Web firm experienced a decade of meteoric growth. But as the company matures, that balance is becoming more difficult to maintain, and Google is starting to find itself - with increasing and alarming regularity - incurring the wrath of governments and courts around the globe.
The latest case came this week, when an Italian court convicted three Google executives of privacy violations in a case involving a clip posted to Google's video service. The video, uploaded in 2006, showed teenagers abusing an autistic boy. Staff were alerted and eventually took the video down, but a support group for people with Down syndrome brought the case to Italian prosecutors, and a judge eventually handed out six-month suspended sentences for three of the four Google executives charged. Google has said it will appeal the ruling.
Google's response was unequivocal: On its blog, one of Google's lawyers said the decision "attacks the very principles of freedom on which the Internet is built," and if upheld, "then the Web as we know it will cease to exist, and many of the economic, social, political and technological benefits it brings could disappear."
Indeed, of the myriad court cases in which Google finds itself today, many may well set precedents for commerce in the Internet age. Such are the perils of leading the innovation curve. "The risk profile to Google internationally has been increasing," said Colin Gillis, an analyst at BGC Financial LP in New York who follows the company. "Why are these governments focusing on Google now? Partially it has to do with size, and partially it has to do with scope."
As Google has grown, Mr. Gillis said, the amount of user data it holds has exploded - from e-mails to video to search requests. Be it as a result of legitimate privacy concerns, legal issues or even political posturing, that store of data is subjecting the company to intense scrutiny. "It can become politically motivated. Who's going to take the other side of that debate and say it's fine for Google to have the deep quantity of data that it has?"
The issue of user privacy came back to the forefront this month after Google announced Buzz - a service designed to leverage Gmail in order to compete with microblogging sites such as Twitter. But Buzz almost immediately came under attack by critics who said the service made too much user information available to too many people.
But a bigger privacy concern in the longer run may be Google's push into mobile space. The smart phone market is considered especially lucrative for companies that derive revenue from advertising because smart phones also tell an advertiser where a person is - advertisers will pay more to show their ads to someone looking to buy flowers in New York than someone just looking to buy flowers, Mr. Gillis said.
But by moving aggressively to capture that market, Google adds a user's location to its already massive collection of data, creating the potential for more headaches similar to this week's Italian court ruling.
Some of the disputes Google is currently involved in may well have a serious impact on the company. Google executives are believed to be holding talks with the Chinese government to try to resolve a continuing dispute over the company's allegations of cyberspying and criticism of Beijing's Internet censorship. But regardless of how those talks turn out, Mr. Gillis said he has written off Google's ability to successfully do business in the country, as a result of all the bad blood that has already been created there.
The Italian court case presents another challenge. It comes at a time when Google is trying to monetize YouTube as a hub for companies looking to create rich multimedia ads. But if forced to manually review every video submitted to the site in Italy - and possibly the entire European Union - Google may have no choice but to abandon those markets.
"If the Italian ruling is upheld - and I suspect it will not be - YouTube will have to shut down," said Deloitte Canada analyst Duncan Stewart.
But Mr. Stewart added that such hurdles tend to come with the territory when a company grows into a behemoth. Many court cases involving other tech giants such as Microsoft and Intel sometimes took years to resolve, and ultimately had little impact on share prices. "Google does cool, new, interesting things - any time you do that you get to the boundaries," he said. "When courts are looking to define new things, they look at technology."