Google weighs penalties against Daily Beast parent over deceptive marketing

The Google logo appears on the side of a building in Mountain View, California. (Photo by Lee-Sean Huang)

Search giant Google is weighing the possibility of imposing “severe penalties” on media company IAC Group, the parent company of the current events blog The Daily Beast, over what it considers deceptive marketing related to some browser-based software products.

The consideration was first reported Monday afternoon by the Wall Street Journal newspaper, which relied on internal documents and interviews with people familiar with the matter, its reporters said.

The issue revolves around several software applications developed by IAC for Google’s Internet browser Chrome, which is installed on more desktop and portable computers, tablets and smartphones than any other in the world. The software, which are known as “browser extensions,” offered to connect users with different services like Bible quotes, hardware manuals and government forms among others.

But the browser extensions didn’t behave as they were described, and in some ways changed a user’s Chrome software so that it would recommend IAC’s own search engine MyWay above Google’s. The browser extensions also steered users toward advertisements that benefited IAC financially, the Journal said.

Both of these things amounted to marketing manipulation and deception, Google’s Chrome security team found earlier this year, according to documents reviewed by the Journal. The security team urged the “immediate removal and deactivation” of offending browsers from Google’s Chrome Store where users had been able to install and activate them, the Journal said.

At least five browser extensions have since been taken offline and removed from the Google Chrome Store, the Journal said, and the company is weighing other penalties against IAC for its malfeasance. That punishment could include a wholesale banning of IAC’s browser extensions and other software from Google’s online marketplaces.

In addition to software-based advertising business, IAC operates a number of standalone online services, including the video sharing website Vimeo, recommendation directory Angie’s List and the news-focused blog The Daily Beast.

None of those properties were implicated in the software scandal, but they could all be impacted by any punishment Google hands down because IAC’s software and advertising business constitutes a significant source of revenue.

“Google has taken hundreds of millions of dollars from us to advertise and distribute these products in the Chrome Store,” Valerie Combs, a spokesperson for IAC, told the Journal in a statement. “There’s nothing new here: Google has used their position to reduce our browser business to the last small corner of the internet, which they’re now seeking to quash.”

But Google has been hesitant to impose a harsh penalty on IAC because the search giant is worried that regulators might view it as anti-competitive, the Journal said. The tech company has already faced scrutiny from regulators in the United States, Europe and elsewhere over its size and influence in the technology space, particular with respect to its own search and advertising businesses, which far eclipse IAC’s in size and scope.

On Monday, a Google spokesperson told the Journal that the company was continuing discussions with IAC and was “reviewing the remaining extensions and our enforcement options.”