Showing posts with label advertising. Show all posts
Showing posts with label advertising. Show all posts

Thursday, December 3, 2020

Google: Department of Justice files a Long-Anticipated Antitrust Lawsuit (2020-Current)

 

        Google is one of the largest companies in the world, and has a major influence not only on the internet itself, but all its users. On Tuesday October 20th, 2020, the United States Department of Justice along with eleven state Attorney Generals filed a civil antitrust lawsuit against Google. Google is under heavy scrutiny, and the future of the tech giant is dependent upon the results of this lawsuit. The main objectives of this paper are to allude to whether or not Google is in fact in violation of antitrust laws, and whether or not their business practices and potential monopolization of the market lies within ethical boundaries, or violates them. There are four main ethical theories that will evaluate Google, those four theories include Individualism, Utilitarianism, Kantianism, and Virtue Theory. Each theory consists of different rules and criteria, but with all four justifications considered, Google’s recent practices can be evaluated fairly and without bias.

What is Google?

         “Our mission is to organize the world’s information and make it universally accessible and useful” (1). This is the mission statement for Google, an American multinational technology company, that has dominated the internet over the past decade. Google specializes in internet services and products, most importantly, online advertising technologies, a global search engine, cloud computing, software, and hardware. Google is the most visited website worldwide. It is considered one of the big five technology companies in the United States: Google, Apple, Amazon, Facebook, and Microsoft. (2) Undoubtedly, Google has embedded itself into the daily lives of billions of people all across the world. Google was first conceived as a graduate project at Stanford, however, since its initial public offering in 2004, it has amassed into one of the most recognizable firms worldwide. In order to truly understand the worldwide impact of Google, the following information must be acknowledged. In an article compiling statistics on Google, the author states the following, “Google handles more than 40,000 queries per second. That translates to over 3.5 billion searches every day. Additionally, as of December 2019, Google holds 92.71% of the search engine market share“(3). Not only does Google have a huge consumer base, but it also serves as a marketplace. The article states, “[Producers] can get up to 30% more customers

by only moving up one spot in Google’s search results, and users are four times more likely to click on a Google ad than on one by any of its competitors” (3). Google’s influence upon its consumers has exponentially grown over the years through new advertising strategies. Overall, Google has grown into a household name and entity in billions of lives, and will continue to provide its vast services and products to people worldwide. However, despite Google’s overwhelming success, it has faced its share of obstacles. On October 20th, 2020, a civil antitrust lawsuit was filed against Google by the Department of Justice. 



[The graphic to the left shows the statistics of various search engine usage rates across multiple platforms. It is important to acknowledge that Google is represented by the blue, red, and a few of the smaller sections in the graph. The largest competitors of Google are also shown in this graphic.] 




Antitrust Laws

         To put it in simple terms, antitrust laws are laws which regulate firms, and prevent the monopolization of markets in order to preserve the competitive integrity of the market. The Federal Trade Commission provides an overview of the various antitrust laws. The FTC states,

“Congress passed the first antitrust law, the Sherman Act, in 1890 as a "comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade." In 1914, Congress passed two additional antitrust laws: The Federal Trade Commission Act, which created the FTC, and the Clayton Act” (6)

Despite being passed by Congress over a hundred years ago, these three main antitrust laws, with some minor changes, are still serving today. The Sherman Act, according to the FTC, “outlaws every contract, combination, or conspiracy in restraint of trade, and any monopolization, attempted monopolization, or conspiracy or combination to monopolize” (6). The Sherman Act has been cited in many antitrust lawsuits in the past, and is often the deciding factor of whether a company is deemed as a monopoly. The Federal Trade Commission Act prohibits, “‘unfair methods of competition’ and ‘unfair or deceptive acts or practices’ “(6). Lastly, the Clayton Act prohibits forms or mergers in which the same people are able to make decisions for competing firms. All three of these antitrust laws form the basis for any antitrust lawsuit filed against a firm. In order to win an antitrust lawsuit, the Department of Justice must be able to provide enough evidence to prove that the firm is in violation of one or more of these laws. With regards to Google, the Department of Justice has enforced the Sherman Act similar to what they have done in the past. In order to understand the consequences of a violation of antitrust laws, historical cases must be analyzed.

History of Antitrust Lawsuits

         Google is not the first major firm to face an antitrust lawsuit; some notorious antitrust lawsuits include the ones filed against AT&T in 1974 and Microsoft in 1998. The Department of Justice has made it clear that this current lawsuit filed against Google has the same severity of those previous lawsuits. In order to fully understand the complexity of the lawsuit filed against Google, there must be some historical context to provide a basis for this current lawsuit. In 1974, the Department of Justice filed a civil antitrust lawsuit against AT&T. The following excerpt has been taken directly from the public release by the Department of Justice in 1974,

“According to the complaint, the alleged violation of Section 2 of the Sherman Act had the following effects: Defendants have achieved and maintained a monopoly in telecommunications service and telecommunications equipment in the United States; Actual and potential competition in telecommunications service and telecommunications equipment has been restrained and eliminated; and Purchasers of telecommunications service and telecommunications equipment have been denied the benefits of a free and competitive market” (4).

Under the antitrust laws, AT&T was deemed a monopoly, and was forced to split up following the lawsuit in order to sustain a free and competitive market. AT&T coincidentally possessed some similar statistics to Google in regards to market ownership in an industry. The document states, “AT&T has total assets of more than $67 billion, and its operating company subsidiaries supply more than 80 percent of the nation's telephones” (4). The Department of Justice has been closely watching Google for years, and has finally filed this lawsuit with the same concern that was voiced in 1974. Fast forward 24 years, and the Department of Justice filed its second major antitrust lawsuit against Microsoft.  On May 18th, 1998, the Department of Justice made the antitrust suit available to the public, under the claim that Microsoft was unlawfully monopolizing computer software markets. Within the document, Joel I. Klein, Assistant Attorney General in charge of the Department's Antitrust Division, said the following regarding the case, "This action will protect innovation by ensuring that anyone who develops a software program will have a fair opportunity to compete in the marketplace” and additionally, “Inventors and investors cannot and will not develop and market innovative software programs if they know that Microsoft can use its Windows monopoly to block the distribution of their programs and to force consumers to buy Microsoft's competing products” (5). Similar to AT&T, Microsoft was acting as a monopoly in the software industry. This successful lawsuit protected the competitive market, and ensured the consumers that no large firm was above the law. The current antitrust lawsuit, filed by the Department of Justice, aims to do the same; preserve the free and competitive market that allows consumers and producers to make fair and conscious decisions.

Overview of Google’s Antitrust Lawsuit

         October 20th, 2020 marked the beginning of another major antitrust lawsuit against the internet giant, Google. Similar to AT&T and Microsoft, Google has control over most of their market. The Department of Justice is labeling Google as a monopoly, whereas Google is stating that they are a free to use search engine who is driven by the consumer. In a statement from Attorney General William Barr,

“Over the course of the last 16 months, the Antitrust Division collected convincing evidence that Google no longer competes only on the merits but instead uses its monopoly power – and billions in monopoly profits – to lock up key pathways to search on mobile phones, browsers, and next generation devices, depriving rivals of distribution and scale” (7).

Attorney General Barr along with numerous other Attorney Generals from all different parts of the country as well as the Department of Justice, are stating that Google is wielding monopoly power and is successfully manipulating the consumers. Attorney General Barr would then go on to state, “This lack of competition harms users, advertisers, and small businesses in the form of fewer choices, reduced quality (including on metrics like privacy), higher advertising prices, and less innovation” (7). Google is continuing to grow and prosper off of these practices, and without regulation, consumers and smaller firms and producers will be hurt. In closing, Attorney General Barr writes, “If we let Google continue its anticompetitive ways, we will lose the next wave of innovators and Americans may never get to benefit from the “next Google.”  The time has come to restore competition to this vital industry” (7). The Department of Justice is enforcing the Sherman Act, as explained previously as the prohibition of any restriction in trade or monopolization of a market. However, the information provided by Attorney General William Barr is not sufficient in exploiting Google’s unethical practices. The lawsuit released by the Department of Justice provides a more in-depth explanation as to how Google is in violation of antitrust laws. The complaint alleges that Google acquired monopoly powers in search and search advertising through the following:

“Entering into exclusivity agreements that forbid preinstallation of any competing search service. Entering into tying and other arrangements that force preinstallation of its search applications in prime locations on mobile devices and make them un-deletable, regardless of consumer preference. Entering into long-term agreements with Apple that require Google to be the default – and de facto exclusive – general search engine on Apple’s popular Safari browser and other Apple search tools. Generally using monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization” (8).

The complaint against Google is substantial, and the giant corporation is facing quite the challenge with the odds stacked against them. In response to the allegations brought up against them, Google wittily responded, “The bigger point is that people don't use Google because they have to, they use it because they choose to. We remain absolutely focused on delivering the free services that help Americans every day” (9). There is quite a lot that lies within the verdict of this lawsuit, and this will unequivocally impact the markets, its producers, and consumers worldwide. Considering the vast amount of information, the claims by the Department of Justice seem to wield enough power to impose antitrust restrictions on Google. However, this is an ongoing lawsuit, and the eventual verdict will not be a simple answer. The following ethical evaluation will be based on the claims that the Department of Justice has put forward.


Stakeholders

         The people affected by this antitrust lawsuit extends much further than Google itself. Obviously, the shareholders, employees, and executives of Google will be substantially impacted by this lawsuit. However, as the worldwide leading search engine, Google reaches billions of people all over the planet. The stakeholders consist of all of the billions of individuals worldwide that use Google’s search engine and products every day. The verdict in this antitrust lawsuit will impact the advertising on google for all of the producers and firms worldwide that pay Google to run their advertisements. Consumers and smaller producers may even benefit from this lawsuit if Google’s advertising practices are changed, giving smaller businesses an opportunity to grow. Certainly, in the case of a monopoly, competitors are unable to compete in the market. This lawsuit brings life into all of the competitors in the industry, and gives them a fair opportunity to provide their services. The reality is that billions of people are affected by Google and their practices, whether good or bad, this antitrust lawsuit will have an impact on all of our lives.

The Application of Individualism

         Individualism is one of four ethical theories that will be used to evaluate Google and their current antitrust lawsuit. Individualism’s primary values are the business, the owner’s choices, and most importantly the business’ profits. According to Dr. Salazar’s Case Manual, the general rule of individualism is that, “business actions should maximize profits for the owners of a business, but do so within the law” (10). Individualism is the contrary to many ethical beliefs, but nonetheless it is a form of ethical evaluation. In the antitrust lawsuit filed against Google, which is an ongoing investigation and lawsuit, it is difficult to completely assess whether or not Google is acting ethically or unethically. Google would state that they are in fact maximizing profits through the generation of ad revenue and the sales of their products. However, according to the Department of Justice, Google is in violation of antitrust laws, and is a monopoly in the market. As stated previously, they have justified their position by stating that Google is in violation of the Sherman Act. They have done so by achieving monopoly powers in the market, and essentially entering agreements with companies like Apple to diminish any presence of competition in the market. By doing this, Google would certainly benefit and profit a lot more off of their services through advertisements. However, this practice is illegal and an abuse of power by the firm. If the Department of Justice can prove that Google has been conducting these practices and is a monopoly, then Google would be acting unethically according to individualism. Again, individualism states that a business’ main objective is to maximize profits within the law, but in this case, Google would be maximizing their profits by breaking antitrust laws. Therefore, from an individualism standpoint, if the accusations filed against Google are true, then Google’s business practices would be unethical.

The Application of Utilitarianism

         Utilitarianism, another main ethical theory that will be used to assess Google, focuses on the overall happiness of all human beings. According to the Case Manual, Dr. Salazar states that the primary values of Utilitarianism include, “Happiness of all conscious beings, often interpreted hedonistically as pleasure and the absence of pain, but also sometimes interpreted as the satisfaction of desires” (10). For Google, Utilitarianism states that its actions must promote happiness for all conscious beings, and not only for the business and their consumers. Dr. Salazar states that the ethical rule of Utilitarianism is to, “maximize the happiness in the long run for all conscious beings that are affected by the business action” (10). Utilitarianism is completely different from Individualism; essentially with individualism, it is ethical to conduct a business practice that hurts a majority of individuals as long as the practice maximizes profit and is conducted within the boundaries of the law. With regards to Utilitarianism, maximizing profit is not a main focus, and you can break the law as long as it promotes happiness for the majority of conscious beings. For this reason, it is a lot simpler to evaluate Google and the current antitrust lawsuit under Utilitarianism than Individualism. The verdict in the antitrust lawsuit against Google will not justify Google’s ethical standing. Google is one of the largest and widely recognized firms in the world. As stated earlier, Google is home to billions of consumers, and much of their consumers have Google’s services at their disposal at all times. Google’s search engine is extremely useful and helpful, and makes everyone’s day easier. It is without a doubt that the average person is more than grateful for Google’s substantial information databases and search queries. Billions of lives around the globe are made easier with Google, and it is without a doubt that those individuals are very happy with Google and what it provides to them. However, although the majority is content with the firm’s free-to-use services, there are a few groups of people who are unhappy with Google and are seeking justice. Those groups include the justice system who had filed the lawsuit against Google, and the competitors of Google who do not have a fair chance to compete with its products and services. Utilitarianism focuses on the overall happiness of conscious beings, but not every single conscious being can always be content. For this reason, the majority rules. In the case of Google, despite the antitrust lawsuit and potential violation of antitrust laws, their products and services make billions of people all around the world happy. From a Utilitarian standpoint, Google’s practices would be considered ethical, because although it might be a violation of antitrust laws, it makes more people happy than not.

The Application of Kantianism

         Kantianism is one of the more complex ethical theories, and the evaluation of Google using Kantian ethics can be influenced through the outcome of the lawsuit as well as the legitimacy of the allegations against Google. According to the Case Manual written by Dr. Salazar, the primary decision-making values of Kantianism ethics include, “Rational decision making, autonomy of individuals, honesty, and freedom” (10). Kantian ethics vouches for decisions to be made based on the “Good Will”, essentially, this means that decisions should be made with the right intentions. Kantianism states that you should not be a hypocrite, to be consistent and rational, allow and help people to make rational decisions, respect individuals, their own rationale, and their differences, and finally do what is right because it is the right thing to do. Dr. Salazar states that the Kantian ethical rule is the following, “Always act in ways that respect and honor individuals and their choices. Don’t lie, cheat, manipulate or harm others to get your way. Rather, use informed and rational consent from all parties” (10). Essentially, with regards to the Kantian ethical theory, a party must allow others to make decisions for themselves, and you must not lie or manipulate them in any way that will affect their ability to make rational decisions. A law of Kantian ethics that applies to the Google antitrust lawsuit is the Formula of Humanity. This ethical law states that you must not use an individual as a mere means to achieve what you want, but rather use them as an end. With regards to Google’s case, it appears that through the accusations of broken antitrust laws, Google has used its “free” platform to create a monopoly. Google has always credited its success to its fairness and accessibility to consumers, but their free platform has been manipulating billions of people for years. Although it is a free platform, Google runs thousands of ads to each user, and has implemented some new advertising strategies to maximize their success. In an article exposing the invasive tactics of Google, the author writes,

“That’s how monopolies extract their price. Google is playing fast and loose with the whole idea of search engines, making sure the simplest and easiest-to-access results are either paid ads or information that keeps you on Google. Either way, Google wins — and, more often than we realize, we lose” (11).

This article is very informative about advertising practices along with the specified results that allow Google to continue to build on its power on the market and the consumer. Although Google search queries are very useful and helpful more than not, the indirect effects of these advertisements and internet traffic are a direct manipulation of the consumer. Everything that Google does is conducted with the main objective of keeping you on their sites, and keeping their products a favorite amongst consumers. Although Google claims that their platform has the purpose of helping the consumer, in reality, the consumers are pawns in the grand scheme. The whole reason that Google has gotten to the point where an antitrust lawsuit was filed against them, is due to their manipulation of the consumer in order to gain more power. Additionally, through their search queries, Google is manipulating the individual’s rational and ability to make rational decisions by themselves. In the article exposing Google of unethical practices, the author writes, “A few weeks ago Elliot Anderson, a former state lawmaker who helped get Question One on the ballot, noticed that Googling “question one Nevada” generated a box at the top of the results that began: “Vote ‘no’ on Question 1” (11).

Not only is the firm using the consumer to further its dominance over its market, but it is also impeding on the individual’s rationale by attempting to influence them through their beliefs as a firm. With all the information considered, from a Kantian standpoint, Google is clearly acting unethically and their business practices violate the Formula of Humanity. Google is using the consumer to further its strangle on the market, and is utilizing their market power to influence the rational of their consumers. Undoubtedly, Google is in violation of Kantianism and the evidence to support how Google has acted unethically is similar to the evidence cited by the Department of Justice.



[The image above shows the search results for Question One on a Nevada ballot, which was discussed in the prior paragraph.]


The Application of Virtue Theory

         Virtue Theory ethics assesses whether a person, or in this case a firm, is virtuous or not. According to the Case Manual, the ethical rule of Virtue Theory is to, “Act so as to embody a variety of virtuous or good character traits so as to avoid vicious or bad character traits” (10). Overall, the objective is to accumulate good character traits by embodying the values of these various traits, and to avoid any harmful or malicious traits. When Virtue Theory is applied to an individual or firm, the following virtues are assessed: Prudence, Temperance, Courage, and Justice. These four character-traits are commonly referred to as the “Four Cardinal Values”. In regards to the four cardinal virtues, prudence and justice can be applied to the antitrust lawsuit. Prudence refers to making wise decisions pertaining to your future self, and certainly Google has not made great decisions considering the fact that they are facing an antitrust lawsuit, and are being accused of manipulating consumers and destroying competitors. Rather than utilizing justice to describe what Google has not done, it is important to acknowledge that the Department of Justice is seeking justice for the competitors of Google by attempting to dismantle their alleged monopoly. The advertising practices and corporate goals can be seen as greedy and selfish; Google is generating an absurd amount of money, but as a firm they are adamant about eliminating all forms of competition. As explained in the Kantian evaluation of Google, they are very dishonest with their consumers and are effectively manipulating them to further their control on the market. Overall, from a virtue theory ethical standpoint, Google has accumulated many negative virtues through the events that have led up to an antitrust lawsuit against them. The practices and business model of Google, assessed through virtues, are unethical.

Justified Ethical Evaluation

         Given that this case study involves an ongoing lawsuit, which has yet to be heard in court, it is unfair to give a verdict with complete certainty. We have all heard the common theory “Innocent until proven guilty”, but with all the information considered, we can speculate about the outcome of this lawsuit and the potential violation of ethics and morality by Google. In my opinion, after reviewing information from the Department of Justice and further validating some of their claims through outside credible sources, I do believe that Google is in violation of the antitrust laws, especially the Sherman Act which was previously discussed in this study. I believe that Google has engaged in unethical advertising practices in order to manipulate their consumers and the market, the information and studies speak for themselves. We all understand the power that the firm wields, but the methods in which they obtained this power was in violation of both antitrust laws and ethical theories. Google has successfully killed off competition through engaging in deals with other powerful companies like Apple to make their products unavoidable. These deals made by Google to establish themselves as a monopoly power, have violated the law and morals. Although some ethical evaluation does not deem Google’s practices as unethical, I believe the majority of ethical analyses will overwhelmingly deem their practices as unethical. To further develop my belief that Google has acted unethically and violated antitrust laws, I will reiterate a few key points. First off, I believe that any violation of antitrust laws is a violation of the individual consumer’s rights; it does not allow any competitor to experience success, thus destroying any choice that a consumer should be allowed to make. Second, I believe that Google is solely motivated by profits and has little regard for the consumer or any smaller firm that is trying to compete; their practices have proven to be malicious to competition. Google has manipulated the consumer by showing them what they want to see, and further enforcing selective advertisement. They have been able to control the rationality and decision making of billions of otherwise free minds. Google should be unbiased and impartial, and should enforce the belief that each individual should be open minded. However, the manipulation of the individual through prioritizing certain search queries and selective advertisement, has genuinely hurt the average user. Last, I believe the accumulation of search queries to produce a digital profile, and in turn using that to generate familiar and favorite results is an invasion of privacy. Google has been able to justify this by claiming it is helpful and more efficient, but in reality, it is just a means of control. I believe that this lawsuit will be very difficult for Google to put to rest, and I think that the evidence provided by the Department of Justice will help to reach a guilty verdict. I believe that Google needs to change their practices and allow competitors to be active in the industry that way one firm will be unable to manipulate the consumer; Google should be held accountable for their unethical practices.

Action Plan

         Google certainly has a lot of work ahead of them to demonstrate that they are and can continue to abide by antitrust laws, regain the trust of the consumer, and regain respect that has been lost to a lot of smaller competing firms and producers. Although Google is under heavy scrutiny with this impending antitrust lawsuit, as one of the most recognized companies in the world, it is without a doubt that Google can regain their respect. In order to resolve this issue, Google must first of all settle this lawsuit. Google must either clear their name and beat the lawsuit, or pay the consequences of the lawsuit and admit their wrongdoings. Once the lawsuit is settled, Google is still far from being up to ethical standards. Google must resolve the issues cited in the lawsuit by implementing new advertising methods that's main objective is being unbiased to the consumer, while still retaining its profitability. Google’s new practices may not be as profitable due to their previous practices being unethical and potentially illegal, but they must initiate change. If they do not change their methods, they may profit more, but they will still be acting unethically towards the consumer and to the market. Once Google implements new business practices which its goals are clearly stated, ethical, and importantly within legal boundaries, Google must be honest with the consumer and competitor. Google needs to encourage competition and allow the consumer to have a fair choice. Google’s current mission statement reads, “Our mission is to organize the world’s information and make it universally accessible and useful”. Google needs to prioritize freedom of will and the power to make individual decisions. They must continue their current mission statement, but attach a crucial part onto it. Google’s new mission statement should emphasize fairness, equal opportunity, freedom of will and choice, privacy and security, and respect for the opposition. Google’s new mission statement should be the following: Our mission is to provide the world’s information and make it accessible for everyone, but to do so impartially and respect the choices and views of all individuals. With Google’s new standards, the system must provide all information equally and make all information easily accessible. Google should not have any favorites, but act as a beneficiary to all individuals despite any preferences. Google should allow for competition, and win its consumers over through honesty and transparency rather than engaging in cutthroat business methods. All employees and management should be in support of being impartial, and welcoming to competition. Google will have to engage in a large-scale marketing campaign to push this new mission statement and regain confidence from its consumers. Although Google’s new practices might not be as profitable as before, their past practices lead them to an antitrust lawsuit which hurt consumer confidence. With their new business methods, Google will certainly avoid any future lawsuits of this kind, and will not have to allocate resources and time towards defending their brand. Google, after the lawsuit despite the outcome, will remain the most popular name in their industry. For this reason, if they become more transparent with their consumer and regain their trust, this can retain their large consumer base. Justice, honesty, and fairness will propel Google from this lawsuit back into profitability, but do so ethically and within the boundaries set by antitrust laws. To conclude, Google still has a long journey ahead of them to get back to where they want to be, but new methodology and values will ensure the legality and ethics of future endeavors.


References 

1) Google. “About Google, Our Culture & Company News”. (n.d.). Retrieved November 23, 2020, from https://about.google/.

2) “Google”. (2020, November 21). Retrieved November 23, 2020, from https://en.wikipedia.org/wiki/Google

3) S, Aleksander. (2020, September 11). “70+ Intriguing Google Statistics and Facts, Updated in 2020”. Retrieved November 23, 2020, from https://techjury.net/blog/google-statistics/

4) Department of Justice. (1974, November 20). “DOJ Antitrust Lawsuit filed against AT&T”. Retrieved November 23, 2020, from https://www.justice.gov/archive/atr/public/press_releases/1974/338834.pdf

5) Department of Justice. (1998, May 18). “JUSTICE DEPARTMENT FILES ANTITRUST SUIT AGAINST MICROSOFT FOR UNLAWFULLY MONOPOLIZING COMPUTER SOFTWARE MARKETS”. Retrieved November 23, 2020, from https://www.justice.gov/archive/atr/public/press_releases/1998/1764.htm

6) Federal Trade Commission. “The Antitrust Laws”. (2017, December 15). Retrieved November 23, 2020, from https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws

7) Department of Justice. “Statement of the Attorney General on the Announcement of Civil Antitrust Lawsuit Filed Against Google”. (2020, October 20). Retrieved November 23, 2020, from https://www.justice.gov/opa/pr/statement-attorney-general-announcement-civil-antitrust-lawsuit-filed-against-google

8) Department of Justice. “Justice Department Sues Monopolist Google For Violating Antitrust Laws”. (2020, October 21). Retrieved November 23, 2020, from https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws

9) Fung, B. (2020, October 22). “Google's defense against antitrust lawsuit? You”. Retrieved November 23, 2020, from https://www.cnn.com/2020/10/22/tech/doj-google-antitrust-analysis/index.html

10) Salazar, Heather. The Business Ethics Case Manual. n.d.

11) Fowler, G. (2020, October 27). “Perspective | How does Google's monopoly hurt you? Try these searches”. Retrieved November 23, 2020, from https://www.washingtonpost.com/technology/2020/10/19/google-search-results-monopoly/


Saturday, November 11, 2017

BudLight: #UpForWhatever Ad Controversy (2015)

Controversy
Bud Light's Controversial Ad Label
Bud Light launched an “Up for Whatever” ad campaign in 2013 which included 140 different slogans canvased on Bud Light labels. The company’s vision for the campaign was to invoke the idea that Bud Light should be associated with carefree and spontaneous nights out or in with friends, but one of their slogans invoked quite a different image. A slogan saying “The Perfect Beer For Removing ‘No’ From Your Vocabulary For The Night. #UpForWhatever” outraged the majority of the brand’s consumers. Many consumers felt that the slogan promoted rape culture and encouraged non-consent. Consumers took to social media and demanded the slogan be removed from circulation immediately which negatively impacted the company. Along with an influx of bad publicity, the company’s brand perception rating took a hit. The “buzz” score—the official measure of daily brand perception—fell from a 6 prior to the incident to a 0 after the slogan went public.
        The company responded to the incident with this: “It’s clear that this message missed the mark, and we regret it. We would never condone disrespectful or irresponsible behavior.” This statement, by Alexander Lambrecht—VP of the company, addressed the issue and was followed by a promise to stop producing the label immediately and to halt circulation of bottles sporting the controversial slogan. Further, it seems the company’s marketing department is ignorant of the suggestive and offensive nature of many of their advertising efforts. Barely a month before the latest “Up for Whatever” controversy, the company was forced to retract yet another offensive tweet associated with the ad campaign. The tweet read: “On #StPatricksDay, you can pinch people who don’t wear green. You can also pinch people who aren’t #UpForWhatever.” The ad campaign seems to leave the company susceptible to a host of controversies surrounding their marketing efforts under such an inherently suggestive theme: up for whatever.
Ad for BudLight's 2015 Campaign

Stakeholders
            The stakeholders involved and affected by this scandal are many, considering the span of the customer base Bud Light has as a mainstream alcoholic beverage company. Many of the consumers of Bud Light have been offended and disappointed by the marketing stunt, and therefore have been affected by the scandal. Bars who may have purchased the controversial bottles likely experienced backlash from their own subsequent customers as the backlash from social media trended. Further, the company itself was affected by their own decision to market a possibly offensive and deliberately misleading ad which they knew had the possibility of offending their consumers. The company and its board members lost the respect of many and the business ultimately made a poor decision that negatively affected millions, which will go on to hurt sales and profits as well as the shareholders of the company.

Individualism
            Individualism poses that ethically “business actions should maximize profits for the owners of a business, but do so within the law,” (Salazar, 17). Considering poor advertising decisions are not a violation of the law, this marketing mishap would technically be considered ethical as it did not break the law. Ultimately, the uproar and attention the slogan caught brought the company more attention but many consumers chose to boycott the company and its products until the slogan was removed, so it failed to maximize profit. Over time, a poor brand perception can lead to significant decreases in sales and ultimate demise for a company if the situation is not rectified. BudLight’s “buzz” score decreased dramatically in the aftermath of the ad. Positive brand perception is integral to successful businesses and to profit maximization. The ad negatively impacted profits, but luckily for the company not for long. Simply put, the decision of Bud Light to publish the offensive slogan led consumers to have a negative consumer brand perception of the company which failed to maximize profit in any way, which would not be supported under the Individualistic ethics principle.

Utilitarianism
"The Perfect Beer For Stepping Outside For Some Old
School Fun"--one of the campaign's tamer slogans. 
Utilitarianism suggests ethical guidelines that encourage decisions which “maximize the happiness in the long run for all conscious beings that are affected by the business action,” (Salazar, 17). Bud Light failed to make a decision which made any party concerned with the company happy in the long run. When the company published the slogan, they only attracted negative attention from offended consumers and received public backlash directed at the company’s marketing team, which did not bring happiness to any party involved. Further, the company—during the time of the ad campaign—was spearheading its efforts to target more women consumers. This controversial ad backtracked any progress they might have made by directly offending the exact consumers they were attempting to target: women. Many consumers took a pledge to boycott BudLight until they addressed and fixed the ad mishap, which negatively affected business and overall happiness.

Kantianism
            Kantianism revolves around the ideal that a company should “always act in ways that respect and honor individuals and their choices. Don’t lie, cheat, manipulate, or harm others to get your way,” (Salazar, 17). Bud Light violated two out of the four specifically indicated measures to not violate by advertising their controversial slogan. The company, in a way, harmed consumers who have been affected by rape and the popularization of rape culture by suggesting an alcoholic beverage could be the key to such encounters. Such consumers were deeply offended and suffered emotional damage from the insensitive slogan. They additionally manipulated their consumers by using a slogan that suggested the beer had the power to decrease rejection and increase willingness in women. By two counts, Bud Light’s ad campaign would be considered unethical to a Kantian. Further, the ad itself failed to respect and honor individuals and their choices. By literally promising that BudLight will remove no from your vocabulary, the company removed the right to choice
. The ad did not honor individuals in that it encouraged its consumers to pursue things, and women, who would usually—other than under the influence of BudLight—reject them. It set its consumers up to take unnecessary risks and to potentially put others at harm, which is unethical.

Virtue Theory
           Virtue Theorists suggest that behavior is ethical when a business “acts so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits,” (Salazar, 17). Virtue Theory involves four main virtues: honesty, courage, temperance, and justice. As for Honesty, Bud Light did not intentionally publish their slogan with the knowledge that it would be offensive, but as soon as they received news of the backlash it ignited, they rushed to apologize and agreed to remove the slogan. The company was Courageous when they owned up to the mistake and agreed that they understood where the slogan had missed the mark with consumers. As for Temperance, the company displayed unreasonable expectations and desires when they thought their ad campaign would be perceived agreeably by all consumers. The Justice in this case was fulfilled in that the company agreed to remove the slogans and apologized for their mistake. Virtue Theory also insists business decisions avoid vicious or bad character traits that will be associated with the company. The ad BudLight published associated the company with those w
ho support nonconsent and who promote rape culture. These are terrible and offensive traits for a company to have, and the ad directly aligned BudLight with such ideals. If such traits are sure to be negatively perceived when associated with an individual, the effect is amplified when they are associated with such a big company as BudLight. Overall, Virtue Theorists would concur that BudLight made a very unethical decision. 

Tuesday, April 4, 2017

Volkswagen: Marketing Hoax Deceives Customers into Buying Sabotaged Cars (2016)

By: Toni Ambrosino

Vintage iconic "Lemon" ad
Volkswagen Group is one of the largest automakers worldwide. It was founded in Germany in 1937 by the German Labour Front. They partnered with the Austrian automotive engineer Ferdinand Porsche to create an affordable yet still speedy vehicle to be the “people’s car” (Volkswagen). Some of their well-known subsidiaries include Audi, Porsche, Bentley, Bugatti, Lamborghini, Ducati. However, what Volkswagen is most notorious for is their advertising. “In 1959, the advertising agency Doyle Dane Bernbach launched a landmark campaign, dubbing the car the “Beetle” and spinning its diminutive size as a distinct advantage to consumers. Over the next several years, VW became the top-selling auto import in the United States” (Volkswagen). Perhaps the most iconic ad they ever featured was simple. It presented the classic Beetle, seemingly immaculate, on a plain background with one bold word, “Lemon.” Underneath, the ad copy stated, “This Volkswagen missed the boat. The chrome strip on the glove compartment is blemished, and must be replaced.” The ad went on to explain the meticulous inspection process and reasoned as to why this car was unfit for shipping. This ad was was unpretentious and unexpected, and definitely memorable for its time.

Sales event specifically promoting the Clean Diesel line

Case

Volkswagen set out to create an improved, “cleaner” diesel. In 2014, it was discovered that Volkswagen had been intentionally equipping their cars with a “defeat device” that would allow them to pass emissions tests while actually emitting high levels of nitrogen oxides. They then deliberately promoted these vehicles as “Clean Diesel” cars in an illusory marketing campaign that promoted over 500,000 cars as “Environmentally Friendly,” and sold them at an exceptional price. FTC described this campaign as a “high-profile marketing campaign that included Super Bowl ads, online social media campaigns, and print advertising, often targeting ‘environmentally conscious’ consumers” (Rechtin 2016). The ads repeatedly boasted that “diesel was no longer dirty,” when in fact these cars are the epitome of dirty energy. The vehicles involved ranged from the 2009-2015 Volkswagen TDI diesel models of Jettas, Passats, and Touareg SUVs, as well as Audi TDI models. It’s unclear who was directly responsible for signing off on these ads, but ultimately, the CEO, Michael Horn, accepted responsibility and apologized claiming, “Let me be clear, we at Volkswagen take full responsibility for our actions and we are working with all relevant authorities in a cooperative way.” For these misleading ads, Volkswagen reached a settlement with the U.S. government and agreed to pay a total of $4.3 billion in fines and penalties.

Stakeholders

Stakeholders are anyone who is affected by the activities of a business. Some examples of stakeholders include customers, suppliers, and shareholders. It’s safe to say that when a business makes a decision, it can have monumental effects on many different people. These decisions can have either positive or negative effects. “Business institutions have a tremendous influence on many lives. We depend on business for our jobs, our food, our healthcare, our homes, our livelihoods” (DesJardins 15). In this particular case the stakeholders are the customers and their families, the community, the company as a brand, the stockholders, upper management, the employees at Volkswagen, the manufacturers/suppliers, competing companies, and the environment.

Individualism

The general theory of Individualism is more broad than Milton Friedman’s definition. Individualism states that the profits for owners/shareholders of a business should be maximized within the constraints of the law. Friedman’s argument concerning the obligations of a business is that the only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders.
In order to evaluate Volkswagen’s actions according to Individualism, two criteria must be met. The first element is, did Volkswagen maximize profit? While they did sell over 500,000 of their “Clean Diesel” cars through their marketing campaign, they are now suffering the consequences. They settled their lawsuit with the FTC agreeing to pay $4.3 billion in fines and penalties. They also must pay to fix any customer’s car that contains the defeat device. Furthermore, they will be losing customers and investors whose trust they have broken due to this scandal. Consequently, they did not maximize profits. The second requirement was that the company stayed within the constraints of the law. They illegally outfitted cars with the defeat devices, and intentionally falsely advertised. Because Volkswagen did not meet either condition, it has failed Individualism.

Utilitarianism
Unhappy protester outside a VW factory

Utilitarianism states that happiness is a natural end of human life; the desire to be happy is basic and needs no further justification. Happiness or pleasure are the only things of intrinsic value. “We ought to bring about happiness and pleasure in all beings capable of feeling it (and doing so impartially). Reason: if happiness is valuable, there is no difference morally-speaking between my happiness and yours” (Salazar). It is a compromise between egoism and altruism, that is, it aims to maximize happiness for oneself and others. All sentient things matter, and all parties are involved. It incorporates people as individuals by looking at what they like and value.
A Utilitarian would analyze the Volkswagen controversy through the stakeholders involved. All of the stakeholders included would, as a consequence of this event, be unhappy. The customers would be very unhappy, because they were lied to and purchased a product that was ineffective. The employees are unhappy because their reputation is damaged by their association with Volkswagen, and many who were involved have lost their jobs. The company as a brand is unhappy because now they must pay for all the damage they’ve done, and their reputation is tarnished. The owners and stockholders are very unhappy because they’re losing money. Overall, Volkswagen hurt more people than they helped. According to a Utilitarian, this was unethical.

Kantianism

Immanuel Kant came up with the idea of Kantianism. It has Four Basic Principles: 1. Act rationally – don’t act inconsistently in one’s own actions or consider oneself exempt from rules. 2. Allow and help people to make rational decisions. 3. Respect people, their autonomy, and individual needs and differences. 4. Be motivated by Good Will, seeking to do what is right because it is right. In order to evaluate whether or not something is from goodwill, these four principles must be applied. In order to determine if a company is acting rightly, what is rational is right. This is determined through the “Categorical Imperative.” Kantianism is about treating people the way they want to be treated. According to the Formula of Humanity, “Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means” (Kant, MM 429).
According to Kant, goodwill is the only thing that is good in itself. “Good Will is a technical term and not to be understood in the way people commonly use it, which is synonymous with “having good intentions.” Only people with autonomy, or freedom, and rational agency, or the ability to reason, think, and act on their reasons, can have Good Will. Having a Good Will necessitates that people have good intentions and use good reasoning to come to conclusions that will make their good intentions effective” (Salazar 21). Rationality is important to Kant, however this isn’t equated to the only thing that is good in itself because it’s the process by which a person ascertains what is right. After this process, a person must autonomously make the decision on their own; only after they choose what is rational is it correct.  
The aforementioned stakeholders of this case included: the customers, the employees, the brand itself,  the owners and stockholders, its suppliers, and the environment. A Kantian would ask, “is it rational?” Volkswagen’s maxim for action is most likely to falsely advertise because they’re trying to make a profit. By looking at the Categorical Imperative and the Formula of Humanity, what they’re doing is not rational. It goes against the Formula of Humanity because it devalues its customers by deliberately lying to them in order to get their money. They don’t give their customers the correct information to make a rational decision, and by doing this, they are devaluing their customers, putting them as less important than their sales. Secondly, the motivation is for self-interest, the company trying to make more money, which according to Kant is incorrect.

Virtue Theory
A misleading ad

Virtues are the characteristics that allow things to function properly, and are sometimes called “good-making features.” Virtue Theory is based off of Aristotle’s ethics. Aristotelian Functionalism states that whether a person or action is good partly depends on what it is. If it fulfills its function well, then it is good. The distinguishing characteristic of people is rationality, and people must therefore exercise rationality in order to function well and live good lives. Furthermore, a thing is happy if it fulfills its function. Therefore, people who live good lives by functioning well will also live happy lives. Virtue Theory builds off this by stating that “virtues” depend on two things: the thing’s function, and the thing’s circumstance. There are four Main Virtues of Character in business. Courage is risk-taking and willingness to take a stand for the right ideas and actions. Honesty is exhibited in agreements, for example, the hiring and treatment of employees, customers, and other companies. Temperance is reasonable expectations and desires. Finally, Justice, which is hard work, quality products, good ideas, and fair practices. The only issue with Virtue Theory is that it doesn’t give clear guidelines, circumstances change and there’s no one answer.
In order to apply this theory to Volkswagen, the people in the company that allowed this decision, and their circumstances, must be analyzed. In this case, the people involved included the marketing team as well as upper management. They weren't courageous because no one publicly took a stand against this debacle. They were not honest in their advertising. They did not show justice, because it was not a quality product, nor was it a fair practice. They did not have reasonable expectations or desires because they only focused on profiteering without any concern for the well being of others. Additionally, they broke their customer’s trust. Because of all these factors, Volkswagen failed Virtue Theory.

Justified Ethics Evaluation

Overall, I believe what Volkswagen did was profoundly unethical. First, their actions of adding defeat devices was wrong. But what's worse is that they profiteered off of exploiting customers who were trying to be environmentally friendly. They knew that their diesel was far from clean, and then intentionally promoted it. They pushed their sales hard through different forms of advertising, whether it was a commercial on television, or a printed ad. Through this deceit, they sold over 500,000 cars. The money they used in advertising could’ve easily been put into research for emissions. That way, they wouldn’t have had to create fraudulent ads in the first place.


References

DesJardins, Joseph R. An Introduction to Business Ethics. Fifth edition. New York, N.Y.: McGraw-Hill/Irwin, 2014. Print.
Kant, Immanuel. The Metaphysics of Morals. As described in Heather Salazar’s Kantian Business Ethics Lecture Feb. 2017.
Rechtin, Mark. "FTC Charges Volkswagen With False Advertising." Consumer Reports. Consumer Reports, n.d. Web. 26 Jan. 2017.
Salazar, Heather. The Business Ethics Case Manual: The Authoritative Step-by-Step Guide to Understanding and Improving the Ethics of Any Business. Print.
Salazar, Heather. “Utilitarianism and Business Ethics.” Business Ethics Lecture Series. Western New England University. Springfield, MA. Jan 2017. Lecture.

"Volkswagen Is Founded." History.com. A&E Television Networks, 2017. Web. 01 Apr. 2017.