Top Alphabet executive likens Google search business model to selling 'cigarettes or drugs'

The document was recently released online by the US Justice Department in the anti-trust case against Google.

A senior Alphabet executive once likened Google's search advertising business to selling drugs and called it “one of the world’s greatest business models ever created” because the company can focus on generating revenue from advertising while “ignoring” users, Bloomberg reported. He also likened it to illicit businesses such as "cigarettes or drugs".

Michael Roszak, vice president for finance at Google's parent company Alphabet, wrote the notes during a training session organised by the tech giant in July 2017.

The document was recently released online by the US Justice Department in the anti-trust case against Google in which the government is trying to prove that the tech giant's anti-competitive tactics have helped it maintain the top position in the search business.

"Search advertising is one of the world’s greatest business models ever created… there are illicit businesses (cigarettes or drugs) that could rival these economics, but we are fortunate to have an amazing business," Roszak wrote. “We've essentially been able to ignore one of the fundamental laws of economics -- supply and demand. We could mostly ignore the demand side of the equation (users and queries) and only focus on supply side of advertisers, ad formats, and sales"

The senior Alphabet executive added that Google made “smart marketing/distribution investments to get our product everywhere, but we could essentially tear the economics textbook in half."

Meanwhile, Google lawyers have objected to the document being used in the case, highlighting that it wasn't a business record and does not reflect the opinion of the company. Moreover, a Google spokesperson told Bloomberg that the document was drafted for a public speaking class where the attendees were instructed to say something attention-grabbing and deliberately exaggerated.

This legal fight has huge implications for Big Tech, which has been accused of buying or strangling small competitors but has insulated itself against many accusations of breaking antitrust law because the services the companies provide to users are free, as in the case of Google, or inexpensive, as in the case of Amazon.com.

Previous major antitrust trials include Microsoft, filed in 1998, and AT&T, filed in 1974. The AT&T breakup in 1982 is credited with paving the way for the modern cell phone industry, while the fight with Microsoft is credited with opening space for Google and others on the internet.

Read more: India plans action against Google after antitrust breaches

(With inputs from Reuters)