New Headwinds Facing Google

| About: Alphabet Inc. (GOOG)

Google (NASDAQ:GOOG) has really been grabbing my attention lately. The company just unveiled its new Nexus 7 tablet, putting greater pressure on its primary competitors Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN). However, the company has also recently captured my attention in another way: it has seemingly developed an uncanny ability of making enemies. In talking about enemies, I would not be talking about the Google versus Apple issue that dominates news outlets and smartphone publications. Rather, my focus is on Google's ability to make enemies in other sectors.

For one, U.S Senator Charles Schumer has raised concerns over Google and Apple's new map apps. He called them "spy planes that have the capability of gathering highly sensitive images that could lead to security breaches." It is still too early to know if the Senator's concerns will result in action. The best thing that both tech giants can do right now is to provide a dumber version of the apps. Otherwise, they may suffer from a complete censorship or shutdown by the U.S government.

Interestingly, it seems that Google is facing a similar challenge in Switzerland, albeit to a lesser degree. News has it that an earlier ruling had ordered Google to blur out every face and license number that comes up on its Street View application. However, the Swiss Federal Data Protection and Information commission has demanded that 100% of the faces should be blurred out of the service even if it would take a manual blurring after Google has been able to achieve a 99% blurring.

However, Google filed an appeal on that grounds that it is financially and logistically difficult to blur out the remaining 1%. That appeal has been partially upheld by a Swiss federal court.

In another development, Google was asked by the EU to make an antitrust settlement in order to resolve an EU antitrust probe and to avoid a full formal complaint into the allegations that Google is discriminating against its rivals barely a month ago. In the words of Joaquin Almunia, the EU competition commissioner "By early July, I expect to receive from Google concrete signs of their willingness to explore" a possible settlement, he also said that if the proposals "turn out to be unsatisfactory, formal proceedings will continue through the adoption of a statement of objections." You may remember that the details of the investigation holds that Yahoo! (NASDAQ:YHOO) and Microsoft (NASDAQ:MSFT) hold one fourth of the U.S web search market, while Google holds an enormous ninety-five percent of web search traffic in Europe.

It may also interest you to know that the web searches for Google in Russian internet searches increased from 26.2% to 26.8%. Interestingly, the web searches for Russian most-used search engine Yandex (NASDAQ:YNDX) suffered a drop from 60.5 % to 60.2%

However, news has it that the EU is still awaiting Google's response to the matter. In fact, a chief of the European Union competition authority said that it is still contemplating launching a full-blown investigation into the Android operating system of Google.

However, news that can bring some sunshine into the erstwhile gloomy outlook of Google is its recent acquisition of the Mobile Transmit Diversity (MTD) patent portfolio from Magnolia Broadband. The patent portfolio, which is a result of a decade's worth of R&D will assist Google in increasing its network capacity so that it can expand coverage at a faster uplink speed. According to Osmo Hautanen, the CEO of Magnolia Broadband, "We believe that Google's acquisition of our more than 50 Mobile Transmit Diversity beam forming technology patents underlines the need for such a technology in mobile broadband devices."

Interestingly, it seems that Google's problems with world governments are far from over, especially with the revelation that it received about 1000 requests to remove some content from its service. A Google report said that the queries came in forms of court orders, requests from executives, police and even the government of some countries.

While Google has lamented the perceived encroachment into the rights of free speech, it said that it has complied with 65% of the court orders and attended to 43% of the informal requests. However, in what can be regarded as a countermeasure, Google has revealed its plan to publish the list of all the "censorship requests" that it got in a Global Transparency report. The report, which will be published on Monday, will have among other things, the number, location and type of content removal requests that Google received from different quarters.

The move will surely be followed by a series of outcries, some praising Google, others denouncing it from different quarters. However, one certain fact is that the affected governments will not take things lying low with Google, especially if the report casts them in bad light to their citizens. Thus, Google should be prepared for another intensive season of renewed government interests in its actions especially on areas such as antitrust issues where it is still undergoing investigations.

In the meantime, Google should be ready for another season of probing from the U.S. privacy regulator over the previously investigated issue of the gathering of personal data with its Street View service. The FCC has revealed its interest to reopen the investigations in a letter it sent to the company. According to the letter, the renewed interest in the probe was necessitated by the fact the Google's defence in the initial investigation are probably being refuted by a new FCC report on the same issue.

It was reported that Google claimed that the interception and storing of personal information by its Street View location service to be a mistake. However, the FCC seems to think otherwise, and it has asked Google to pay a fine of $25,000 for delaying investigation. This singular fact is responsible for the U.S. privacy regulator's renewed interest in the probe. Without much ado, if Google should be found guilty after the investigations have been conducted, the results could be very serious for a stock that seems to be gathering enemies on all sides. In addition, the mere fact of Google making some important and powerful enemies may be bad news, and if its enemies team up against it, Google may be headed for a long stay in sunken territory.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.