Holmes Report Blog

The Holmes Report blog focuses on news and issues of interest to public relations professionals. Our main site can be found at www.holmesreport.com.

Sunday, January 22, 2006

Good for Google: Google’s share price may have taken a hit on Friday—down 7.6 percent in heavy trading—after the Justice Department filed a legal motion in an attempt to force the company to comply with a subpoena for consumer search records. But there are plenty of people who believe Google’s stand, which contrasts to the capitulation of competitors like Yahoo!—will be good for the company in the long run.

“We believe the market will react negatively to this news, decreasing Google’s share price,” Denise Garcia, an analyst at WR Hambrecht & Co., said in a note to clients Friday. “Ultimately, we believe Google’s leadership position, resisting compliance while their competitors have bowed to government pressure, will bode well with its user base.”

Martin Wolk, chief economics correspondent at MSNBC, agrees. “For a company that declares its corporate motto is ‘Don’t Be Evil,’ the decision to take a principled stand against the broad demand for information offers a rare opportunity to distinguish itself from its rivals [and from the phone companies—if Google goes into the telecom business, it can have my business] just as the issue of government snooping is heating up politically on Capitol Hill.

“But by choosing to fight the subpoena in court, contending it is overly broad, Google signals to its customers that it is a company that can be trusted with sensitive personal information as it presses ahead with an ambitious business plan to move well beyond search into technology services that compete with established software, media and entertainment companies.”


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