Another business with a cause: Is Google just a good citizen?


Google is an adventurous company, but few would consider it a financial regulator.

And yet, this is effectively what Google became on Wednesday when it announced that it would no longer run ads for payday loans, the short-term loans that typically have annual interest rates of over $ 300. %. Google’s move will almost certainly hurt lenders, given that about a third of the payday loan market is online, according to Pew Charitable Trusts. A business group for payday lenders called Google’s actions “discriminatory and a form of censorship.”

This is not censorship, because Google is a private company, not the government. But with so much digital advertising spreading across Google’s vast network, Google has tremendous power to make changes quickly. But is this power similar to that of government?

Expect protests to escalate as powerful tech companies continue to use their influence to advance their causes in society. Facebook was accused this week of removing conservative posts from its “trending” list. Last month, PayPal, a leading online payments company, announced it would cancel an expansion in North Carolina, to protest the state’s new law that limits toilet access for transgender people.

Businesses don’t always side with progressive causes. Uber has treated its drivers like independent contractors, which excludes them from the coverage of many labor laws.

An interesting model is forming, but it is not a widespread takeover by American companies. It’s more nuanced than that.

Google could argue that its decision only tips the scales in favor of the borrower. PayPal could argue that its decision concerned civil rights. Corporate power is controlled to some extent by many types of laws and regulations, including those against unfair competition, discrimination and unsafe working conditions. PayPal, for example, would have big legal problems if it fired employees for supporting North Carolina’s toilet law.

Corporate lobbying may seem corrupt and favors industries with generous pockets, but the laws govern lobbying. What’s more, lobbying often doesn’t work: The big banks got relatively little because they tried to undo the post-recession overhaul of the financial sector. And companies may see it in their best interests to relax their positions, as Uber seems to have done in some cases.

More importantly, however, when there is no glaring harm, a crackdown on a business could do more harm than good.

The current debate on Facebook is a good example of how difficult it is to diagnose problems, let alone solve them. It’s still unclear exactly how widespread the bias in Facebook’s trending list was. The New York Times article on the subject quoted former employees who said the articles were excluded or included on the basis of their perceived credibility, not their political inclination.

But even if Facebook deleted every right-wing post – something that would reduce its credibility, destroy its reputation, and undermine its business – it wouldn’t be illegal. Freedom of expression is guaranteed like any press organization. Indeed, trying to make a company’s bias illegal would have negative consequences for the company that would far outweigh any harm caused by Facebook’s trending list.

Yet, because the First Amendment protects Facebook, it operates under few external constraints as it helps determine what shows up in user feeds. Or as Glenn Greenwald, founding editor-in-chief of The Intercept, put on twitter“In addition to fueling the persecution of the right, this is a key reminder of the dangers of controlling content in Silicon Valley. “

Facebook could change its own system to guard against prejudice. But it’s also tricky. How can “bias” ever be conclusively defined on a social media site with 222 million users in the United States with widely differing opinions? It would be almost impossible to look for bias in all of these feeds. Still, Facebook could take more modest and sensible steps, like encouraging external auditors to look into serious accusations of bias and bring them to the attention of the company.

Google’s ban on payday loan ads drew the same sort of disturbing comments that were directed at Facebook. “I don’t like payday loans either, but do we want private media companies to decide what services are available to people? ” James Kwak, who criticized the power of Wall Street, tweeted Wednesday.

But in reality, Google’s decision was not drastic. Media companies often decide not to show certain types of ads, such as those for escort services. And Google is hardly out of step with the financial industry as a whole. Traditional lenders have long moved away from payday loans, leaving the business to a few companies.

Instead of being an example of unlimited corporate power, Google’s ban appears to be aligned with the thinking of democratic institutions. Many states have passed laws to stamp out payday loans, but some lenders are escaping the restrictions by offering their loans online in those states, Pew researchers have found. Google’s advertising ban can now make it harder for payday lenders to evade the law.

The Consumer Financial Protection Bureau, a federal agency that regulates consumer loans, has a long history of studying payday loans. He plans to publish a proposed rule in a few weeks to make payday loans less expensive for borrowers. The payday loan industry, and its allies in Congress, will fight back fiercely over the next few months.

Google’s ad ban, on the other hand, came quickly, a reminder of how effective corporate power can be. You can understand why the troubleshooting industry has found this troubling. But lenders are only one side of this debate.

Google allowed comments under the blog post announcing the ban, and one commentator put it this way: “Great job !!!! I support this 100%. Google for the president. Joke, but serious. … I’m happy that Google is more progressive and protects the public faster than some government policies.

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