Courtesy of Google
But every once in a long while, a story will come across my desk that blows me away. In my experience, massive stories typically start as a series of small- to medium-sized tremors.
This one, involving Google (GOOGL), qualifies as massive.
Google has one of the most successful advertising networks in the world. The network is primarily composed of a one-two punch called Google Adwords and Google Adsense. Google Adwords allows advertisers to pay for advertising based on certain keywords or groups in an auction style exchange with Google acting as a middle man.
Google Adsense allows online content publishers (Web sites, blogs etc) to accept advertising from advertisers with Google acting as a middle man. This online combination has been tremendously successful for Google for many reasons.
- It's a solid and robust platform that has been around for a decade.
- They have some of the best publisher payout rates in the industry.
- They have the most consistent payments for publishers in the industry.
I have been a Google Adsense publisher and advertiser. I have made well over six figures with my online properties as a publishers and can personally attest to the rock solid nature of the program compared to all its competitors.
So when an anonymous "alleged whistleblower" who claims to be a former Google employee came out and made strong accusations against the search engine giant, it hit the Web like a mini nuclear device.
This anonymous source accused Google of banning web publishers from its AdSense advertising system primarily to cut costs and make more money.
One of the more salacious parts of the "leaker's" memo was:
"We were told to go and look into publishers accounts, and if any publisher had accumulated earnings exceeding $5,000 and was near a payout or in the process of a payout, we were to ban the account right away and reverse the earnings back,".
If the accusation is true, it would mean that Google has intentionally denied publishers payments earned through advertising and simply pocketed the earnings for themselves.
That would be a huge blow to the heart of Google's core business -- advertising revenue. Also, if true, this allegation would potentially leave the Search Engine giant open to class action lawsuits the likes of which we have never seen.
It's important to reiterate that these are just shadowy "allegations and accusations" from an unknown person or persons. They may well turn out to be a hoax and Google may be 100% innocent of all these allegations.
Regardless of how it does turn out, this should be a wake-up call to investors about how vulnerable this stock could still be after so many years of dominance.
Google has kept a shroud of darkness over a lot of its governance and policies in this area. Publishers have had no support (until recently), no recourse and Google's word has always been final.
I don't know of any other multi-billion dollar business where there has been this little accountability and transparency.
It seems to me that when a business this size is run this way, it leaves itself vulnerable to claims of malfeasance. Google has cut off so many publishers from very substantial amounts of money over the years that the sense of fear and resentment is palpable.
You only have to look through the Webmaster World forums to understand the level of frustration Google's publishers feel.
The bottom line is, if you own Google stock, you need to watch this story very closely. It could be nothing or it could be something very, very big.
At the time of publication the author had no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
>>Read more: How Microsoft Changed the Console Wars