Google's Says "A Hui Hou" to Mahalo Jobs

Google has so much influence over the success of online sites that Mahalo, a well-known how-to site started by serial Internet entrepreneur Jason Calacanis, cut 10 percent of its staff after Google changed its algorithm recently, the Los Angeles Times reports. Calacanis wrote to staff in an email:

“It’s hard not to be disappointed since we’ve been spending millions of dollars on producing highly professional content… In addition, we are re-evaluating our freelance content production, pausing it in the near term and determining how to best produce the high-quality educational material we aspire to in the long run. We are not, however, diminishing our video production efforts.”

The job cuts come only two months after Mahalo relaunched its site, with plans to hire 100 new workers this year. Those plans were based on a strategic decision by Mahalo to leave “behind its attempt to compete with Google as a search engine and instead changing its focus to education,” the Los Angeles Times reported back in January.

The impact on Mahalo, representative of the 12 percent of sites affected by Google’s algorithm changes, demonstrate’s the power of Google’s dominance and price in jobs for the lack of transparency in Google’s black box search algorithm.

This is not an academic, ivory tower debate about whether Google has too much power over the Internet. When Google decides, without any transparency, to change its rankings, Internet users lose out, workers lose jobs, and startups, some of whom are trying to compete with Google to organize information for Internet users in specialized areas of information, get put at risk of going under.

It’s telling that, according to reports of the Calacanis email, he told employees “despite the cuts Google’s YouTube has encouraged Mahalo to keep producing videos that they post on the video website.” Huh?

A classic example of Google’s “do what we say, not what we do” strategy.

On one hand, Google, is tweaking its algorithm in ways that push down sites like Mahalo in search results that compete for eyeballs, allegedly because these sites have unoriginal content.

Yet, Google continues to profit from taking content (so, unoriginal content) from those same sites to feed its own advertising-based business model.

How can Google do this? Because Google can leverage its dominance to favor its own services to the detriment of a competitive market for the purpose of marginalizing rival companies. We’ve seen this with Google’s treatment of its own service in Google Places with content from Yelp for local search and TripAdvisor for travel reviews, and Google will continue to stick it to Mahalo by using its content on YouTube while pushing its rankings lower in Google search results.

Users, not search engines, should choose the winners and losers in the online marketplace. Despite its “trust us” mantra, Google abuses its dominance to pick its own services to win out over competitors on its own search page. And who loses? Consumers. Because only when companies are able to compete on the merits do consumers reap the benefits of a fair marketplace that produces real innovation.

One way Google’s behavior can be checked is for the Justice Department to prevent Google from gaining even more leverage over travel sites by challenging Google’s proposed acquisition of ITA Software.