Ad Resellers Accuse Google China of Malpractice, Bribery
Sina Tech, 10/12/10
In a press conference in Shanghai today, 7 former Google China advertising resellers based in east China accused Google China of corruption, bribery and illegally canceling their rights to resell Google online advertising.
The resellers claim that during a Google China advertising auction in Suzhou, Jiangsu province, in April, the low bidders won despite higher bids from other firms. They also allege that the process did not have clear rules, lacked third-party auditing and gave no official notice regarding bidding.
The seven firms claim that some Google employees openly asked for and received bribes such as brand-name automobiles, so much so that in some cases Google representatives control a 55% stake in a reseller.
The seven firms say that Google China's withdrawal from China and subsequent drop in sales performance translated into increased pressure from headquarters on Google China's sales department overseeing the resellers, leading to plans to restructure to increase revenue. Certain Google China employees allegedly were able to manipulate the restructuring process, and met with VC firms about raising funds to acquire the ad reseller licenses. The VCs, however, were unable to raise funds quickly enough, scuttling plans to restructure by buying back reseller licenses. Without proper time or funding, these employees instead revoked the seven companies ad reselling rights.
Representatives from the seven agencies claimed to have some evidence to support their claims, but refused to reveal it on the grounds they may need it in a future conflict with Google. They do not want to expose the Google employees involved in the scandal, but are most concerned with resolving issues regarding reseller rights and losses incurred by employees and clients. The seven firms currently seek a dialogue with Google China and its parent company.
Regarding Google China's cancellation of the seven companies' reseller rights, the seven firms dispute the legality of the move, saying that according to China's contract laws one party cannot unilaterally cancel a formal contract.
Editor's Note: For more background on this topic, please see "Google to Halt Cooperation with 7 Southeastern Ad Resellers" MD 9/30/10 issue.
Keywords: Internet reseller scandal online advertising Google online search
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