Call me naive: I think you can make a lot of money, go public, even monopolize a market, and still retain a moral compass that points in the direction of Google’s stated top priority—users.

But Google lost me today:

Google is now displaying “tips” that point searchers to Google Calendar, Blogger and Picasa for any search phrase that includes “calendar” (e.g. Yahoo calendar), “blog” and “photo sharing,” respectively. This is clearly bad for competitors, and it’s also a bad sign for Google. But I generally support anything that benefits users, even if it’s controversial. I believe, for instance, that shipping Internet Explorer with Windows was a good move. So why are tips bad for users?

First, some notes. One, Yahoo and Ask already do this, but they didn’t build their businesses on the promise of being unconventionally trustworthy. I care that Google is doing it because the company’s integrity over the years has impressed me and earned my loyalty. And two, Google has been doing similar things for awhile. Search The Holiday and you’ll get a special box pointing to reviews of and tickets for the movie. The difference is that this is still a filter on the Web; the reviews link to their sources and the tickets link to Fandango. Google may share the Fandango revenue and certainly shuts out competitors, but as a user, I get better service than I would without the box.

The tips are different—and bad for users—because the services they recommend are not the best in their class. If Google wants to make it faster and easier for users to manage events, create a blog or share photos, it could do what it does when you search GOOG: link to the best services. To prevent Google from being the gatekeeper, the company could identify the services algorithmically.

But if that sounds familiar, perhaps that’s because Google already works that way. After all, Google is predicated on the idea that the democratic structure of the Web will push the cream to the top. Search for “photo sharing” and you should already get the highest quality services. According to Google, Picasa is not one of them. These “tips,” then, can only be a tacit admission of failure: either the company does not believe in its own search technology, or it does not believe its products are good enough to rise to the top organically. I’d guess the latter. And if I were on the Calendar, Blogger or Picasa teams, I wouldn’t be celebrating the news that my employer has lost faith in me.

Implications for advertisers

Google has been advertising its own products through AdWords for some time, and I see nothing wrong with that. The protest that unjustifiably erupted three weeks ago questioned the positioning of these ads. As advertisers began making antitrust overtures, Walter H. from Google Marketing stepped in to sooth nerves (emphasis mine):

What changed in three weeks?

While advertisers compete to be first in a string of lookalike ads that are often shunted to the side, Google now determines the precise position and appearance of ads tips that are not subject to any of the same rules. Its ads get icons while others don’t, and if you think that’s small potatoes, you are not an advertiser: images boost clickthrough. Google can make a Picasa ad say “Easier to use than Kodak,” but Kodak cannot create an ad that reads “Easier to use than Picasa.”¹ And the kicker: neither the highest quality ads nor the highest quality search results can replace these tips.

In the end, would you rather be Blogger or TypePad on my screen?

A new kind of bundling

Google’s new age “bundling” is less threatening than Microsoft’s because changing operating systems is hard, while changing search engines is easy—so easy that every engine out there is desperately trying to stay in your face. And choosing an alternative to Microsoft’s bundled software used to be prohibitively complicated for the average person, not to mention time consuming—you had to go to a store and buy a boxed copy or spend the evening downloading it. Eventually everyone will be experienced enough to procure applications, and then word of mouth alone will bury the distribution advantages Google and Microsoft now enjoy.

But we’re not there yet, and in many ways, Google’s bundling is worse than anything Microsoft did or even could do. Microsoft threw spaghetti at the wall and hoped it stuck, and likewise there’s nothing wrong with Google’s arbitrary front page ads. The difference here is that Google knows what users want and can discreetly recommend its products at the right time. Microsoft can’t easily hide a program packaged with Windows (and doing so would defeat the purpose), but competitors can only discover Google’s bundling, which might be transient or limited to certain regions, through trial and error searching.

Now let’s put away the tin foil hat and consider this: According to Nielsen NetRatings, the top ten search queries of 2006 were specific services like “Hotmail” (another view). So significant amounts of people, typically novices, use search engines as address bars. Three of the top ten were actual addresses like MySpace.com. If Google decided to show tips for “mail” or “space,” they would appear in these circumstances even though the user is usually en route to a particular destination (working example)².

Would Google complain if Microsoft informed users about Live Search when they typed Google.com into Internet Explorer’s address bar? Don’t roll your eyes: it would just be another innocuous tip presented to a user en route to a destination. Google owns one of the Web’s command lines, and Microsoft owns the other.

Perhaps the most nefarious aspect of this feature is how it operates within our collective blind spots. Advertisers are happy that Google no longer invades the canonical Ad Results. Technology purists continue to see untainted Search Results. But does my mother make that distinction? How much does a result have to look like a Result to cross the line?

Google promised not to be the type of company that needs to ask.

Update: Matt Cutts, a well-known Google employee who works on web search, has posted his views.

Update #2: This post is not a sign that I think Google has turned “evil” as some have suggested. I wrote it because Google has impressed me enough over the years that the slightest deviation catches my eye. You’re welcome to disagree that these tips constitute any “deviation,” but please read what I actually wrote (in the comments as well) before jumping to conclusions. I don’t “hate” Google, nor do I find this the apocalypse. The world is not black and white.

¹ If you’re still not convinced, go to AdWords now and try to create a U.S. ad containing “Picasa”. Google forbids it on the basis of trademark infringement.

² I realize this is already possible with AdWords, but again, Google is no longer subject to the same trademark or style policies as other advertisers.