When it comes to selling smartphones, it pays to be the king of search. Google jumped directly into the smartphone seas this week with the launch of the Nexus One. One of the first things the search giant did (besides open an online store to sell the phone) was put a big ad for the phone on its homepage.

That’s prime real estate, especially considering that the pristine page is generally ad free. But Google has other tricks when it comes to search that could be more dubious. Like manipulating search results and blocking advertising on its trademarks.   

Google
doesn’t like to think of itself as a media company, but as the search giant
acquires content startups and starts selling its own products, the
lines are getting blurry.

Google’s smartphone is the first phone sold directly to
consumers online. It is not sold in stores and has almost no real estate on T-Mobile’s site save for a searchable link that points users to Google’s online store.

But Google has ways around
these handicaps. For starters, there’s that covetable slot on google’s homepage. According to Compete.com, Google.com gets over 146 million unique U.S. visitors a month, so that’s nothing to sneeze at. But few Googlers actually go to the search engine’s homepage anymore. More intriguing are the spots that the Nexus gets in Google’s search results. And those are also more complicated.

Back when Google put an ad for T-Mobile’s G1 on its homepage, there was outrage that Google was gifting itself such enviable ad space when it had denied such placement to other companies. But Google wasn’t bumping anyone else off the page to put links to its own products up there.

In the case of paid and organic search results for its products, that may be exactly what’s happening. Google has earned this criticism before and the company insists that it has an AdSense account and pays for Google search ads just like everyone else.

But when you’re paying your own company for prime placement, it still seems a bit unfair. And that could be what’s going on now with the Nexus.

When I searched for “smartphone” earlier today, Nexus One was the top paid result, and the only brand that appeared in organic results on the page:

Results look a lot different when you go to other search engines. My search results for “smartphone” on Bing and Yahoo
didn’t return a single result for the Nexus, but plenty of links to
competitors’ websites. Meanwhile, Google either isn’t selling ads to
competitors on the term “Nexus One” or none have been purchased yet. But a search for “Nexus One” on Bing shows up with Blackberry links on the top and bottom of the page.

Considering the large marketshare that Google has in search, slight favoring of its products could become a thorny issue, especially as Google grows into the content business.

According to Google publicist Jake Hubert:

“Like
hundreds of thousands of other businesses, we believe in the value of
search marketing to connect with web users.

With regards to the organic search results, our philosophy has always been to not manually
intervene with search results (unless a site violates our policies or
we must for legal reasons). The ranking of search results is decided by
our algorithms, using the contributions of the greater Internet
community.”

But no one knows the details of how Google’s algorithm chooses its placements. And according to Andrew Goodman, President of Page Zero Media:

“What’s important about this is that
it’s just one instance of a problem that could grow in all directions. It started out as a question mark five years ago when people realized
that Google was potentially getting into different verticals.”

While other advertisers have to pay full price to appear in the search engines’ results, Google has much more leeway in how it presents itself there.  

Because so much of Google’s search algorithm is unknown, it’s hard to
say exactly what propels the placement of a result onto the first page of search terms. The
results are personalized and change constantly, and while Google has never aggregiously abused its search algorithms to benefit its own products, that ability is well within the company’s power. Says Goodman:

“It’s not longer a question that Google can manipulate results. They can.”

A more pressing concern is whether anything should be done about it. Mark Schwartz, managing parnter of SteakNY, thinks Google is acting within its rights:

“It’s no surprise they are pulling out all the stops, after all it’s their product and their marketing tools. Why not take full advantage of everything they have to offer?”

But as Google expands into growing markets, its search moves are going to be watched with increasing scrutiny. And on top of attracting inquiries from antitrust regulators, Google has to worry about breaching the trust of its users. When Google launched, the company’s original promise to keep its homepage ad free set it in stark relief to other search engines out there. As Google CEO Eric Schmidt said just last summer:

“People wouldn’t like [ads on the homepage]. We prioritize the end user over the advertiser.”

But while Google cares about users more than its advertising clients, the company cares about its bottom line even more. Says Goodman:

“Promoting their own products from the homepage is breaking a promise that Google implicitly made to searchers a decade ago.”

If the company is also shifting search results in favor of its own products on a regular basis, upstarts like Bing may be getting even more users than they bargained for. And soon.

Images: Google