Google apologizes to Kenya startup over dirty business tactics

IDG News Service - Google has confirmed allegations made Friday by a Kenyan provider of online business listings, Mocality, that Google staffers attempted to undermine its business by lying to its customers and improperly mining its data.

"We were mortified to learn that a team of people working on a Google project improperly used Mocality's data and misrepresented our relationship with Mocality to encourage customers to create new websites," said Nelson Mattos, Google's vice president for product and engineering, Europe and emerging markets.

"We've already unreservedly apologized to Mocality. We're still investigating exactly how this happened, and as soon as we have all the facts, we'll be taking the appropriate action with the people involved," he said in a statement.

Mocality, which has compiled a large online directory of Kenyan business listings, alleged earlier Friday that for months Google has falsely told Mocality customers that the two companies have a partnership and that Mocality charges for its services.

The calls started shortly after Google announced its plan in September to provide Kenyan small and medium-size businesses with freely hosted and designed websites, as well as a fee-based option to purchase their own domain, according to Mocality CEO Stefan Magdalinski, who published a detailed account of the claims on the company's blog.

About 30% of the 170,000 businesses listed in Mocality's directory have been contacted by Google staffers in Kenya and by employees from a call center company Google apparently hired in India as part of the Getting Kenyan Businesses Online (GKBO) initiative, he claims.

"Since October, Google's GKBO appears to have been systematically accessing Mocality's database and attempting to sell their competing product to our business owners. They have been telling untruths about their relationship with us, and about our business practices, in order to do so," he wrote.

Magdalinksi provides a variety of evidence to substantiate his claims, including IP addresses and recorded conversations between its staffers and callers representing Google, who thought they were talking to a Mocality customer.

Mocality's database is its core business, and the company built it by paying Kenyans a fee for every business listing they submit and is verified as accurate. Over the past two years, it has paid more than $100,000 to individuals in Kenya as part of this "crowdsourcing" effort.

The news comes at a particularly bad time for Google, which this week has gotten hammered by various industry experts and organizations who argue that its latest search feature, which includes promoting Google+ business profiles in result pages, is unfair to competitors and potentially illegal on antitrust grounds.

Juan Carlos Perez covers search, social media, online advertising, e-commerce, web application development, enterprise cloud collaboration suites and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.