Someone enlighten me on click fraud. Do the web sites where the actual ads run get a share of the click fee? Or does GOOG keep it all and just pay the site a flat fee to run the ads?
It seems to me that the $90 million settlement for apparently rampant click fraud was digested by the market as basically business as usual. It strikes me as very serious however, since it calls into question the whole model of pay per click. Comparisons to TV advertising are not analogous, since ads are bought based on historical viewership, at least I think they are, and it would be difficult to rig the Neilson system anyway.
The fact that GOOG settled this seems to imply that they were either aware of the fraud or perhaps complicit in it. So that calls their accounting into question and the legitimacy of their SEC filings. Hello, class action lawyers.
Suddenly, the most important stock in the market seems to have an awful lot of fleas. The embarrassing performance by their exec's, their complicity in chinese censorship and repression, the web site screwup where they published numbers, then took them down, now this click fraud...what's next?