By Lambert Strether of Corrente
I’ve always been a big fan of Akerlof and Shiller’s concept of a “phishing equilibrium,” which they developed in Phishing for Phools: The Economics of Manipulation and Deception. Since 2015, when they published the book, the concept hasn’t really caught on, perhaps because it was a foundational assault on mainstream economics, perhaps because it cuts too close to the bone. Now a new article from the Wall Street Journal, “Millions of Business Listings on Google Maps Are Fake—and Google Profits,” gives me the opportunity to revisit phishing equilibria. First I’ll review the concept, then I’ll look at the Journal’s article on Google, and finally I’ll look at our own article on Facebook (“Facebook: Mark Zuckerberg’s Fake Accounts Ponzi Scheme“).
“Phishing Equilibrium” Defined
Quoting Akerlof and Shiller from my review, “Angling for Dollars: A Review of Akerlof and Shiller’s Phishing for Phools“:
The fundamental concept of economics is … the notion of market equilibrium. For our explanation, we adapt the example of the checkout lane at the supermarket. When we arrive at the checkout at the supermarket, it usually takes at least a moment to decide which lane to choose. This decision entails some difficulty because the lines are — as an equilibrium — of almost the same length. This equilibrium occurs for the simple and natural reason that the arrivals at the checkout are sequentiallly choosing the shortest line.
The principle of equilibrium, which we see in the checkout lanes, applies to the economy much more generally. As businesspeople choose what line of business to undertake — as well as where they expand, or contract, their existing business — they (like customers approaching checkout) pick off the best opportunities. This too creates an equilibrium. Any opportunities for unusual profits are quickly taken off the table, leading to a situation where such opportunities are hard to find. This principle, with the concept of equilibrium it entails, lies at the heart of economics.
The principle also applies to phishing for phools. That means that . Among all those business persons figuratively arriving at the checkout counter, looking around, and deciding where to spend their investment dollars, some will look to see if there are unusual profits from phishing us for phools. And if they see such an opportunity for profit, that will (again figuratively) be the “checkout lane” they choose.
And economies will have a “phishing equilibrium,” in which .
“Every” really meaning every. To put the idea in simpler terms with a more limited use case: “If fraud can happen, it will already have happened.” Now let’s look at our Silicon Valley behemoths.
A Phishing Equilibrium at Google
The Wall Street Journal gives the following overview:
Google’s ubiquitous internet platform shapes what’s real and what isn’t for more than two billion monthly users…. Google handles more than 90% of the world’s online search queries, fueling $116 billion in advertising revenue last year. In recent years, it has extended that dominance to local search queries, emerging as the go-to source on everything from late-night food deliveries to best neighborhood plumbers. [But Google Maps] is overrun with millions of false business addresses and fake names, according to advertisers, search experts and current and former Google employees. The ruse lures the unsuspecting to what appear to be Google-suggested local businesses, a costly and dangerous deception….Online advertising specialists identified by Google as deft fraud fighters estimated that Google Maps carries roughly 11 million falsely listed businesses on any given day, according to a Journal survey of these experts.
We think of maps as representing terrains, but with Google, the Maps service is itself a terrain: of battle. Over pushpins. Since Google annihilated the local advertising market — the Yellow Pages, classified ads — many local businesses have sought customers by registering with Google and getting their pushpin onto Google Maps. But the fraudsters can outweigh the legitimate businesses. The Journal ran a query for plumbers in Manhattan. Their results:
Type a search query and Google will post at the top of the screen as many as six businesses that bought Google ads. The adjacent map that pops up is supposed to pinpoint bricks-and-mortar businesses in the neighborhood.
A search for plumbers in a swath of New York City found 13 false addresses out of the top 20 Google search results. Only two of the 20 are located where they say and accept customers at their listed addresses, requirements for pushpin listings on Google Maps.
People don’t put fake listings on Google maps out of the goodness of their hearts. Fake listings enable consumer fraud:
[Nancy] Carter had pulled into her Falls Church, Va., driveway and saw the garage door was stuck. The 67-year-old searched Google and found the listing of a local repair service she had used before. She phoned in a house call.
A man arrived at Ms. Carter’s home in an unmarked van and said he was a company contractor. He wasn’t. After working on the garage door, he asked for $728, nearly twice the cost of previous repairs, Ms. Carter said. He demanded cash or a personal check, but she refused. “I’m at my house by myself with this guy,” she said. “He could have knocked me over dead.”
The repairman had hijacked the name of a legitimate business on Google Maps and listed his own phone number. He returned to Ms. Carter’s home again and again, hounding her for payment on a repair so shoddy it had to be redone.
Google’s failure to eliminate phony listings puts legitimate businesses at the risk of threats and blackmail by competitors or con artists.
Anas Abuhazim, who runs a cash-for-junk-cars operation in the Chicago suburbs, learned firsthand. His two businesses, Smart Tow Inc. and Cash for Junk Cars LLC, field calls from people looking to dump useless vehicles. His phone operators offer callers around $300 for their wrecks and retrieval within an hour. That leaves Mr. Abuhazim reliant on Google searches.
Last year, he was approached by a marketing firm that offered to lift his business listings on Google Maps for a fee in the tens of thousands of dollars.
Mr. Abuhazim agreed to the deal. In March, he said, the marketing firm tightened the screws: Hand over half your revenue or else. The firm threatened to bury Mr. Abuhazim’s Google listings under hundreds of fictional competitors unless he agreed to the onerous terms.
Mr. Abuhazim refused, and the agency carried out its threat. It unleashed an avalanche of new listings under such names as “Chicago Auto Brokers.”
Mr. Abuhazim tried reaching Google to explain his dilemma, but he was repeatedly routed to an offshore call center. Operators, he said, “treated me like I’m stupid.” With his businesses pushed off the first page of Google Maps results, incoming calls halved. He said he was on the verge of closing.
Google Maps in March dropped all six offices of personal injury attorney Ian Silverthorne for unspecified “quality issues,” he said. Out of suspicion, he searched Google and counted 108 suspect listings in and around Orange County, Calif., where Mr. Silverthorne has an office.
He started calling the listings, he said, and found they went to a competitor, Oakwood Legal Group LLP, which operates a single Orange County office. Oakwood didn’t respond to requests for comment.
Google profits, naturally, from advertising on Google Maps:
Once considered a sleepy, low-margin business by the company and known mostly for giving travel directions, Google Maps in recent months has packed more ads onto its search queries. It is central to Google parent Alphabet Inc. GOOG -1.39% ‘s hope to recharge a cresting digital-advertising operation.
And from Google’s perspective, no doubt, the more pushpins, the more traffic, and the more time spent onsite, all translates into profit. And they are also profiting from the fraudulent pushpins, who pay Google to get to the top of the listings.
So Google, naturally, isn’t doing anything about the problem. Probably the best way to understand this is by checking in with the CEO that’s in the business of creating fake pushpins:
One prolific listings merchant is Mark Luckenbaugh. From a basement smelling of cigarette smoke in Hanover, Pa., he runs a business that can place as many as 3,800 fake Google Maps listings a day.
A self-described high-school dropout, Mr. Luckenbaugh manages 11 people who, he said, “mostly” follow Google rules to help clients get better visibility on Google Maps. A separate staff of 25 in the Philippines employs unsanctioned methods to fill orders for fake listings, he said….
Mr. Luckenbaugh charges $99 for a single made-up listing and up to $8,599 for a 100-pack. The listings are aimed at businesses that want to pepper Google Maps with faux locations to generate more customer calls. Subverting Google’s verification system, he said, wasn’t hard.
His employees submit fake business listings to Google, scraping real addresses from commercial real-estate listings and creating such search-friendly names as best personal injury attorney.
The listed phone numbers can be routed to Mr. Luckenbaugh’s clients.
“,” Mr. Luckenbaugh said. The method leaves “,” he added.
That’s it? Google built a ginormous multi-billion dollar global system that can be cracked by anyone with a burner? Apparently so. I just searched my own area for plumbers. Ludicrous. “If fraud can happen, it will already have happened”
It’s worth asking what the human weaknesses are — besides greed in the C-suite — that enable the phishing equilibrium in Google Maps. For Nancy Carter and Anas Abuhazim the weakness was desire: for Nancy, to have her garage door fixed; for Anas, to own a profitable small business. Paraphrasing the Buddha, the cause of suffering is desire; that’s why they were “on the hook,” preyed upon by the fraudsters and extortionists that Google’s desire for profit enables. A secondary weakness was trust, as illustrated by the fable of the frog and the scorpion (“It’s my nature“). But what kind of society have we built where wanting your garage door fixed is an exploitable weakness? Or trusting a map? Why don’t we simply expropriate Google, turn it into a public utility, eliminate advertising, and eliminate the occasions of sin?
 Another, simpler example from NC: Potential Phishing Equilibria Under Neoliberalism in the U.S. Medical Coding System.
 Readers will be reminded of the “dark patterns” concept.
 I can’t imagine hiring a plumber without a personal recommendation, but perhaps that’s just oldthink.