I think it's crazy.
Either way, the idea of an open auction for shares is interesting, but I can't imagine the SEC would allow some IPO people to buy cheaper than others?
If they really do that, we could see absolutely insane excesses. Did you follow the Wedding Gown auction on Ebay? People were putting in crazy bids they didn't intend to honor; at one point it got up to $100 million. Ebay and the seller eventually sorted it out, but I don't think the SEC wants to deal with shit like that.
I think also that inexperienced investors could end up paying far more than they should at an auction. Of course that's basically their problem, but I don't think it would send the right message about the seriousness of the company.
If they want to give Average Joe a shot at owning IPO shares, they should just fix a price and conduct a drawing. If they do what they seem to be saying they'll do, the result will be chaos. But a chaos from which flippers who get shares in the syndication will benefit enormously. And that would be the opposite of what the Google owners say they want.
