Innovation

To promote "America's free market," President Obama today ordered a government-wide review of regulations that "make our economy less competitive," in order to take us "toward a 21st century regulatory system."

Here is the case for why the FCC's December Open Internet order deserves to be atop of the Administration's regulations to review for abolition.

• (This regulatory review analysis is also highly relevant and applicable to Congress' review of the FCC order under the Congressional Review Act.)

First, the FCC's new Internet regulations violate the President's goal of a "21st century regulatory system" by applying "outdated" 19th century common carrier regulatory thinking and approaches to the previously un-regulated, and flourishing 21st century Internet. (Para 68)

Second, the FCC rules violate the President's goal of avoiding "excessive, inconsistent, and redundant regulation."

In a rare public antitrust defense, Google posted a rebuttal of Washington Post columnist Steven Pearlstein's challenge of Google's strategy of buying its way to broader market dominance (via its pending acquisition of ITA Software that is being reviewed by the DOJ.)

Google's standard misdirection warrants fact-checking.

First, Google claims: "All companies make 'build vs. buy' decisions. The clear subtext here is that Google is no different than any other company making acquisitions, so if others have had their mergers approved so should Google -- fair is fair.

This is misleading because Google is omitting highly material facts of how Google is very different than other companies, and why ITA arguably is a very special case.

Comcast's EVP David Cohen spoke at Brookings today on "Who should Govern the Internet."

• His thesis was dead on and well worth spotlighting -- the Internet is an engineering creation and the Internet flourishes because it lives in the collaborative and capable hands of engineers dedicated to making the Internet work for everyone.
• The speech explained how engineers working together in forums like the IETF and BITAG can solve, and solve quickly, issues that others try to unnecessarily involve lawyers and regulators in.

My big takeaway from the event, was that the FCC should declare victory -- that we have a free and open Internet -- and then get back to the real pressing work facing the FCC -- the National Broadband Plan.

There are no existing net neutrality problems, and no technical issues that the industry engineering bodies, IETF and BITAG have not been able to resolve.

There is simply no need for the FCC to fix an Internet that is already operating as the FCC and most everyone expects it to operate.

Google's proposed purchase of ITA Software is likely to be blocked by the DOJ for five big reasons.

First, the announcement of a new FairSearch.org coalition of Google's Travel competitors opposed to the Google-ITA deal, which was first reported by Tom Catan of the WSJ, provides the DOJ with most all the elements necessary for the DOJ to block the deal: broad and deep evidence of anticompetitive effects from multiple competitors with deep understanding of the market, a sound theory of the case, and a number of credible witnesses willing to take the stand in court to block the deal.

Second, a key opposition counsel who represents IAC's Expedia, is none other that Tom Barnett, who was the DOJ Antitrust Chief in 2008, who blocked a previous Google attempt to monopolize in the Google-Yahoo Ad Agreement.

Apple's CEO Steve Jobs is wise to publicly debunk Google's claim that: Google defines "openness" (aka -- good), and Apple defines "closedness" (aka -- evil).

• As Google CEO Eric Schmidt said: Google's concept of "openness" is "much easier to understand by opposition" so he defined Google's approach as the "inverse" of Apple's.

Google is right that they are the inverse/opposite of Apple, but not in the way that Google claims -- being open/neutral vs. being closed.

Google announced it is working on an economy-wide Google Price Index, but has not decided whether to make it public, per Google Chief Economist, Hal Varian, who spoke at the National Association of Business Economists conference this week.

• This development has under-appreciated implications for insider trading and also spotlights how Google's online dominance of market-relevant information suggests market failure and a new potential systemic vulnerability to the integrity of global capital markets.

I.  Insider Trading

In March, Google CEO Eric Schmidt said: "One day we had a conversation where we figured out we could just try and predict the stock market... and then we decided it was illegal. So we stopped doing that."

Now any hedge fund (or market regulator not born yesterday) understands that if Google is actively working on a Google Price Index, Google has not stopped trying to use its uniquely comprehensive and timely, repository of sensitive market information to predict information highly useful to predicting the stock market.

Google's blog post "What we're driving at" announced that Google has "developed technology for cars to drive themselves." Google stated: "Larry and Sergey founded Google because they wanted to help solve really big problems using technology... Our goal is to help prevent traffic accidents, free up people's time and reduce carbon emissions..."

This project raises some interesting questions no one has asked Google yet.

The link is here to: "Googleopoly VI -- How Google is Monopolizing Consumer Internet Media and Threatening a Price Deflationary Spiral and Major Job Losses in a Trillion Dollar Sector" -- It is a 41 page PowerPoint presentation with 18 pages of pictorial analysis.

Below is the Executive Summary: (The PDF link is here.)

Executive Summary

Googleopoly VI – Seeing the Big Picture: How Google is Monopolizing Consumer Internet Media

And Threatening a Price Deflationary Spiral & Major Job Losses in a $Trillion Sector

By Scott Cleland* President of Precursor LLC, September 13, 2010

Google's claim that presenting search results faster with Google Instant -- does not affect advertising, user search behavior or user-click-throughs -- does not ring true.

First, how is Google Instant not push-advertising?

A spate of recent Google antitrust developments indicate there is more here than meets the eye.

First, Google, just like it cleverly discriminates in its search results to its advantage, cleverly discriminated when it announced antitrust information material to Google investors -- not when it occurred but when the least number of people would see it, according to its web analytics calculations.