The Dangers of Over-Regulating Competition

As a regular reader of Steve Pearlstein's Washington Post's business column, I was dismayed at the consistent pro-regulation frame of Sunday's piece on the AT&T-T-Mobile acquisition: "The Revenge of the Baby Bells."

The hallmark of longstanding bipartisan competition policy has been that if market players have the freedom to succeed or fail at differentiating, innovating and investing to meet consumers' rapidly evolving needs, market forces can maximize consumer welfare much better than FCC regulators can.

 

  • Current fierce communications sector competition on multiple levels, vibrant innovation and massive private sector investment have proven Congress' wisdom in instituting competition policy to replace economic regulation as the best framework to maximize consumer welfare in communications.
  • Without the 1996 Telecom Act replacing economic regulation with competition policy, the Internet would be a fraction of the phenomenon it it today.

 

Thus it is dismaying that Mr. Pearlstein crafted a false choice in his column: "...stick with the competitive, lightly-regulated model and... block a merger... or it could acknowledge... the "telephone" market is a natural oligopoly... and... requires much stronger government regulation."

 

Top 10 Reasons Google Has Culpability in Gmail Security Breach -- Security is Google Achilles Heel Part XII

Google's deep aversion to accountability was in full view in its blog response to the latest gmail security breach, in which Google placed most all of the blame on users and others, while largely trying to absolve Google of its responsibility and accountability in the matter as the world's largest source of private, sensitive and secret information.

Top 10 Reasons Google Has Culpability & Needs More Accountability:

 

Denying Competitive Substitution is Weakest Link of FCC's De-Competition Policy

In order to justify broadband price regulation in the Open Internet and Data Roaming orders, the FCC and FreePress must continue to undermine Congress' competition policy by denying the increasingly obvious and incontrovertible facts that users competitively substitute broadband services between various broadband technologies like copper networks/DSL, cable modems, fiber, WiFi/WiMax, wireless broadband, and satellite.

 

How FCC Data Roaming Order Undermines FCC's Net Neutrality Regulations

The FCC's Open Internet Order is even more likely to be overturned in court than before because the FCC's extraordinary delay in publishing its December net neutrality regulations has oddly moved the FCC's April Data Roaming Order to the front of the line of cases challenging the FCC's overall legal authority to regulate broadband.

 

  • (The April 7 Data Roaming Order was published in the Federal Register 29 days after the decision; the December 21 Open Internet Order may not be published until late summer or fall, 7-9 months after the decision, per Politico's Morning Tech.)

 

 

Consequently both cases are now more likely to be heard in the FCC-unfriendly D.C. Circuit Court of Appeals.

Big Brother Inc. -- My Huffington Post Op-ed on Google & Privacy

My new Huffington Post op-ed: Big Brother Inc., tells the story of how Google has become a more intrusive and effective "Big Brother" than even George Orwell imagined in "Nineteen Eighty-Four."

  • My Huff Post Tech post on the world's #1 blog shows how Google's 24-7-365 omni-tracking enables Google to know what you want, think, believe, say, read, write, watch, and intend to do.

Google's serial disrespect of privacy is a central theme of my new book: "Search & Destroy Why You Can't Trust Google Inc."

FCC's In Search of Relevance in 706 Report

The FCC's latest arbitrary and capricious torturing of the facts, law, and common sense, in its most recent 706 report, makes it obvious that the FCC is "in search of relevance" and highly insecure about its authority and role in the broadband competition era.

 

  • Apparently, the FCC now sees competition-driven consumer benefits as a threat to the FCC's relevance, role and authority.
    • If the bipartisan policy/law of promoting competition succeeds, then the FCC by definition has less and less to do.
  • It is becoming increasingly apparent that many at the FCC don't want competition policy to succeed, because they vainly believe that the FCC can, and should, mandate social outcomes "better" than market forces and consumer choice can produce via competition.

Thus the pro-regulation forces at the FCC are increasingly and proactively seeking to discredit competition policy wherever possible by ignoring and torturing any facts, evidence, logic and common sense that do not forward their government-centric-view that "expert" FCC regulators invariably know best.

Consider the common thread between:

Why DOJ's Pending Criminal Case Against Google is Very Serious

The widely reported DOJ criminal investigation into Google for promoting illegal pharmacy sales may be Google's most serious clash with Federal law enforcement to date; (even compared to Google's many previous run-ins with law enforcement chronicled in my recent Forbes op-ed.)

Why is this case is so serious?

First, this is a bonafide criminal probe involving Google promoting illegal drug sales, which could have put hundreds of thousands of U.S. consumers at serious risk of injury or death from counterfeit, harmful, or inappropriate-use drugs.

 

  • This case involves more than fraudulent business behavior, it appears to involve criminal disregard for the health and safety of consumers for monetary gain.

 

Second, if reports are correct that this case also involved an official Google business decision in 2004 that Google, unlike other online advertisers, would continue to promote Canadian pharmacies that they and others knew sold drugs illegally to U.S. customers, then Google may have made a deliberate business decision to disregard the law.

 

Google has 93.7% Share of U.S. Search Revenues & Is Rapidly Taking Share

 

With reports of the FTC's looming antitrust investigation of Google, it is highly-relevant that Google now has ~93.7% of U.S. revenue share of search advertising and that Google has taken ~26% of the search advertising revenue share that it did not have a year ago.

  • Google continues to relentlessly gobble up massive search advertising revenue share from its only significant competitors, Yahoo and Microsoft (which have combined forces in search in the last year), in part because:
    • Google's relevant search revenues are 24x bigger than Yahoo's and 39x bigger that Microsoft's; and
    • Google is growing its huge search revenue base so much faster -- +27% to Yahoo's -19% and Microsoft's +14%.
      • (These revenue share calculations are relatively easy to do -- they are explained in detail at the end of this post.)

 

Many do not realize that antitrust authorities already believe that Google is a monopoly, because the most commonly cited market share numbers in the media are from ComScore, which tracks share of searches not search advertising revenue share.

My Forbes Op-ed on Google's Disregard for the Law

My new Forbes' op-edGoogle Disregards the Law, tells the sordid story behind today's story of Google apparently agreeing to settle a criminal investigation with the Department of Justice for ~$500m for promoting and accepting advertising from illegal online pharmacies.

 

  • The op-ed sadly chronicles that this latest law-breaking by Google is part of a well-established pattern of disregard for the rule of law.
  • If one cannot trust a public Fortune 100 company to obey the law, one cannot trust them overall as I explain in much great detail in my new book "Search & Destroy Why You Can't Trust Google Inc."