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The FCC’s Googleopoly Gatekeeper Navigation Device Set-up

It’s the FCC-forcing-proprietary-video-to-be-free-to-Google stupid!

That’s a Jim Carville-esque paraphrase of the FCC’s AllVid commercial navigation device proposal to focus the mind.

The FCC spins its AllVid proposal as pro-competition in isolation when in reality the evidence will prove it profoundly anticompetitive overall.

That’s because the FCC’s AllVid proposal has been primarily orchestrated behind-the-scenes by Google to primarily benefit Google, which commands the world’s overwhelmingly dominant ‘navigation device’ for the entire Internet – its dominant Google Search engine, and also commands the world’s dominant mobile operating system/navigation device for the mobile Internet, Android, which already can turn any of the hundreds of millions of Android smartphones, tablets, or laptops into an Internet TV ‘remote control’ or de facto navigation device.

Given Google-YouTube, the world’s dominant Internet video distribution platform with ~1.6 billion viewers in 70 countries and 75 languages covering 95% of the world’s population, and given Google-Android is the world’s dominant mobile operating system with >80% share, the only thing Google lacks in the Internet video business is a willingness to pay a market-negotiated rate for the licenses and rights to use and profit from the world’s most valuable video content, and to be a responsible corporate steward to protect the premium content from the devaluation of piracy.

So this FCC AllVid proposal is not about “unlocking the box” for competition, it is really about unlocking the legitimate “box” protecting copyrighted content and market-negotiated licensing contracts, not with the offered and legitimate, owner’s “key” of proprietary apps, but with the destructive and illegitimate, “crowbar” of FCC force, so that Google can take for free what others in the marketplace now pay a competitive premium for, and so Google can singularly dominate the global monetization of this premium content for pennies on the dollar.

Now you see why Google wants the FCC to “unlock the box” for them. This ‘box’ protects premium content producers and distributors from theft, piracy, and abuse of their property.

Ironically and sadly, this “box” may be needed most to protect from the predatory devaluation of Google’s dominant piracy-tolerant: navigation device/search engine, advertising/monetization platform, and YouTube distribution platform.

So how can we be sure this is what Google and the FCC are doing?

Consider the evidence of Google’s history of anticompetitively devaluing premium content.  

First, don’t miss this damning Google admission in the Viacom v. YouTube Statement of Undisputed Facts # 161: “On June 8, 2006, Google senior vice president Jonathan Rosenberg, Google Senior Vice President of Product Management, emailed Google CEO Eric Schmidt and Google co-founders Larry Page and Sergey Brin a Google Video presentation that stated the following: “Pressure premium content providers to change their model towards free[;] Adopt ‘or else’ stance re prosecution of copyright infringement elsewhere[;] Set up ‘play first, deal later’ around ‘hot content.’” The presentation also stated that “[w]e may be able to coax or force access to viral premium content,” noting that Google Video could “Threaten a change in copyright policy” and “use threat to get deal sign-up.””

Even in 2006, before Google bought YouTube, and when they only had ~44% of search share per ComScore, that email shows Google’s leadership was keenly aware of the market power its search engine enjoyed as the leading ‘navigation device’ for all free Internet content at that time.

Google’s leadership bought YouTube in 2006 knowing that video searches comprised roughly a quarter of all Internet searches and knowing that YouTube was the overwhelming Internet video market leader, precisely because its willful blindness to copyright infringement enabled fast piracy-driven search growth.  

Tellingly, the Viacom v. YouTube Statement of Undisputed Facts # 162 shows us that Google co-founder Sergey Brin disagreed with co-founder Larry Page and Chairman Eric Schmidt in buying YouTube because it effectively was forcing paid video to be free on Google; Mr. Brin said in an email: “…is changing policy [to] increase traffic beforehand that we’ll profit from illegal downloads how we want to conduct business? Is this Googley?”

In the first four years of Google owning YouTube, Google’s share of search tipped to dominance in increasing ~50% from 43.7% to 65.1% per Comscore, in large part because YouTube’s piracy-fueled business model drove strong video search and search advertising growth.

Note that after Google purchased YouTube, Google sought to continue to leverage YouTube’s blind-eye to piracy to force pay TV content producers into Google-favorable revenue deals with Google.

Statement of Undisputed Facts # 216 tells us that Google Manager David Eun said on 2-15-07 that: “Audio fingerprinting system whereby the content partner can send ‘reference’ fingerprints’ to Audible Magic’s database “are now live as well and are only offered to partners who enter into a revenue deal with us.””[Underline added for emphasis] (Translation: Google would only protect a video content owners’ content from piracy, if they allowed Google to monetize and revenue share at an advertising price dramatically less than other advertisers paid for the same thing.)

How do we know that Google long understood the market power its world’s dominant search engine/navigation device commanded? Santiago de la Mora, Google Executive, said 8-23-09 in the NYT that: “Search is critical. If you are not found, the rest cannot follow.”  In 2010, Google’s search ranking head, Amit Singhal, tacitly admitted Google is “the biggest kingmaker on this Earthper the Telegraph.

In 2012, Google led,  orchestrated, politically-framed and set the political tone for much of the Web’s opposition to the SOPA/PIPA anti-piracy legislation, because it threatened Google’s anti-property-rights mission, open philosophy, business model, innovation approach, competitive strategy, and culture.

From 2014 to present, Google has sued in court that Section 230 in federal law completely immunizes Google from State law enforcement authority for violating state laws concerning consumer protection and property theft among other violations. 41 State AGs currently oppose Google’s breathtaking claim of special legal immunity from all state law enforcement.

In sum, apparently Google’s gambit here is to use its political influence to get the FCC to use its dwindling legal credibility to contort an outdated 1996 navigation device provision to forcibly open-source pay TV content and grant Google a political fair use claim to take the premium pay TV content for free and profit from it.   

The combination of the FCC de facto open-sourcing pay TV content by fiat, with the anticompetitive reality of Google’s dominant search engine navigation device, dominant Android remote control operating system, and dominant YouTube global Internet video distribution platform, and with Google’s longstanding anticompetitive tolerance of piracy, would not be a pro-competitive dynamic as the FCC claims, but would be a profoundly anticompetitive and anti-proprietary content dynamic going forward.

Forewarned is forearmed.

***

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an emergent enterprise risk consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.

 

  

 

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