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The FTC-Created Google Android Mobile Monopoly is Anti-Privacy by Design

 

A succession of demonstrably wrong and lax antitrust decisions by the FTC has created a 90% market share Android mobile monopoly in licensed mobile operating systems that is anti-privacy by design, because Google’s ill-gotten mobile advertising dominance demands bulk data collection of Android users’ app metadata and private information without users meaningful knowledge or consent.

A new antitrust complaint in the EU against Google-Android by Disconnect, a privacy and security software company, eventually could put a bright spotlight on the FTC’s apparent abject failure to adequately enforce the FTC’s antitrust and Section 5 consumer protection authorities against Google. 

A glaring antitrust enforcement double standard concerning the mobile sector appears to be a central pillar of the Obama Administration’s Google-as-national-champion industrial policy.

The Obama Administration has paid zero attention to preventing or addressing the vast anti-competitive and consumer privacy harms of a 90% U.S. Android operating system mobile monopoly.

However, it has been most aggressive in requiring that there be at least four mobile carrier competitors in the U.S. -- by blocking mergers between AT&T/T-Mobile and Sprint/T-Mobile, and by arbitrarily changing spectrum policy to limit the amount of prime spectrum two companies, Verizon and AT&T, can buy at public auction, in part so it can give Google-Android, et al, prime commercial spectrum for free.

Apparently, the FTC has forgotten that the last high-profile, industry-defining, publicly adjudicated, antitrust case in the U.S. was over abuse of operating system monopoly market power in United States v. Microsoft Corp., a case with OEM tying allegations of monopoly power abuse eerily analogous to allegations of OEM tying by Android.

And apparently the FTC does not appreciate that the Android mobile monopoly with 90% market share has almost three times the subscriber market share as the largest U.S. mobile carrier has, and that Android’s mobile monopoly home screen position is situated in between a mobile carrier’s relationship with its customer, which affords it extraordinary market power to favor Google’s Search and apps via a much closer and more privately intimate customer relationship than a carrier’s required neutral role under Obama FCC policy.

Importantly, the new EU antitrust complaint by Disconnect this week could spotlight the unique antitrust and privacy pass the Obama Administration has apparently afforded Google Android’s monopolistic bulk collection of metadata and private information, and require the FTC to publicly acknowledge and investigate the Disconnect allegations against Google, given the recent congressional and national focus on bulk collection of Americans’ private communications in the reauthorization fight of the U.S. Patriot Act.

Disconnect, a privacy software/app company founded by former Google engineers, filed a formal antitrust complaint against Google Android in the EU and "charges Google with abusing its dominant market position by banning [from Google Play] Disconnect's app, a revolutionary technology that protects users from invisible tracking and malvertising, malware served through advertisements."

EFF explains the case succinctly, “Disconnect's mobile app is designed to prevent non-consensual third-party trackers from collecting detailed profiles of how you use your Android phone… Google seems to be enforcing this clause [to block Disconnect from Google Play] in order to put its own profits ahead of the privacy of its users. By banning Disconnect Google has effectively said that users don't get to control what data their phones transmit to third parties, if that control depends on apps distributed through the Play store.”

Why is one American-based company first complaining against another American-based company in Europe?

The EU’s DGComp antitrust authority has charged Google with abusing its search dominance in Europe by systematically favoring Google Shopping in Google Search over competitors; it also is formally investigating Google’s Android mobile operating system for anti-competitive self-dealing behavior.  

In addition, Disconnect apparently was aware of the FTC’s past actions of: declaring that privacy violations cannot be anti-competitive; its enablement of the Android mobile monopoly via approving Google’s acquisitions of DoubleClick and AdMob; making Google’s search bias investigation go away; and issuing a Google-requested press release this year defending Google from antitrust charges.  

What is the evidence “that a succession of demonstrably wrong and lax antitrust decisions by the FTC has created a 90% market share Android mobile monopoly in licensed mobile operating systems that is anti-privacy by design?

In the Bush Administration, the FTC and DOJ unilaterally decided to substantially reduce the scope of U.S. antitrust enforcement — by no longer considering privacy to be a non-price factor in antitrust enforcement.

That fateful policy decision by the FTC/DOJ to ignore privacy as a factor in antitrust enforcement has fostered a perverse market dynamic where Google, and many online advertising companies, now effectively compete on the basis of who can take advantage of consumer privacy most, rather than compete on the basis of who can best protect consumer privacy.

Tellingly in 2012, Google was found to have hacked into their competitor Apple’s Safari browser to bypass the privacy and security protections of Apple’s customers, in order to serve Google’s ads to Apple’s customers without the customers’ permission.

Perversely the FTC, because of their prior privacy decision, could not consider it anti-competitive to break into a competitor’s system for competitive gain. The FTC was pathetically self-limited to enforcing that Google misrepresented their privacy policy.

The FTC/DOJ’s preemptive decision to look the other way, if companies’ competitive practices harm consumers’ privacy, has created a de facto antitrust safe harbor in the U.S. for mass privacy abuse and bulk data collection of metadata on the Internet.

It ensures there is no FTC antitrust accountability, risk, or cost for a dominant player like Google-Android, sacrificing consumer protection of privacy for anti-competitive gain.

Common sense tells us that law enforcement committed to maximizing the effect of deterrence signal neither the exact time/place of their police patrols, nor where they won’t patrol.

However, with privacy and antitrust, FTC authorities by design have unwittingly telegraphed to the marketplace exactly where they won’t provide accountability, so potential bad actors like Google Android know they can get away with abusing consumers’ privacy with relative impunity.

Simply, this is a de facto FTC anti-privacy policy by design. 

In 2007, the Bush FTC approved Google-DoubleClick (4-1) with no conditions, effectively tipping Google to dominance by allowing Google to buy most all of the advertiser, publisher, and user relationships that it did not have.

Contrary to the FTC’s approval assumptions, that the acquisition would not “substantially lessen competition,” only one year later, the Bush DOJ found in blocking of the Google-Yahoo ad agreement that “Internet search advertising and Internet search syndication are each relevant antitrust markets and that Google is by far the largest provider of such services, with shares of more than 70 percent in both markets.”

Simply, the FTC created Google’s search advertising dominance of 70% by approving the acquisition of DoubleClick.

In 2010, the Obama FTC approved Google’s acquisition of #1 mobile advertiser Admob without conditions despite “serious antitrust issues,” by assuming Apple iAd would provide sufficient competition to mitigate any potential anti-competitive harm. That determinative FTC assumption proved wrong as Apple iAd has not become a significant online advertising competitor to Google.

In 2013, in dropping its search bias investigation of Google without any finding of antitrust violation, the Obama FTC effectively adopted the opposite of the antitrust analysis of both the Bush and Obama DOJs.

To find that consumers on balance were helped more than hurt by Google’s search bias, the FTC had to assume that the consumer was the customer of search, not the advertisers who actually pay for it.

The Obama FTC quietly rejected the Bush and Obama DOJ’s definition of the relevant antitrust market in the Google Yahoo Ad Agreement and the approval of the Microsoft-Yahoo search partnership, and in its place came up with a super Google-friendly and contorted relevant market analysis that effectively presumed search to somehow be a charity for consumers, not an advertising business, and if consumers sufficiently liked the charitable benefit, Google couldn’t be anti-competitive to publishers or advertisers.

The FTC effectively politically blessed Google’s dominance by re-imagining the market so that consumers are Google’s customers of search and not the product sold to search advertisers, when the Bush DOJ concluded the opposite in blocking Google-Yahoo in 2008 and the Obama DOJ agreed in approving the Microsoft-Yahoo search partnership.

Simply, the FTC’s policy of ignoring that privacy abuse can be consumer harm in its antitrust analysis, the FTC perversely concluded by design that search bias does not harm consumers “on balance.”

Fast forward to 2015 and we learn that the FTC views itself more of a defender of Google as America’s national champion than as an antitrust and consumer protection enforcer, because it issued an official press release defending Google’s PR antitrust position at Google’s email request.  

We have also learned in 2015 that the public evidence shows that seven former employees of, or consultants to, Google, appear to be conveniently and simultaneously  positioned in most every major federal policy or law enforcement area of commercial interest to Google Inc. Consider this public evidence.

Megan Smith has served as U.S. chief technology officer and assistant to the president since September. Smith served as a senior Google executive from 2003-2014.

Alexander Macgillvray has served as deputy U.S. chief technology officer for intellectual property & privacy since September. Macgillvray served as Google’s deputy general counsel for intellectual property from 2003-2009.

Mikey Dickerson has served as deputy U.S. chief information officer and administrator of the U.S. digital service since August. Dickerson served as a Google Senior Engineer from 2006-2013.

Michelle Lee has served as the head of the U.S. Patent & Trademark Office since November of 2012. Lee served as Google’s deputy general counsel and head of patents and patent strategy from 2003-2012.

Renata Hesse has served as deputy assistant attorney general for criminal and civil operations of the antitrust division of the U.S. Department of Justice since May of 2012. Hesse served as an outside counsel to Google during the DOJ’s opposition to the proposed Google-Yahoo ad agreement.

David Gelfand has served as deputy assistant attorney general for litigation of the antitrust division of the U.S. Department of Justice since August of 2012. In that capacity Gelfand also may have served as the DOJ’s antitrust litigation liaison to the European Commission’s Directorate of Competition. Gelfand represented Google in the Federal Trade Commission’s 2010 antitrust review of the Google-Admob transaction.

Joshua Wright has served as one of five U.S. Federal Trade Commission Commissioners since January of 2013. Wright did antitrust-related academic consulting work for Google and formally recused himself from all Google matters before the FTC until January of this year.

Simply, the evidence shows broad USG Google favoritism -- apparently by design.

Conclusion

Ironically in 2011 the FTC Google search bias investigation expanded its scope to investigate Android per the WSJ, which happen to be the antitrust allegations that the EU is currently investigating formally.

Sadly, the FTC apparently shut down that Android investigation with the slightest of public acknowledgement in January of 2013 when the FTC abruptly made its Google search bias investigation go away after the Presidential election.

Apparently, there is only this public oblique FTC acknowledgment:  “…that Google entered into anticompetitive exclusive agreements for the distribution of Google Search on both desktop and in the mobile arena. The agency decided not to take action in connection with these allegations.”

It will be interesting and telling -- if after the EU has begun cleaning up the FTC’s Google antitrust and privacy messes, and after the Disconnect complaint to the EU spotlights Google's anti-competitive, anti-privacy behavior in the context of Android's wanton bulk data collection of the world’s metadata and private information without meaningful user knowledge or consent -- if the FTC steps up and finally fulfills its statutory law enforcement responsibilities.

Forewarned is forearmed.

Scott Cleland is President of Precursor LLC, a consultancy serving Fortune 500 clients, some of which are Google competitors. 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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