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Google’s New Home/Hardware Integration Has Privacy & Antitrust Implications
Submitted by Scott Cleland on Fri, 2016-10-07 11:20
Listen to Google’s CEO Sundar Pichai when he says Google foresees a transformation from a “mobile-first world to an AI-first world,” because that is where Google-Android’s ~90% market dominance in mobile, search, and search advertising, is going to take the world -- like it or not.
As you will see, an “AI-first world” is also a “privacy-second world” and an “antitrust-cursed world.”
Just like Google’s unmatched data collection enabled it to figure out how to position itself to dominate the mobile Internet with Android’s contractual-tying over the last eight years, Google’s unmatched data collection currently is enabling it to figure out how to perfectly vertically-integrate a comprehensive-suite of home-related, products and services to dominate home-digital information and services with its just announced products: Google Home, Google WiFi, Allo, Google Assistant, Google Pixel, etc.
Naturally this Google “data-driven,” omni-integration will have big privacy and antitrust implications.
First, let’s connect all the products Google just announced with everything else they are doing to grasp the new important big picture here.
Starting with Internet access, Google WiFi routers matter because Google is positioning to be the default wireless home Internet access gateway/gatekeeper to all digital home services. It offers a 3-pack of meshed WiFi routers that ensure better house/area coverage and enable full seamless integration with Google’s full product suite discussed below.
Google’s aptly named Google Home hardware speaker device (like Amazon’s Echo device) is fully integrated with Google’s software, Google Assistant, which jointly aspires to be to someone’s home, what a smartphone now is to a person.
Let me repeat that in another way. Google ultimately sees these new hands-free, smart-home-phone devices serving people in a home or other place, like a hand-held smartphone serves a person everywhere.
Google Home/Assistant is integrated to leverage Google’s big lead in Artificial Intelligence (AI) voice recognition in search queries --into a new dominant lead in far-field voice recognition and complex AI conversation/interface.
Importantly when in a room with Google Home one does not necessarily need one’s smartphone, or to click or type commands. Eventually Google WiFi/Home can have Google speaker-interfaces throughout most rooms in a house to make it like communicating with Star Trek’s “computer” wherever one is on the spaceship.
This is a big deal because Google is displaying its cleverness yet again that it has figured out another way to use “free” software (this time AI software that is extremely expensive to produce and maintain) to change the form factor and customer control point in order to maintain dominance over its previously dominated markets.
Remember, Google evolved its original dominant typed-search-bar-interface to mobile by innovating, adding, and dominating voice-driven search. Now Google is leveraging its voice-activated interface AI capabilities to access multiple Google apps beyond search via Google Assistant’s AI integrated voice conversation capabilities.
Google is confident that its voice recognition capabilities, language translation and dialect/accent recognition, combined with its comprehensive suite of ~200 software services, can’t be matched by any competitor. It has very good reason to be so confident because in reality, no other competitor is anywhere close to Google in quality and sophistication of voice recognition/conversation.
Data dominance and market dominance beget innovation dominance. Rinse and repeat.
So just like Google tied the Android smartphone with default Google search/apps to disintermediate and dominate mobile services, Google envisions this hands-free, smartphone-free, far-field voice interface to be yet another new disintermediating customer interface (like the Google search bar or Google-Android smartphone home page with Google apps did in the past), that it now can leverage going forward to dominate the new market of digital home/place services. (Ultimately Google understands this current residential “home” expertise can be transferred to any homogeneous “place” – think enterprises.)
Many may not appreciate the significance of Google’s unbeatable Google Home AI capabilities being embedded and delivered in Google Allo, Google’s new messaging/all-purpose-communications system/platform, that’s fully integrated with Google Assistant; more on that later.
Google also introduced its new Google Pixel smartphone that Google touts as “The first phone with the Google Assistant built in.”
This means it is de facto the first AI-cloud phone designed to handle and manage the significant increase in processing that an AI-driven device needs to deliver in substantial part from the Google cloud.
Remember AI-Driven devices and software are inherently more cloud-centric than the current more device-centric smartphone industry model of today.
Now what does all this set-up have to do with antitrust and privacy? Everything.
That said, with Alphabet-Google’s stock price hovering at a near record high, it appears that the market does not have the EU’s three antitrust cases against Google (search, search advertising and Android OS) on its radar screen at all, despite the fact that the EU has formally charged Google with abuses of its >90% dominance in four separate markets in three separate antitrust cases -- search/shopping, Android mobile, and advertising.
This would not be the first time financial markets did not see what was in plain sight.
Importantly, a Reuters exclusive recently reported that Reuters reviewed the EU’s latest charge sheet on Google’s alleged Android tying, and it indicated that the EU antitrust authorities intended to prohibit Google from engaging in most all of the contractual tying, bundling, inducements and punishments in current Android contracts with smartphone manufacturers and mobile operators.
If that’s true, and if Google did not plan to mitigate its effects, it would be highly “disruptive” to the lion’s share of Google’s core business model. But as we see from the recent product announcements Google has plans to mitigate a potential disruptive EU-Android antitrust sanction and remedy.
Google has a surprisingly successful history of trying to obsolete antitrust cases against it, first by slow-rolling and delaying the antitrust process ceaselessly, and second, by using that borrowed time, to “innovate” its way out of the apparent defined antitrust market and charge sheet, like Google showed us by radically revamping its Google shopping offering from all search results to all ads to disrupt the status quo baseline of the case.
In that light, Google’s Pixel AI-phone with Google Assistant/AI built-in, and with Google’s AI-driven-Allo messaging platform undergirding Google Assistant /Google Home, it looks a lot like Google is thinking ahead and figuring out a new way to head off and disintermediate competitors from retaking market share regardless of whether or not the EU bans Android tying in contracts.
Apparently their Houdini-esque antitrust escape plan is to technologically-tie Google’s AI Assistant capabilities deeply into many of Google’s core products, so that Google de facto can lock-in the Android-dominated mobile market via AI integration technically, like it previously did contractually with Android.
Google knows there is more than one way to skin the proverbial cat.
What does this mean for the EU?
Apparently, the EU needs to be more forward-thinking here in devising its Android-tying remedy to make it future-proof.
That’s because it appears Google may have already figured out how it can maintain its 90% dominance in search, advertising, and mobile, and that is through its new AI-first integrative market power that is inherently built off of, and leverages, Google’s ongoing underlying dominance of general Internet search services, search advertising, Android and Google Play.
The EU antitrust authorities need to think of an AI-powered-Allo messaging platform as a coding abstraction or business derivative of an operating system like Android that may not mirror the same exact functions as an OS, but practically may collect much of the same private and sensitive personal information and data, and control many analogous API gatekeeper-leverage points, just like Android currently does to leverage, maintain, and expand its mobile market dominance.
Simply, give Google big time credit here. They are cleverly thinking ahead, and also cleverly gaming the antitrust enforcement process by stonewalling at every opportunity and by transforming the going-forward underlying facts of the marketplace as much as possible through misdirection, technology and antitrust-defense-innovation.
If Google is moving everyone to an “AI-first world”… it is inherently moving everyone in Google’s sphere of influence, to a Googlian “privacy-second world.”
First, AI needs access to a person’s most personal private information to be useful as an “assistant.” And to make that most private data fully accessible, efficient, and useful, the AI has to allow that private data and its derivatives to proliferate much more broadly through the Google ecosystem of data centers, applications, and devices, than it would without AI.
This natural “AI-data-proliferation-effect” creates many more privacy vulnerabilities and privacy risks for users. That’s because AI can’t work with encryption -- what Google previously represented as the gold standard technology to protect user privacy.
Remember that technical reality: AI can’t work if the data is encrypted to protect privacy. This means an “AI-first world” is a “privacy-second world.”
Simply Google’s AI-first world makes it much harder to protect one’s privacy.
FCC Set-Top Box Privacy:
Given that Google wants its Google Home voice recognition to be the universal interface for all devices in the home, now people can see why Google was the impetus and orchestrator of the FCC’s AllVid Set-Top Box proceeding and pushing so hard to force free access to the ~200b worth of video programming flowing through America’s pay-TV providers.
It wants Google Home to be the default remote control and set-top box for all TVs in all homes.
And now it is also clear why Google fought so hard to be exempt from the FCC’s video privacy rules in the AllVid proposed rulemaking.
They don’t want to bring attention to the fact that Google Home is always listening to users conversations whether consumers are watching TV or not.
FCC Title II Privacy Rules:
The FCC’s proposed rules treat Google’s massive collection and use of personally-identifiable private information very differently from broadband providers.
This unequal treatment is arbitrary and capricious.
The FCC imagines that broadband providers somehow command a “unique vantage point” into consumers’ online activity. That view requires a blind-eye to the “unique” data collection of Google and other dominant edge providers.
Consider, Google wants to have always-on listening surveillance capability in people’s homes with Google Home/Assistant, that can record and AI-analyze all home conversations even with people who may not be aware of the recording device or given permission to be recorded. Some courts have ruled this type of conversation-recording behavior without permission, may be illegal wiretapping.
Then Google wants to fully integrate and commingle all of consumers’ most sensitive private information into its AI-first cloud, without regard to whether it is opt-in or opt-out sensitive information. For example how does Google’s AI-first cloud deal with sensitive requests to set up a doctor appointment or remember to call Mom about this medical condition?
And Google does all this with Google Android, the ~90% dominant operating system enabling all these AI-first capabilities, with Google Search the 90% dominant information access app, Chrome the ~50% dominant browser, and also with the world’s dominant Maps, video/YouTube, translation services, etc.
If the reason a broadband ISP has special tougher privacy rules than edge providers is that they have market power, why does the FCC ignore Google’s manifestly massively more market power relative to any ISP?
Google’s many strategic product and AI announcements are much more significant and far-reaching than many believe.
They also are all designed at core to ensure that Google maintains and expands their dominant data collection capability and their proliferating market dominances.
Finally they have massive privacy and antitrust implications.
Simply, Google’s “AI-first world” is really also a “privacy-second world” and an “antitrust-cursed world.”
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 internetization 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.