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What’s the FTC Hearing before their Hearings on the Unlevel Playing Field?

Evidently antitrust non-enforcement can have big consequences.

It can cause big un-ignorable problems that get the attention of the President, all of Congress, and both political parties. That rare feat of collective attention-grabbing can point them collectively in the same rough direction – back to antitrust authorities that could have, or should have, prevented many of the messy Internet platform unaccountability problems that they collectively are wrestling with resolving now.   

Before the FTC has its first retrospective review hearing on its own institutional performance this fall, it has been getting an implicit earful from its governmental superiors that it actions and inactions have apparently created broad and serious negative consequences for competition.

Senator Orrin Hatch wrote the FTC urging it to reopen its antitrust investigation of Google based on the evidence of serious anticompetitive and deceptive problems apparently flowing directly from the FTC’s 2013 Google non-enforcement decision. It is particularly noteworthy antitrust probe tasking, because then Senate Judiciary Chairman Orrin Hatch was the leading Republican supporter of the Clinton DOJ’s successful Sherman Act monopolization prosecution of Microsoft when Makan Delrahim was his Senate Judiciary Chief Counsel.      

President Trump’s tweets have mega-spotlighted what he views is the unfairness and lack of neutrality in Google search rankings and in how Google, Facebook, and Twitter appear generally biased against conservative views. In an interview with Bloomberg he said Google, Facebook, and Amazon are in an “antitrust situation.”

House Majority Leader Kevin McCarthy also has been vocal about concerns of social media bias against conservatives and the need for more tech transparency.  

Senator Mark Warner, Ranking Democrat Member of the Senate Intelligence Committee has been social media’s leading congressional Democrat critic of Google, Facebook, and Twitter’s irresponsibility regarding social media’s role in 2016 foreign interference in the U.S. election. He also is highly critical of Google CEO’s refusal to testify before Congress and has described Google-YouTube as “an engine of radicalization [i.e. enabling ISIS’ organization] and disinformation.” Most importantly, Senator Warner has taken the Senate Democrat lead in developing twenty “Potential Policy Proposals for Regulation of Social Media and Technology Firms” and submitting them as comments to the FTC.

Senator Ron Wyden, Ranking Democrat Member of the Senate Finance Committee and a longtime leading supporter of social media companies, has now become highly critical of them. He said at an August Senate hearing on social media and election interference: “As the author of Section 230, the days when these pipes are considered neutral are over, because the whole point of 230 was to have a shield and a sword, and the sword hasn’t been used and these pipes are not neutral.”  

FCC Chairman Ajit Pai this week posted an op-ed on Medium with questions about the unlevel playing field advantaging Internet platforms. He said: “when we talk about protecting a free and open Internet, shouldn’t we be focusing on the part of the Internet economy where it is most at risk? … These issues of online transparency, privacy, and free expression raise the question of public oversight. …The public deserves to know more about how these companies operate. And we need to seriously think about whether the time has come for these companies to abide by new transparency obligations.”

U.S. Attorney General Jeff Sessions announced the DOJ will be meeting with State Attorneys General this month to “to discuss a growing concern that these companies [social media platforms] may be hurting competition and intentionally stifling the free exchange of ideas on their platforms.”

This is a particularly relevant development because Google and Facebook quietly stopped directly competing against each other in 2014 in search advertising and social advertising, resulting in their joint share of digital advertising growth quickly leaping from 65% to 95%.

The DOJ and AGs should want to know if these evident extraordinarily anticompetitive outcomes involved collusion to divide the market. Concerning the “free exchange of ideas” it is relevant that the Facebook and Google bottleneck distribution models now jointly command 94% of reader referral traffic on U.S. politics.

The problems Congress is experiencing are just the political symptoms of unaccountable abuse of market power by Google and Facebook overall. Focusing purely on resolving the competitive problems would have the ancillary effect of solving the political problems of no reasonable alternative or competitive choice to using Google or Facebook.  

The purpose of the FTC and DOJ’s antitrust authority is preventing monopolization and cartelization to protect the free market competitive process, the free and fair flow of information, and competition for ideas – which every two years is called elections and politics.

Now that the President, Congress, the political parties, and State Attorneys General apparently have collectively figured out that their myriad of Internet platform problems in front of them require an antitrust enforcement component at a minimum, they will become more interested in learning what anticompetitive facts are.

There is a simple fact set hiding in plain sight.      

The facts are incontrovertible that before the FTC abruptly closed all five of its Google antitrust probes in January 2013 there was serious competition in the business of search and the business of social; and now in 2018, there is minimal competition in these critically important economic and societal markets, that are at the epicenter of the huge political controversies over foreign election interference, fairness of treatment of political expression, and Internet platform unaccountability overall.  

Tellingly, in 2010 the DOJ approved the rare combination of #3 Microsoft Bing and #2 Yahoo to increase competition to Google’s dominance in search and search advertising, a move that then private antitrust lawyer Makan Delrahim, explained in Roll Call was necessary because “without the right amount of searches, you can’t have a very significant competitor.”

The facts are incontrovertible that in early 2013, Google had significant competition in search and search advertising syndication because the four of the biggest sources of originating search traffic, Microsoft, Yahoo, Facebook, and Apple were all in significant direct competition with Google in the search and search advertising business; and that today Microsoft, Yahoo, Facebook and Apple do not directly compete with Google for the search and search advertising market like they did before.  

It is incontrovertible that in early 2012 Facebook faced three fast-growing social platform competitive threats for the social advertising market: Google+, Instagram, and WhatsApp.

In September 2012, Facebook bought Instagram for $1b. In February 2014, Facebook announced its acquisition of WhatsApp for $19b in outbidding Google. In April 2014, Google defunded its Google+ network and closed its Orkut social network. In December 2014, Facebook ended its search and search advertising partnership with Microsoft-Bing/Yahoo.

In 2015, all three of Facebook’s fastest-growing social platform competitive threats for the social advertising market were eliminated -- apparently anticompetitively.  

In sum, what the FTC is hearing from a lot of governmental sources is loud and clear before the FTC has its own public hearings.

What they are hearing is that unaccountable Internet platform market power and lax antitrust enforcement may be a key cause of the many high-profile problems engulfing Congress and the social media companies.

The incontrovertible competitive facts here challenge and disprove the conventional wisdom of Google’s and the FTC’s narrative that the FTC’s 2013 closure of its Google antitrust probes was the right decision, warranted, and pro-competitive.

The collective politic increasingly will focus on antitrust enforcement of Google and Facebook because sans antitrust enforcement, America’s economic, social, and political systems will continue to be disintermediated by one unaccountable monopoly bottleneck for information, Google, and one unaccountable monopoly bottleneck for social sharing.

What elected official now thinks that is a good idea?

As these problems proliferate and accumulate, more and more elected officials will be asking why antitrust enforcers think no reasonable competitive choice is a good thing for information access and its monetization and for social sharing and its monetization.  

The unlevel playing field of antitrust non-enforcement of Google and Facebook has had consequences for free market competition, the economy, society, and elections.

The open question is when will Google and Facebook face any antitrust consequences from the FTC and/or the DOJ Antitrust Division?

Forewarned is forearmed.  

 

NOTE: The evidence undergirding this analysis:

 

See here for the evidential chronicling of what’s happened since the FTC ended its Google probes.  

 

See here for “The Slam Dunk Antitrust Case Against Google.”

 

See here for “The Solid Conservative Antitrust Case Against Google.”

 

See here for the litany of irregularities in the FTC’s abrupt closure of all its Google antitrust probes.

 

See here for how Google and Facebook abruptly stopped competing against each other.

 

See here for how Google and Facebook are jointly crushing digital advertising competition.  

 

 

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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. Cleland has testified before the Senate and House antitrust subcommittees on Google. Eight different Congressional subcommittees have sought Cleland's expert testimony and when he worked as an investment analyst, Institutional Investor twice ranked him the #1 independent analyst in his field.

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Precursor LLC Research on Asymmetric Accountability Harms:

Part 1:   The Internet Association Proves Extreme U.S. Internet Market Concentration [6-15-17]

Part 2:   Why US Antitrust Non-Enforcement Produces Online Winner-Take-All Platforms [6-22-17]

Part 3:   Why Aren’t Google Amazon & Facebook’s Winner-Take-All Networks Neutral? [7-11-17]

Part 4:   How the Google-Facebook Ad Cartel Harms Advertisers, Publishers & Consumers [7-20-17]

Part 5:   Why Amazon and Google Are Two Peas from the Same Monopolist Pod [7-25-17]

Part 6:   Google-Facebook Ad Cartel’s Collusion Crushing Competition Comprehensively [8-1-17]

Part 7:   How the Internet Cartel Won the Internet and The Internet Competition Myth [8-9-17]

Part 8:   Debunking Edge Competition Myth Predicate in FCC Title II Broadband Order [8-21-17]

Part 9:   The Power of Facebook, Google & Amazon Is an Issue for Left & Right; BuzzFeed Op-Ed[9-7-17]

Part 10: Google Amazon & Facebook’s Section 230 Immunity Destructive Double Standard [9-18-17]

Part 11: Online-Offline Asymmetric Regulation Is Winner-Take-All Government Policy [9-22-17] 

Part 12: CDA Section 230’s Asymmetric Accountability Produces Predictable Problems [10-3-17]

Part 13: Asymmetric Absurdity in Communications Law & Regulation [10-12-17]  

Part 14: Google’s Government Influence Nixed Competition for Winner-Take All Results[10-25-17]

Part 15: Google Amazon & Facebook are Standard Monopoly Distribution Networks [11-10-17]

Part 16: Net Neutrality’s Masters of Misdirection[11-28-17]

Part 17: America’s Antitrust Enforcement Credibility Crisis – White Paper [12-12-17]

Part 18: The U.S. Internet Isn’t a Free Market or Competitive It’s Industrial Policy [1-4-18]

Part 19: Remedy for the Government-Sanctioned Monopolies: Google Facebook & Amazon [1-17-18]

Part 20: America Needs a Consumer-First Internet Policy, Not Tech-First[1-24-18]

Part 21: How U.S. Internet Policy Sabotages America’s National Security [2-9-18]

Part 22: Google’s Chrome Ad Blocker Shows Why the Ungoverned Shouldn’t Govern Others [2-21-18]

Part 23: The Beginning of the End of America’s Bad “No Rules” Internet Policy [3-2-18]

Part 24: Unregulated Google Facebook Amazon Want Their Competitors Utility Regulated [3-7-18]

Part 25: US Internet Policy’s Anticompetitive Asymmetric Accountability - DOJ Filing [3-13-18]

Part 26: Congress Learns Sect 230 Is Linchpin of Internet Platform Unaccountability [3-22-18]

Part 27: Facebook Fiasco Is Exactly What US Internet Law Incents Protects & Produces [3-26-18]

Part 28: How Did Americans Lose Their Right to Privacy? [4-14-18]

Part 29: The Huge Hidden Public Costs (>$1.5T) of U.S. Internet Industrial Policy [4-15-18]

Part 30: Rejecting the Google School of No-Antitrust Fake Consumer WelfareStandard [4-20-18]

Part 31: Why New FTC Will Be a Responsibility Reckoning for Google Facebook Amazon [4-27-18]

Part 32: “How Did Google Get So Big?” Lax Bush & Obama FTC Antitrust Enforcement [5-23-18]

Part 33: Evident Internet Market Failure to Protect Consumer Welfare -- White Paper [5-31-18]

Part 34: What Happened Since FTC Secretly Shut 2012 Google-Android Antitrust Probe? [6-8-18]

Part 35: Buying WhatsApp Tipped Facebook to Monopoly; Why Didn’t FTC Probe Purchase? [6-19-18]

Part 36: The Sea Change Significance of Simons-FTC Privacy and Antitrust Hearings [6-27-18]

Part 37: New U.S. Privacy & Data Protection Law Is Inevitable Like a Pendulum Swing [7-9-18]

Part 38: Why a US v. Google-Android Antitrust Case Is Stronger than US v. Microsoft [7-16-18]

Part 39: Google-Android’s Deceptive Antitrust Defenses Presage a US v. Alphabet Suit [7-20-18]

Part 40: Case Study of Google Serial Over-collection of Private Data for FTC Hearings [7-30-18]

Part 41: The Unfair and Deceptive Online-Offline Playing Field – FTC Hearing Filing [8-7-18]

Part 42: What Most Stunts FTC Antitrust and Consumer Protection Law and Enforcement? [8-21-18]

Part 43: Why New U.S. Privacy Data Protection Law Will Preempt State Privacy Laws [8-27-18]

 

 

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