Google surrogate CCIA lashes back against "Googleopoly" report

It didn't take long for the Empire to Strike back! Shortly after the release of Googleopoly, Ed Black, President and CEO of the Computer and Communications Industry Association, which represents Google, put out a critical press release on my Googleopoly white paper entitled:  "Merger Report Unconvincing." 

  • As I predicted on my blog this morning:"I expect to be attacked personally for my analysis and conclusions here, just like I was attacked by Bernie Ebbers and WorldCom as "the idiot Washington analyst" for having the audacity to be the only analyst in the country willing to predict, and stick to my guns, that the government would block the WorldCom-Sprint merger."

As expected they tried to discredit the messenger because they don't like the message. Standard operating procedure from my debate opponents.

Why the FTC Will Likely Block the Google-DoubleClick Merger

My detailed analysis over the last several weeks leads me to believe that the FTC is likely to block the Google-DoubleClick merger because it will enable Google to dominate online advertising and dramatically increase the opportunity for market collusion and price manipulation in the market for consumer click data, ad-performance tools, ad-brokering and ad-exchanges.

Antitrust is fact-specific and evidence-driven. To understand the true antitrust outlook for a merger one needs to become familiar with the core facts of the case. To date, media and investment coverage of this merger has been remarkably superficial.

  • The executive summary and my new 35-page white paper: "Googleopoly: the Google-DoubleClick Anti-Competitive Case" can be found at Googleopoly.net. An audio file of my conference call on this merger outlook will also be on Googleopoly.net. The analysis and conclusions are driven by pages and pages of facts and evidence.
    • The purpose of the paper is to present the detailed case theory, argumentation and evidence of why the merger is anti-competitive and harms consumers, content providers and advertisers.
    • The paper:
      • Defines the market;
      • Explains why Google-DoubleClick are competitors;
      • Explains why startups, Yahoo and Microsoft can't compete with Google in search;
      • Spotlights the four anti-competitive network effects of the merger; and
      • Shows how the merger harms consumers, content providers and advertisers.

I see three big takeaways from my white paper.

First, the more people learn about this merger the more concern they will develop.

Googleopoly conf. call Tues. July 17 11am EST on Google-DoubleClick merger

You're invited to participate in a conference call Tuesday July 17th at 11 am EST to hear a discussion of, and Q&A on, my new 35-page white paper, entitled:

I will explain how a Google Inc. (NASDAQ: GOOG) - DoubleClick merger will facilitate a de facto Internet information access monopoly, substantially lessen competition, and harm consumers, Internet content providers, and advertisers.

FCC Martin chills broadband investment embracing Hundtonomics

FCC Chairman Martin's surprising proposed open access/net neutrality regulations for the 700 MHz auction, threaten to broadly chill the broadband investment necessary to deliver broadband deployment to all Americans.

  • Chairman Martin apparently has chosen to abandon over a decade of bipartisan free-market Internet policy and adopt a new more regulatory "managed competition" broadband policy advocated by new House Chairman Ed Markey, who has strongly praised Chairman Martin for his support for net neutrality regulation/open access.
  • The real world effect of this unwarranted core policy flip flop is to introduce new and very substantial policy, legal and investment uncertainty into what had been a very stable economic growth environment. 
    • Chairman Martin is making the heroic assumption that he can massively interfere with market forces and heavily subsidize untested and likely uneconomic business models with no unintended consequences on investment or economic growth in the critical broadband sector.    

Chairman Martin has now emphatically embraced the core economic principle of former FCC Chairman Reed Hundt's Frontline Proposal (and Frontline's Google gaggle of investors), which is that market forces will not and cannot promote sufficient "competition" so the government must regulate and "manage competition" (i.e. mandate prices, terms and conditions -- either directly or indirectly) to ensure consumer welfare.

 

Watch the "open" CNBC debate over 700 MHz rules -- you decide

CNBC's Larry Kudlow hosted a debate over Chairman Martin's proposed open access/net neutrality regulations for the 700 MHz auction.

Both sides were ably represented:

  • John Rutledge of Rutledge Capital took the free market view and
  • Gerry Waldron who represents Google and worked for Chairman Ed Markey took the pro-regulation view.

Watch and enjoy!

The Department of Justice on "bid rigging"

Given the issue of whether or not the 700 Mhz auction is being run for the benefit of the American taxpayer, there is a very interesting quote from a Justice Department official today on their view of "bid rigging" in a competitive government auction, in this case concerning a defense contractor.

  • "The antitrust division is committed to protecting the competitive market for Americans," said Assistant Attorney General Thomas O. Barnett, who heads the department's antitrust division. "We will continue to bring to justice those who rig bids and thereby deprive the public of the benefits afforded by a competitive bidding process."

It is interesting to juxtapose this Justice Department quote of today with another quote from today in the Dow Jones article on the 700 MHz auction, which quoted the position of Gigi Sohn of Public Knowledge on "bid rigging":

  • She acknowledged that effectively Google and public interest groups were asking the FCC to "rig the auction" to facilitate a third national broadband competitor to the incumbents - AT&T Inc. (T), Verizon Communications Inc. (VZ) and the cable companies.

The ends don’t justify the means.

FCC pulling the rug out from under the Administration's broadband policy?

Kudos to the Wall Street Journal today for their twin great editorials on net neutrality and the 700 MHz auction: "Reed Hundt's Spectrum Play" by the Jounal editorial writers and "Telecom Time Warp" by Robert Crandall and Hal Singer.

  • The Journal editorial accurately hits on the Google/Hundt cabal to rig the auction rules so they can win the Nation's most valuable spectrum at a deep discount.
    • Google is laughing all the way to the bank that they could sucker a Republican Chairman of the FCC to carry their water and stand heavily on the competitive scales to pick them as winner before the bidding commences.
    • It will be interesting to see how Chairman Martin "squares this circle" and explains why market participants should ever trust what he says going forward on competition and regulation given that up to now he has discussed no market failure or consumer problem that requires regulation to solve up to now.
  • My favorite point of many in Robert and Hal's great editorial is reminding everyone the outrageousness of the FCC mandating "unbundling" (a drastic action reserved for entrenched monopolies) when the wireless industry is so obviously competitive that the price of a wireless minute has fallen by 84% over the last decade!
  • Amazing! Chairman Martin apparently finds market failure when prices are plummeting, consumer choice has exploded, subscribership and usage has skyrocketed and investment boomed. Huh?
    • What's wrong with this picture? 
      • The only apparent explanation is that Chairman Martin now believes more in the regulatory hand of Big Government than the "invisible hand" of market forces.
    • Wireless is the single biggest competitive success story in communications!
      • And Mr. Martin's reward for all those market players that invested billions of dollars of risk capital to buildout the world's most competitive facilities-based wireless marketplace -- is heavy handed and unnecessary "separations" and unbundling monopoly regulation!

Bottomline:  The Bush Adminstration's sole policy goal in telecommunications has been to promote broadband investment and deployment to all Americans.

FCC Martin proposes corporate welfare for Google in 700 MHz auction

According to DowJones, FCC Chairman Kevin Martin is proposing some of the net neutrality/open access regulation that Google requested for 22 of the 60 MHz of prime 700 MHz of spectrum to be auctioned off by the FCC in early 2008 for use in about 2010.

I have three points to make about Chairman Martin's reported net neutrality/open access proposal.

"Save The Internet" stoops to a new low of vacuousness

SaveTheInternet has a new video out that breathlessly claims that people only have until July 16th to tell the FCC to keep a "level playing field" in order to "save the Internet!"

  • This vacuous "eye-candy" video only says "the Internet is under attack in Washington" but says nothing about what "the attack" actually is, why anyone in their right mind would want to "attack the Internet," what the FCC is actually doing or deciding that needs their input by July 16th, or even why there is a July 16th deadline to act.
  • This video propoganda is a disturbingly accurate representation of the vacuousness of SaveTheInternet's whole net neutrality position and crusade.
    • It is all form and fear and precious little substance.
    • Its scary that they don't even try to inform or educate just incite.  
  • It also tells us a lot about what they think of the intelligence-level of average Americans and those on their mailing list -- they obviously just see them as lemings to scare and herd off a proverbial cliff.  
    • There is zero respect for people's intelligence in this video propaganda.
  • SaveTheInternet sees no need for facts, for information, for context, for balance, or hearing both sides -- just feed the masses the dumbest possible version of a scare message and shout that they have an urgent deadline to act!

This video is damning proof of how vacuous the net neutrality regulation movement has become. View it and weep.

Frontline wants competition through "zoning regulations?"

The Washington Post gave a lot of "free" ink to former FCC Chairman Reed Hundt today to push for his Frontline Wireless corporate welfare scheme. The article also provides a "bay window view" of Mr. Hundt's perverted view of "competition."

  • Mr. Hundt said: "We're asking the FCC to place conditions on the sale of the license, just like zoning on real estate."
  • Competition through zoning regulations!
  • This captures the essence of Mr Hundt's "market" views. He has always thought "competition" was much too important to be left to the marketplace.
    • Mr. Hundt's entire tenure as FCC Chairman was characterized with a deep distrust of free market forces and a fondness for writing very detailed regulations that heavily tilted the playing field to guarantee his desired outcomes.

Now that his company has $3b in capital and is prepared to raise up to $10b in the next five years, according to the Post, why is he so afraid to compete in the auction like everyone else?

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Q&A One Pager Debunking Net Neutrality Myths