Congress

An editorial by the New York Times on free speech points out that Google and other big Internet companies in fact oppose legislation that promotes free speech for those who most need it around the world.

• "Last January, Representative Christopher Smith of New Jersey reintroduced the Global Online Freedom Act in the House. It would fine American companies that hand over information about their customers to foreign governments that suppress online dissent. The bill would at least give American companies a solid reason to decline requests for data, but the big Internet companies do not support it. That shows how much they care about the power of information to liberate the world." [emphasis added]

It seems all this Google-funded effort to cloak net neutrality as a "freedom of speech" issue by Moveon.org, FreePress, Public Knowledge and other Google-supported pressure groups, is just a cynical tactic and political ploy because Google actually opposes free speech when the rubber meets the road -- like with the "Global Online Freedom Act."

• In other words, Google supports freedom on speech when it benefits Google's business, but opposes it when it does not help Google's business.
• I just wish Google would be honest and forthright about their supposed "don't be evil" principles...  

I had to point you to a short, but great post by Michael Arrington of Techcrunch that shows how Yahoo and Facebook feel they must advertise on Google to reach Internet customers.

• He also included an interesting link to a previous post of his that spotlights how Google now has almost 40% share of online advertising revenues and how its share is rising surprisingly fast.

A core point I made in my "Googleopoly" white paper on the pending Google-DoubleClick merger, was why no competitor will be able to catch Google in search advertising, including #2 Yahoo and #3 Microsoft. (see pages 17-18 in particular)

Verizon's announcement that it will allow customers to choose any app and/or any device on its entire network in 2008 is proof positive that competitive market forces best serve consumers, not rigid net neutrality regulation or legislation.

I see three big takeaways from the Verizon announcement: consumer protection/reliability; market discipline, and more diversity of consumer choice.

In "Google's tar pit," an article in the Atlantic about how Google's market dominance is attracting antitrust scrutiny in Washington -- much like Microsoft did before it -- provides us a new "image" or "word picture" of Google.

The article starts with this wonderfully telling scene-setter: "

• "The lawn outside Google’s headquarters in Mountain View, California, is dominated by the imposing visage of “Stan”—tail thrashing, jaws agape, a full replica of the largest Tyrannosaurus rex fossil ever discovered. Stan mysteriously appeared on the lawn one morning several years ago, and is presumed by Google employees to have been a gift from the company’s quirky founders, Larry Page and Sergey Brin."

So what does Google's choice of a T-rex as its corporate mascot tell us about Google?

First, non-Google paleontologists have gotten it all wrong about the T-rex.

It will be very interesting to learn if Google and the SaveTheInternet crowd truly believe in opposing discrimination on the Internet or whether they employ "situational ethics" and only oppose alleged Internet discrimination by their political opponents.

• In other words, should net neutrality only apply to network providers, and not application, service and content providers like the FCC's net neutrality principles says?
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    "consumers are entitled to competition among network providers, application and service providers, and content providers."

A recent Penn State study:  Determining Bias to Search Engines from Robot.txt, highlights that Google benefits from discrimination against smaller competitive search engines because websites block access to those search engines robots that crawl the web to find what users are searching for. 

According to PaidContent.org, Sanford Bernstein's Google analyst, Jeff Lindsay:

• "looks at some of the options available to Google, should the EU (or the FTC for that matter) ultimately come down against the acquisition. He lays out four scenarios: a) Forgo competing in the ad-exchange business. b) Purchase another player, possibly ValueClick. C) Build an in-house ad exchange. D) Form a JV, possibly with DoubleClick". (emphasis added)

The most important takeaway from this analysis is that Google and DoubleClick are obviously competitors in the natural and ongoing evolution of online advertising towards ad exchanges.

• Lindsey believes it would make most sense for Google to build its own ad exchange in house and that with Google's advantages, Google could get it up and runnning faster than it took Right Media or DoubleClick.

Given the Senate Antitrust subcommittee's concerns in their recent letter to the FTC on the merger:

• "Antitrust regulators need to be wary to guard against the creation of a powerful Internet conglomerate able to extend its market power in one market into adjacent markets, to the detriment of competition and consumers."

The challenge for the FTC in analyzing this dynamic market is to understand how it is changing and why.

The top Senators overseeing Antitrust matters, Senate Antitrust Subcommittee Chairman Herb Kohl (D-WI) and Ranking Republican Member Orrin Hatch (R-UT), wrote a strong letter to the FTC urging serious scrutiny of the Google-DoubleClick merger. (see pasted copy of the letter at the bottom of this post.)

Having testified before their Senate Subcommittee in opposition to the merger September 27th, I was gratified to learn of the subcommitttee's serious bipartisan concern about the merger and also their very strong grasp of the potential anti-competitive issues arising from the merger.

There are three big takeaways from the letter.

First, the Subcommittee defines the relevant market as Internet advertising, "...combining these two companies' leading positions in these two forms of Internet advertising could cause significant harm to competition in the Internet advertising marketplace."

• The subcommittee has adopted the same market definition as opponents of the deal.
• Google had hoped the Subcommittee would, and still hopes the FTC and EU will, define the market as advertising overall.
  • If the FTC agrees with their Senate overseers that the relevant market is the ~$20B Internet advertising market, and not the ~$300B overall advertising market, the merger is at higher risk of disapproval.

Second, the subcommittee has concluded Google has market power in Internet search, another key conclusion of opponents of the merger. 

Have Penn State researchers stumbled upon a Google-DoubleClick anti-competitive smoking gun?  

PCWorld flagged some very troubling new research findings pertinent to the FTC/EU reviews of the Google-DoubleClick merger by Penn State researchers in its article "Google Favored By Web Admins."  

• Penn State researchers: "Web-site policy makers are playing favorites, and Google is the big beneficiary, say Penn State researchers."

• ""We expected that robots.txt files would treat all search engines equally, or maybe disfavor certain obnoxious bots, so we were surprised to discover a strong correlation between the robots favored and the search engines' market share," said C. Lee Giles, the David Reese Professor of Information Sciences and Technology at Penn State who led the research team that developed BotSeer, in a statement."

 Why is this significant?

The WSJ article today: “Google has even bigger plans for mobile phones” appropriately addresses the big “open” question of whether Google is serious about becoming a wireless carrier, because if it is, it will need to bid and win substantial spectrum in the upcoming FCC 700 MHz spectrum auction.

The WSJ article states: “the behind-the-scenes moves illustrate just how serious the Internet giant is about trying to reshape the wireless world.” The evidence in favor of Google’s serious entry into wireless is significant, as Google:

Ironically, just as the EU is gearing up to conduct an "in-depth investigation" of the Google-DoubleClick merger, the FTC investigation is apparently wrapping up with a whimper. What accounts for this divergence in approaches to this merger review?

The first and obvious explanation is differences in the process and timing.