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"Privacy is Over" -- Part VIII Privacy-Publicacy Fault-line Series

"All our information is being sucked into the cloud. Privacy is over." That was the bold declaration of Attorney Steve Masur at DCIA's P2P Media Summit per Washington Internet Daily.

  • Wow. As stark an assessment that that is, what really disturbs me is the thought process and tech ethic that underlies this view.
  • Mr. Masur is not alone, he is part of a growing publicacy mentality/movement that looks at privacy as:
    • A neandrethal expectation in the Internet Age,
    • Buzz-kill for Internet innovators, and
    • Road-kill for the cloud-computing bus speeding down the information super-highway.

My pushback here is the blind worship of technology or tech-determinism.

  • I define tech-determinism to be:
    • if technology or innovation can do it, it must be good; and
    • if something stands in the way of technology and innovation, like privacy, it is in the way and should be terminated. 

Did it ever occur to the tech determinists that if there is no privacy in the cloud, many won't go there?

  • Most users appreciate that technology should work for them, they don't work for technology.

Privacy isn't over. 

Looking into the Vortex of the Internet Economy

Google’s earnings remind us of the core competitive dynamic of the Internet content economy – the increasing market dominance of Google.

  • Google’s 18% revenue growth Q407-Q408 during this economic maelstrom is extraordinary, especially when its secondary search competitor, Microsoft, posted zero growth in online services and 2% revenue growth overall.
  • I expect Google’s growth to be even more impressive when compared to Google’s main competitor, Yahoo, which I expect to post ugly fourth quarter negative growth.
    • Yahoo has been in the corporate equivalent of a fetal position ever since the DOJ blocked its ad agreement with Google and it became obvious Yahoo had no “plan B.”
  • I was even more impressed with Google’s dominance when I calculated that Google grew revenues over 31% in 2008 off a large $16.6b 2007 base. The law of large numbers did not take as big a bite out of Google as many expected.

 

As strong as Google’s revenue growth was, the most interesting earnings development to me was the big peek Google gave us behind its infamous secrecy curtain – in disclosing it was re-pricing most of its employee stock options.

Yang's "open" legacy is being overlooked going forward

Most are missing the lasting implications and legacy of Yahoo CEO Jerry Yang's signature "Open" strategy, in all the media chatter about his demise and his successor. 

Yang set Yahoo on a new and different strategic trajectory philosophically and culturally -- i.e. that of the open source movement -- which is strategically Google-aligned and Microsoft-opposed.

  • As Yang said in a statement reported in the Washington Post, "it was important to re-envision the business for a different era to drive more effective growth. Having set Yahoo! on a new, more open path..." [bold added]
  • In the WSJ today was another example of Yang's open legacy and open source/wisdom of crowds philosophy and culture that his successor will inherit: "Mr. Yang's preference for letting employees reach consensus rather than make tough decisions himself..."

This means the cultural momentum and trajectory at Yahoo is to remain close to its "open source" philosophical ally Google regardless of the DOJ decision to oppose the Google-Yahoo ad partnership and despite its investor-correct public statements to the contrary about Microsoft.

Jerry Yang's legacy will not only be opposing shareholder interests in scuttling the Microsoft offer, but also the under-appreciated 'open strategy' he implemented that is designed to continue to thwart a Microsoft bid going forward. 

Google busted by open source guru for not being open!

Dana Blankenhorn of ZDNet, one of the leading bloggers covering open source, blasted Google "for being no different than Microsoft" in not operating in a true open source manner despite Google's constant representations that they are 'open' and honor 'open' principles.

While I respect and read Mr. Blankenhorn's views regularly, I seldom agree with him.

  • In this instance, I must agree with him wholeheartedly as he is spotlighting an insight/theme I have long pounded on -- that Google is profoundly hypocritical, operates under massive double standards, and that its words do not match its deeds.

Bottom line:

Google you have another problem.

  • Your previously loyal base of open source advocates is abandoning you because they realize Google is not principled at all -- Google is really only out for Google.

The cure is obvious Google -- walk your talk: be truly open, be truly transparent, be 'neutral', and be forthright.

Google -- let your actions speak louder than your PR spin machine. Lead by example.

 

The privacy problem is Unauthorized Tracking; the privacy solution is a Meaningful Consent Standard

There was a major tectonic shift in the Internet privacy debate today at the Senate Commerce Committee hearing on Internet privacy. 

Google's Biggest Customers Oppose Goohoo Ad Pact!

Google, you have a problem. The verdict of your biggest customers is in -- and you've been found guilty of not pursuing your clients' best interests.

  • The ANA, the nation's largest association of advertisers and marketers representing ~9,000 brands, just wrote the DOJ formally recommending that the DOJ oppose the Google-Yahoo advertising partnership as anti-competitive.  

I have two big takeaways for you:

  • First, despite the ANA letter, Google continues to claim that Google knows better what's best for their advertiser clients than their advertiser clients do.
  • Second, at core, the DOJ is investigating the Google Yahoo ad pact for illegal price fixing collusion; this is relevant because DOJ antitrust chief Tom Barnett has stated that prosecution of price fixing is his Division's highest enforcement priority.

First Takeaway: Google clearly doesn't subscribe to the old adage -- the customer is always right. Google knows best and isn't afraid to tell most of its biggest customers they are wrong -- in public. 

Rather than publicly respond to the anticipated ANA letter with respectful comments about how Google looks forward to better explaining how the ad pact will benefit Google's customers, Google essentially wagged their finger at their customers in public telling them they don't know what's best for themselves.  

Google's online advertising dominance grows -- Don't forget the pending DOJ investigation...

Google's dominance of the Internet's business model for monetizing content only grows.

  • "Gap widens in online advertising: Rivals struggle to catch up to Google as buyers favor search over display" reports Jessica Vascellaro in the Wall Street Journal.
  • The article's conclusion is dead on and ominous -- the gap between Google and its competitors in online advertising is widening and will continue to do so because the business that Google dominates, search advertising, is growing significantly faster than display advertising is.

As I read the article, I thought many involved in the FTC's investigation and subsequent 4-1 approval of the Google-DoubleClick merger must be getting awfully worried that they made a big mistake in not appropriately enforcing antitrust law last year when they had the opportunity.

If you want honey, don't kick the beehive! -- Google to DOJ: We're going ahead with Yahoo regardless

Google is so arrogant it isn't even aware it is being arrogant.

Per a San Francisco Chronicle article:

  • "Google Inc. and Yahoo Inc. will start a high-profile advertising partnership by early October, even if federal regulators haven't yet approved the deal, Google CEO Eric Schmidt said Thursday.
  • "We are going to move forward with it," Schmidt said in an interview on Bloomberg television after being asked whether the companies would wait for the Justice Department to complete its review."

Let's put this Google behavior into a little context.

DOJ antirust prosecutors are currently involved in a serious antitrust investigation of the Google-Yahoo online advertising partnership for potential Sherman Act collusion/price-fixing illegality.

  • By declaring that Google is going ahead with the Yahoo partnership, with or without approval of the DOJ -- Google is not so subtly telling the DOJ -- "we'll see you in court," "try stopping us, if you can." 
  • What words come to mind to describe Google's public behavior and effective declaration of legal war by their CEO?
    • Arrogant? insolent? disrespectful? defiant? impolitic? inflamatory? tactless? imprudent? unwise? or just downright dumb?   

Bottom line: Normal companies, who respect the rule of law and law enforcement authorities, understand the old adage that "if you want honey, don't kick the beehive."

  • But Google is not normal, its special -- it has a "don't-be-evil motto" "get out of jail free card." No jail is big enough to hold Google! 

Let me leave you with this analogy:

Why "Google Yahoo ad deal is bad for online advertising"

Harvard Business School Professor Benjamin Edelman posted his earlier House antitrust testimony on why the "Google Yahoo ad deal is bad for online advertising." 

  • Professor Edelman debunks Google's claim that auctions determine Google's search prices by explaining how in many cases Google actually sets the price of search through its reserve pricing policy.
  • He also explains why Google is not being truthful when it claims that advertisers can easily take their data with them -- in reality Google impedes advertisers ability to use alternative advertising platforms through a technical "API" barrier to entry. 

In short, it is a useful and concise read, for those closely following the Google Yahoo deal and those trying to determine whether or not the DOJ will have problems with the proposed online advertising partnership.

  • It adds to the mounting evidence that a "partnership" between a dominant #1 Google and Google's leading online advertising competitor, Yahoo, is in fact anti-competitive collusion and a de facto price fixing scheme.    

 

 

What 3Q earnings tell us about Google-Yahoo Antitrust Review; GOOG-YHOO earn ~100% of profits

With the 3Q08 earnings releases by Google, Yahoo and Microsoft in the last few days, DOJ antitrust investigators of the Google-Yahoo partnership now get their first fresh look at the most recent revenue and profit market shares for this market.

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