Antitrust

The DOJ busted six companies, Google, Apple, Intel, Adobe, and Intuit for "naked restraint of trade" in collusively agreeing to not poach each others employees and reducing their employees' ability to be paid what a fair market would bear. See the DOJ statement; complaint; Final Judgment. (and Google's spin that they were very busy changing the world and that everybody was doing it... self-justification -- is here.)

• This is a logical extension of the FTC investigation last summer that forced Google and Apple to cease having overlapping board seats because that was judged anti-competitive collusive behavior.
• Moreover, Google and Apple were at the center of this DOJ antitrust prosecution, in that three of the five illegal agreements involved each of them.

What's notable here?

In a comical defense of Google, David Balto of the Center for American Progress pleaded for the Government to not regulate Google in his HuffPo Op-ed: "Regulating Google: Searching for a solution without a problem." Let me count the ironies here.

First, Mr. Balto is attempting to shield Google behind the successful defense of the broadband industry against mandated net neutrality regulation that "net neutrality is a solution in search of a problem."

That defense works because it is true. The industry has only one official net neutrality violation that has withstood scrutiny and due process -- Madison River in 2005. Since then, the roughly 2,000 broadband networks in the U.S. have abided by the FCC's 2005 Broadband Principles and remain committed to work constructively to ensure that consumers can neutrally access and use the legal content, applications, and devices of their choice.

(Don't miss the eye-opening numbers at the end of this post.)

I am testifying tomorrow before the House Judiciary Competition Subcommittee hearing on "Competition in the Evolving Digital Marketplace."

• My written testimony, with a one-page summary, is here.
• In addition, to talking generally about the evolving digital marketplace, I focus specifically on "The Main Antitrust Event -- Googleopoly."
  • My testimony includes my most recent Google antitrust research released Monday as an attachment: Googleopoly VI Seeing the Big Picture -- How Google Monopolizes Consumer Internet Media.

The other witnesses I have heard that are testifying are: Ed Black of CCIA, Morgan Reed of ACT, Mark Cooper of Consumer Federation, and Geoff Mannes of Lewis and Clarke Law School.

It is a particularly timely hearing given Google's pending acquisition of ITA Software, which is under review at the DOJ, and which is a quintessential example of how Google exploits the soft underbelly of antitrust enforcement to buy its way to monopoly power in vertical markets like travel. My testimony attachment explains how Google already bought its way to a Internet video monopoly via its acquisitions and integration of YouTube, DoubleClick, and AdMob.

The link is here to: "Googleopoly VI -- How Google is Monopolizing Consumer Internet Media and Threatening a Price Deflationary Spiral and Major Job Losses in a Trillion Dollar Sector" -- It is a 41 page PowerPoint presentation with 18 pages of pictorial analysis.

Below is the Executive Summary: (The PDF link is here.)

Executive Summary

Googleopoly VI – Seeing the Big Picture: How Google is Monopolizing Consumer Internet Media

And Threatening a Price Deflationary Spiral & Major Job Losses in a $Trillion Sector

By Scott Cleland* President of Precursor LLC, September 13, 2010

Google's claim that presenting search results faster with Google Instant -- does not affect advertising, user search behavior or user-click-throughs -- does not ring true.

First, how is Google Instant not push-advertising?

A spate of recent Google antitrust developments indicate there is more here than meets the eye.

First, Google, just like it cleverly discriminates in its search results to its advantage, cleverly discriminated when it announced antitrust information material to Google investors -- not when it occurred but when the least number of people would see it, according to its web analytics calculations.

In one of Google's worst misrepresentations about privacy to date, Google's Head of Product Development for Google Enterprise, Matt Glotzbach, told the FT that Google did not believe that its new gmail feature -- that ranks emails automatically based on what Google's algorithm judges are the most important emails to be read first -- would raise any privacy concerns. "We're not creating any new information, we're leveraging information that is already there."

Unbelievable. This is grossly deceptive and untrue.

• Google is claiming that new Google-created information analysis with sophisticated conclusions about importance and urgency, is "not creating any new information?"
• How can Google claim this additional feature as an innovation or as new, if it is not substantially "new information" that Google is providing and using? Their logic is circular.
• And under what warped sense of privacy does the notion of opening, reading, analyzing, and judging the importance of people's private electronic mail without their permission -- not raise "any privacy concerns!?"

By any measure this is what I would call Google's "Deep Tracking Inspection."

Google has purged Google Places of all Yelp local business reviews in Google Places -- per TechCrunch: "It is confirmed, Google has changed the classification of Yelp's reviews, according to a Google spokesperson. Until further notice, don't expect to find Yelp in the "reviews" section..."

The top U.S. spy agency for mapping announced a no-bid digital mapping contract with Google on August 19th. However, after media inquiries, the agency modified the contract's no-bid format, but made clear "the agency's intention to award the contract to Google without entertaining competitive bids" -- per a Fox News story by James Rosen.

• Wow. There are large and broad implications of this remarkable new development for: privacy, security, antitrust, Google's international business, and Government oversight.
• The fact that this was announced in late August, when precious few are paying attention, should heighten everyone's Big Brother Inc. antennae.

Has anyone in a position of authority or oversight even begun to think through the irony and stupidity of contracting out the Nation's most sensitive intelligence gathering and analysis function to a company that has:

Google's self-interested proposal with Verizon on net neutrality legislation publicly spotlighted to many for the first time, Google's Machiavellian manipulation of Washington for competitive advantage, i.e. proactively seeking regulation of Google's competitors while ensuring Google remains unfettered by any regulation.

• Net neutrality activists are now shocked, shocked, that after five years of brilliantly portraying the starring role of the too-good-to-believe "don't be evil" corporate organizer and benefactor of net neutrality, that Google ultimately would just take care of itself, and prove that net neutrality was simply a shrewd means to an end -- best positioning Google to dominate Internet information distribution.
• The movement's most lovable lambkin, has been unmasked as a capitalist wolf in sheep clothing.

This piece will analyze: why Google surprised everyone; what's in this for Google; and why many like Skype, eBay, Facebook, and the TV business, should be very concerned with Google's Machiavellian positioning here.

Let's deconstruct the Google-Verizon net neutrality proposal from Google's perspective.