Antitrust

In a trailblazing and ominous antitrust precedent for Google, French antitrust authorities ruled for the first time that Google is a search monopoly that anti-competitively abused its market power by capriciousy cutting off Navx, a Google competitor, from Google's search results without warning.  

• Per the WSJ, the French authority found Google's hooded anti-competitive actions against Navx lacked transparency and "resulted in discriminatory treatment."  
• Importantly, the French filed a legal injunction that forces Google to address the situation and answer to the French antitrust authority.

  It is not surprising that the French, who in the world-changing French Revolution rebelled against the absolute power of the French monarchy, are now revolting against Google, the entity that increasingly enjoys absolute power over the fate of web businesses the world over.

  The problem for Google is that in this common sense antitrust decision, the French are effectively playing the role of modern day whistleblower in the famous old fable -- by declaring that Google, the Internet's Emperor, has no clothes on to cover their bare monopoli-ness.

The evidence mounts that Google is increasingly throwing its monopoly weight around anti-competitively without much apparent fear of antitrust enforcement. This Google antitrust update will spotlight:

1. New evidence of Google's unfettered "kingmaking" power (lack of search neutrality) to anti-competitively self-deal with highest search rankings and sabotage competitors' rankings;
2. Google's latest anti-competitive pattern of behavior, i.e. Google's wholesale-retail vertical squeeze play; and
3. Why the antitrust risk Google faces comes from the EU and the DOJ, not from the FTC.   

I. Latest Evidence of Google's Anti-competitive Search Discrimination:

Google's behavior continues to raise serious antitrust concerns about whether Google's dominant search business is treating competitors neutrally as it claims, or whether it is anti-competitively picking itself and its partners as content winners and its competitors as content losers. 

• Google's website assures users: "We never manipulate rankings to put our partners higher in our search results and no one can buy better PageRank."
• Mounting evidence indicates this representation is patently false and a deceptive trade practice. 

A. Search Discrimination:

Mr. Masnick of techdirt fame is putting his head in the sand, just like an ostrich does, in hopes that the danger of "search neutrality" will somehow go away as long as he manages to not see or hear anything about it.

• Mr. Masnick's head-in-the-sand stance is in full public view in his latest full-throated defense of Google: 
  • "There Is No Such Thing As Search Neutrality, Because The Whole Point Of Search Is To Recommend What's Best"
• Since Mr. Masnick's mind is obviously made up, let me present some information and evidence for those who remain open-minded to what is actually happening in the marketplace -- concerning the lack of Google search neutrality.

First, none other than Google's founders railed against advertising causing "insidious" bias in search results -- in their famous Stanford paper on search engines -- see Appendix A. 

Google has much to lose in its ill-advised PR and public policy war with Apple, its previous closest Silicon Valley ally.

Antitrust or Fiduciary liablility? Google's recent market behavior puts Google and its CEO Eric Schmidt in a lose-lose situation.

At its Thursday meeting, expect the FCC to adopt Google's PR script to try and better sell the FCC's upcoming "Extreme Makeover" of Internet regulation.

• The centerpiece of the FCC and Google's "extreme Internet makeover" plan is the creation of an entirely new, Google-inspired, regulatory classification called "Broadband Internet Connectivity Service" or BICS.
• The BICS extreme makeover is designed to:
  • Enable the promotion of integrated "edge" products and services like Google Voice, Google TV, and Google's Chrome/Android operating systems; and
  • Empower the FCC to implement its National Broadband Plan on its own without additional Congressional authorization or action. 

Predictably, the FCC's Google-oriented-BICS-scheme has three fatal flaws -- making it a disaster waiting to happen. 

Curious. Very curious. Now reports have it that the FTC is investigating Apple for mobile ads, given what they learned from their ultimate approval of Google-Admob, despite that merger raising "serious antitrust issues." 

What's wrong with this picture?

First, apparently the FTC has concluded that the real risk to competition is not Google-AdMob (that had the #2 player Google buying #1 AdMob for ~75% market share of in-app mobile advertising), but a new entrant, Apple, that had no advertising share at all just a few months ago and bought the weak #3 competitor with less than 10% share.

• There must be a new FTC antitrust doctrine at work here that I had not heard of -- that the biggest anti-competitive threat sneaks up from innovative new entrants with better products and services! Huh?
• The FTC also appears to be breaking new antitrust ground in implying that a non-dominant company's individual products, like Apple's iPhone, iPod, and iPad, are all individually separate antitrust markets and all basically essential facilities. Huh?

Second, if the FTC really concluded that competition was sufficient to mitigate the "serious antitrust issues" of Google-AdMob, why not let that supposed mitigating competition from Apple actually compete and mitigate the "serious antitrust issues" with Google-AdMob combining? Does the FTC have faith in their competitive assumptions in Google-AdMob or not?

Google unwisely brought closer scrutiny to Google's public representation of its business model by pushing WSJ columnist, Holman Jenkins, to run this footnote/correction: 

• "Google objected to a line in a column two weeks ago that summarized its business in part as "collecting data it can sell to advertisers." We didn't say "user data," but Google nonetheless wants you to know it doesn't sell any data directly to advertisers, and doesn't employ user data to sharpen the efficiency of its search advertising, but only its display ads."

With all of the controversy surrounding Google's business model (WiFi privacy-invasion investigations on four continents... a massive private data spill from Chinese hackers stealing Google's password security system... and increasing calls for the DOJ/EU to bring an antitrust case against Google), it seems particularly ill-advised for Google to be nitpicking about how Google wants to represent/misrepresent its business model to the public.

Let's parse Google's misleading nitpicking.

First, Google is being too cute by half in insisting its business is not as Mr. Jenkins succinctly encapsulated it to be: "collecting data it can sell to advertisers."

American consumers clearly want online privacy, per a national poll conducted over the weekend by Zogby International, that was commissioned by Precursor LLC. 

• In a nutshell, over 80% of Americans are concerned about the security and privacy of their personal information on the Internet; about 90% of Americans consider some common industry behaviors to be unfair business practices; and about 80% of Americans support a variety of stronger consumer protections of their privacy online.

More specifically, this Zogby poll asked eight timely questions that are highly pertinent to:

Google's CEO Eric Schmidt, dismissed the notion that Google was "arrogant" in an FT interview.

• Mr. Schmidt: "The arrogance comes across because we trying to do things for end-users against organised opposition from stakeholders that are unhappy -- and they paint us as arrogant. But I am sure that all successful organisations have some arrogance in them."  

It seems to me that "the arrogance comes across" with Google because Google operates, and expects to operate, under a double standard -- where rules, laws and expectations apply to others, but do not, and should not, apply to Google -- because Google is somehow special.

The latest example  of Google's expectation to be treated differently and better than Google treats everyone else -- is Google's "permissions" policy.  (See the Goobris Series below for other examples.)

To help you picture both the enormity and unprecedented power of what Google knows about you and the world's information: public, private and proprietary, I have organized all the world's information types that Google collects onto a one-page chart/PDF: "Google's 'Total Information Awareness' Power."

For those who really want to understand Google and its impact on most everyone and most everything, please read and study this one-page chart/PDF, because much valuable work and insight has gone into it.

• While the chart is visually packed with information that many may find difficult to unpack or digest, the chart itself is an apt metaphor for both how much information Google has, and also how difficult it is for all of us to get our head around all the information Google routinely collects and uses.

A short refresher on where the term "Total Information Awareness" came from and why it is aptly employed here.