Antitrust

Google's reported likely acquisition of Yelp, a popular review site for local businesses in major cities, does a lot to bring Google's broader monopolization strategy into clearer focus.

• Yelp is potentially just the latest in a slew of strategic information-related acquisitions that Google has made, that when looked at individually -- look small and innocuous, but when looked at together and as a cumulative pattern, appear eerily reminsicent of the classic monopolization tactics of Standard Oil's monopolization of the oil industry via acquisition of oil producing/distributing networks in the late 1800s and those of pre-1911 AT&T in rolling up most of the nation's telephone networks via acquisition.
• Google is simply replicating the same type of monopolization strategy for the 21st century by acquiring key strategic information producing/distributing networks.

The following list of strategically important Google acquisitions belies the conventional wisdom that Google's scale and scope have been grown organically and as a result of Google in-house innovation.

Since the EU-Microsoft settlement now will allow users to select an Internet browser from Microsoft, Mozilla, Google, Apple, and Opera among others, the next relevant competitive issue with browsers is if the browsers themselvesa are operating clandestinely in an anti-competitive or closed way.

• In other words, whether or not browsers are non-neutral and divert the user somewhere against the user's expressed choice. 

As I have discussed before, Google's Chrome is not an Internet browser, but a gateway to Google's datacenter to browse Google's mirror copy of the Internet and track the user's every movement. 

Recent revelations indicate that the seriousness of the FTC's antitrust investigation of Google's proposed acquisition of AdMob will be ramping up.

Only eight months ago, Google CEO Eric Schmidt claimed Google and Apple were not "primary competitors" when a shareholder asked Mr. Schmidt to step down from Apple's board, because of an FTC antitrust investigation of Google for engaging in anti-competitive interlocking directorates per an AP story.

• Only four months ago did Mr. Schmidt actually resign from the Apple board under pressure from the FTC.

While everyone is distracted by the front-page news of Google launching its own Google-manufactured smartphone called Nexus One, what I find most  interesting is that Google outbid Apple for AdMob by paying an exceptionally-high "multiple of up to ~16.7 times sales, the sort of price rarely seen in takeover deals since the heady days of the dot-com boom" per Reuters reports.

The Wall Street Journal also reported some very interesting new information/insights relevant to the FTC's Google-AdMob investigation:

Google's CEO Eric Schmidt told Forbes: "Our model is just better." "Based on that, we should have 100% share" -- per Forbes cover story: "When Google runs your life."

This is a remarkably ill-advised admission when Google is:

• Seeking FTC antitrust approval to buy the leading mobile advertising marketplace and direct Google competitor Admob;
• Seeking DOJ and court approval of the Google Book Settlement;
• Seeking to avoid FTC privacy regulation and congressional privacy legislation;
• Seeking to gain special treatment and an exemption from the FCC from pending net neutrality regulations supposedly designed to address anti-competitive behavior.   

Federalist Society Forum:

“Is Google Monopolizing Something and If So What?”

National Press Club, Washington D.C., December 7, 2009

Remarks of Scott Cleland, President of Precursor LLC

Why Google is a Monopoly -- Presenting the Case before the Federalist Society

I am participating in a four-person debate today at noon sponsored by the Federalist Society on: "Is Google Monopolizing Something and if so what?" at the National Press Club in D.C. for anyone interested in attending. 

Panelists:

• Mr. Scott Cleland, President, Precursor LLC and Chairman, NetCompetition.org
• Ms. Susan Creighton, Partner, Wilson Sonsini Goodrich & Rosati, PC
• Prof. Geoffrey Manne, Founder and Executive Director, International Center for Law & Economics and Lecturer in Law, Lewis & Clark Law School
• Mr. Rick Rule, Partner, Cadwalader, Wickersham & Taft LLP

I am looking forward to having the opportunity to directly debate a Google representative for the first time on all the Google anti-competitive issues I have written about in my Googleopoly I, II, III, IV, white papers, which can be found at www.googleopoly.net.   

As part of Google's previously announced plan to make the Web faster, Google announced yesterday a Google engineering alternative system to the Internet's current core, the Domain Name System or DNS. 

• Google believes that Google's new addressing system is faster and more secure than the current Internet addressing system, which is run by the independent Internet Corporation for Assigned Names & Numbers (ICANN) and which is essentially the Internet's de facto "phone book." 

This is a big deal. Google is essentially saying it can do a better faster job for the Internet than the current ICANN can. Listen to ICANN's self description:

Add StudioBriefing.net to the list of companies like TradeComet and Foundem that have been snuffed out by Google's arbitrary exercise of its search advertising monopoly power to pick what Internet content lives or dies.   

In an 11-28-09 letter to its readers, StudioBriefing.net, the blog arm of "the longest-running entertainment-industry publication on the Web," had "no alternative but to shut down" because Google arbitrarily removed them from their Internet search results and from running Adwords advertising. 

Read StudioBriefing.net's letter and the similar complaints by TradeComet and Foundem, to appreciate Google's monopoly power, arbitrary exercise of it, and its power to literally snuff out Internet content companies that do not comply with Google's opaque edicts.

Isn't what Google has done to Studio-Briefing.net, TradeComet and Foundem, exactly the type of non-neutral anti-competitive behavior that Google claims to oppose in its vocal support of net neutrality legislation/regulation for their competitors?

• How can consumers be free to access the Internet content of their choice, if Google can effectively block that access by unilaterally making the content undiscoverable and/or economically unviable?

Google is now blocking the Internet content of users' choice in two different Google services, meaning that Google has assumed the mantle as the Internet's only net neutrality repeat offender. 

• Google's non-neutral behavior pattern indicates that they are confident that they don't need to respect net neutrality because the FCC will exempt Google from any net neutrality obligations when the FCC's proposed Open Internet regulations are formalized next year.  

So what are the two different Google services that are blocking users access to the Internet content of their choice?