Antitrust

Connecting the dots of several recent important developments, Google increasingly is acting autocratically like it has unlimited power and is answerable to no one.

• More and more it appears to operate like a centralized, sovereign, virtual-State exercising control over the world's information, info-commerce and Internet users.

Consider these several Google public actions over just the last month or so:  

Search:

Google's secret algorithm discriminates in favor of The New York Times per a Politico video interview with Ken Auletta, author of the new book: "Googled, the End of the World as We Know It."

Mr. Auletta explains what he learned about Google's secret search algorithm. It favors sites/results based on "wisdom of the crowds" (i.e. most traffic or links), but it also favors authoritative sites like the New York Times, because Google grants them extra ratings points that elevate them in Google's search results.  

• Mr. Auletta goes on to defend Google for keeping the algorithm and the extra ratings points secret in order to prevent others from gaming the system. 

This information that Google proactively and specifically discriminates in favor of certain content over other content is a big deal for several reasons.

First, Google has long represented that it is a neutral algorithm where Internet users determine what ranks highest in searches, or in other words what content gets found and read and what doesn't.

Google's acquisition of AdMob, "the world's largest mobile advertising marketplace," will receive serious antitrust scrutiny focused on whether the deal lessens competition by extending search advertising monopoly to mobile devices. 

• Expect the review process to be a magnet for a host of antitrust, competition, and privacy product/services concerns much like the proposed Google Book Settlement has been a magnet for antitrust, competition, and privacy content concerns. 

First, Google is misleading with its blanket statement: "We don't see any regulatory concerns with this deal." 

1.   Why has Google been so hostile to protecting brand trademarks that companies have had to resort to suing Google to get any satisfactory brand respect?  

2.   Why is Google's Chrome browser so hostile to brand-marketing? 

• If a user types in a company brand name as a www. ... .com URL into Chrome's "Omnibox," Google's browser always takes the user to Google's copy of the website first and not to the requested company's branded website where the brand-company can benefit from the visit or click-thru information that their brand advertising has earned.
  • In other words, is Google leveraging its fast-growing, Chrome browser technology, used by 30 million people, to become a gatekeeper for harvesting branding online? 

3.   Why is Google's  AdWords "Quality Score" policy so hostile to online brand marketing? 

• Google's Adwords quality-score policy rewards fast-loading sites and punishes slow-loading landing pages, which are inherently slower because they rely on display/rich-media brand-building advertising. 
• If brand destinations become weaker online, would advertisers then have to depend on Google more to be discovered on the Internet?     

4.   Why does Google publicly deny that it works for advertisers... which generate 97% of Google's revenues? Is Google somehow not proud of advertising or their advertisers?

eBay is licking their chops at the prospect of the FCC's open Internet regulations locking in their dominance of:

• Online auctions (95% share); 
• P-2-P voiceware (via #1 Skype's ~500m users); 
• Classified ads ( #1 in revenues); and
• Online payments (via eBay's #1 PayPal).

Like Google, eBay knows that "openness" is industrial-policy-speak for:

• Rewarding favored "national champions" and
• Locking in first-mover and netopoly scale-and-scope-advantages.

The netopolists must be giddy at how they now have the full power of the FCC focused on permanently locking in their market dominance going forward. 

What would be the DOJ's interest in having a formal investigation/review of the Google-Twitter agreement?

Google again has blocked search advertising that promotes political views that Google does not share.

• On the morning of the FCC's net neutrality vote last week, Bret Glass of ExtremeTech.com tried to advertise his white paper, that advocated a light regulatory touch, on Google Adwords only to find that Google blocked his ad as not meeting their "guidelines." (See Mr. Glass' full recounting of this non-neutral content blocking incident at the end of this post.) 
  • This is not the first time Google has blocked content that did not comport with Google's political/policy agenda. For example, Google blocked anti-Moveon.org ads proposed by a U.S. Senator's campaign.

The "relevance" of this evidence of net neutrality violations by Google, to the FCC's just-proposed net neutrality regulations, is that the FCC's clearly stated purposes are: to prevent companies with market power from infringing on free speech and to ensure that those with market power are transparent about their market practices that affect the free flow of information. 

Microsoft publicly announced it has already launched a beta of bing Twitter that incorporates Twitter tweets into Microsoft's search results, while Google also announced an agreement with Twitter, but said in an announcement blog post that: "we look forward to having a product that showcases how tweets can make search better in the coming months."

The glaring question is why Google, which prides itself on speed and innovation, and which routinely launches new products and services in beta, will not offer a Twitter product for "months."

The most logical conclusion is what I blogged and tweeted about on October 9th: "Will Google seek DOJ approval of any Twitter agreement?"

The litmus test of whether the FCC's proposed net neutrality rules are really endeavoring to prevent anti-competitive behavior on the Internet (and not about turning private broadband networks into a public utility), will be whether the rules apply to all Internet competitors, which could be anti-competitive, like the existing consensus FCC Broadband Policy Statement already does. 

• If reports prove correct, the FCC will propose to remove the existing FCC net neutrality principle #4 that "consumers are entitled to competition among network providers, application and service providers and content providers," and that new net neutrality regulations apply only to broadband ISPs.
  • Such a change would be new anti-competition policy and completely contrary to existing U.S. pro-competition law/policy, and FCC precedents.
  • Such a change would also not be neutral or fair, but arbitrary and capricious.

Why an FCC Googleopoly exemption from Net neutrality would be transparently capricious.

First, there is more evidence of violations against net neutrality by one company, Google, in one year, than there is evidence against the entire broadband sector over the last five years! 

I kid you not. Google's latest antitrust defense, from the mouth of Dana Wagner, Google's lead antitrust lawyer, is: "We want to be Santa Claus. We want to make lots of toys that people like playing with. But if you don't want to play with our toys, you've got us."

• See the quote for yourself at the very end of a Globe and Mail article entitled: "Google: we're not evil and we're not a monopoly either."
  • Google's Mr. Wagner continues: “In a West Coast company run by engineers, I don't think there was much attention paid to being in Ottawa, being in D.C. and telling your story,” Mr. Wagner says. “If you don't tell your story, other people do it for you.”

Let me attempt to unpack the irony of this new story/metaphor of which Google has taken ownership. 

Most companies when they tell their corporate "story" try to "put their best foot forward," but no one but Google would think to try and slip jolly megalomaniacal corpulence down the narrow chimney of public credibility.  

Only Google would have so little real-world self-awareness as to choose to wrap itself in the beloved mythical role of Santa Claus who has the unique power to decide who has been good or "evil" during the last year, and the unique power to reward those who have been "good" in Google's eyes with toys and punish those who have been "evil" with coal in their stocking. 

Only Google would think it was good PR to allude to Google's secret search algorithms and auction "quality scores" as a worldwide "naughty and nice" list.