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Will FCC Allow Competition to Google’s & Facebook’s Advertising Monopolies?

Why is the FCC protecting and facilitating online advertising monopolies?

How can the FCC square its “competition, competition, competition” PR mantra with its regulatory plans for applying new anticompetitive privacy rules only on ISPs and not the “edge” online advertising monopolies -- Google and Facebook?

Simply as it relates to online advertising, the FCC’s new proposed Title II privacy rules would require ISPs with existing advertising businesses, or those planning to enter, compete, and grow in the online advertising market, to be subject to a new and special, privacy opt-in, consumer-consent framework where they alone in the marketplace would have to secure users’ advanced permission to use a majority of their data for advertising purposes.  

Why Did Google & Facebook Stop Competing With Each Other?

The evidence shows that Google & Facebook -- by far the world’s most dominant Internet gatekeepers – are not an Internet advertising “duopoly,” but worse, two separate Internet advertising monopoly platforms, one in search advertising and another in social media advertising.

That’s because search and social media advertising are not competitive substitutes for each other, but are proving to be synergistic advertising complements to each other in company marketing campaigns, because generally search advertising excels at lead generation and local business visibility while social media advertising generally excels at building brand awareness and interactivity with consumers.

Tellingly, after beginning to directly compete in social in 2011 and in search in 2013, Google and Facebook both abruptly, coincidentally, and effectively stopped competing directly with each other in both the search and social media markets in 2014.

Apparently, they either jointly agreed in 2014 to divide up the marketplace and no longer directly compete with each other to maximize their exceptional mobile growth and profitability; or they concluded independently -- from their initial directly competitive forays into the other’s core markets -- that the other commanded unbeatable monopoly network effects, so not directly competing with each other would maximize their exceptional mobile growth and profitability.     

The EU-Google Antitrust Cases’ Implications for Amazon Facebook & Apple

The EU’s recent intense antitrust spotlight on Google can’t help but illuminate some of what EU antitrust authorities think about other dominant consumer technology platforms adjacent to Google -- i.e. Amazon, Facebook, and Apple – companies Europe collectively refers to as “GAFA” particularly in the context of the EU’s Digital Single Market strategy.

In 2011, Alphabet Chairman Eric Schmidt was the first to identify, and publicly bring attention to, these particular four dominant consumer technology companies “exploiting platform strategies” ironically by branding them the “gang of four.

The EU Strategy behind its Three Google Antitrust Cases

With the EU’s new advertising antitrust charges against Google, the EU has now issued three Google abuse-of-dominance Statement of Objections covering search, mobile, and advertising, that actually span seven separately defined antitrust markets in the EU.   

So what does this strategically-critical new EU-Google advertising Statement of Objections -- that builds upon the other two statements of objection – finally tell us about the EU’s overall Google antitrust strategy?

What EU-Google Advertising Antitrust Charges Mean for the FTC

Of the three EU antitrust cases against Google (search bias in shopping, Android tying, and soon search-advertising-tying), the expected new search-advertising case -- which focuses on how Google has long contractually required websites to use Google’s search advertising if they use Google search -- could be the hardest EU-Google antitrust case for the FTC to ignore, for the reasons below.

Summary of Why It’s Hard for FTC to Ignore the EU Search-Advertising Antitrust Case:

1. The FTC has been following the EU’s antitrust lead.

2. The FTC’s Google 2012 staff report agrees with the EU’s conclusion on search advertising.

3. The DOJ threatened a 2008 monopolization case over Google’s search advertising syndication.

America’s FCC-FTC Privacy Divide

[Note: This was submitted to the FCC for Reply Comments on the Title II Privacy NPRM]

The FCC’s Open Internet order and proposed Title II privacy rules divided what was unified.

For privacy, it broke what was working. Confused what was clear. Complicated what was simple. Unprotected what they sought to protect. Created more costs than benefits.

Since the Internet’s beginning the FTC has had privacy authority over information services.

For the decade since the FCC classified cable, wireless, and DSL broadband as an information service, and for the entire smartphone era where consumers became familiar with online privacy issues and regulation, the FTC was the sole unified regulator for protecting American consumers’ privacy.

In a 2014 filing to the FCC, the FTC explained why the FTC was better positioned to protect consumer privacy and data security than the FCC, because the FTC had national direct statutory authority to protect all consumers under: Section 5 -- that proscribes “deceptive” or “unfair” business practices; the Fair Credit Reporting Act (FCRA); and the Children’s Online Privacy Protection Act, (COPPA).

FCC’s Competition Policy Blind Spot for Dominant “Edge” Incumbents - GAFA

The evidence increasingly proves that Google, Apple, Facebook, and Amazon, companies collectively known as “GAFA,” are the dominant consumer-technology, “edge” platforms/incumbents in their respective communication sector markets of: information, smartphones, social media, and ecommerce.

The evidence below shows Google, Apple, Facebook, and Amazon to clearly be the emerging dominant communications incumbents of the 21st century communications sector ecosystem and that an apparent FCC assumption that “edge” companies cannot be a competition problem is both naïve and erroneous.   

Despite the FCC’s “competition, competition, competition” policy mantra, this GAFA dominance reality has not kept the FCC from slavishly favoring the dominant GAFA incumbents, as “insurgent” upstarts deserving of special FCC treatment and protection, in all of the FCC’s current major communications policy revamps it is making without Congress: i.e. its Title II Open Internet Order; its Title II ISP-only privacy rules; its AllVid set-top box rules; and its implicit wireless policy of favoring spectrum sharing and unlicensed spectrum over spectrum auctions and licensing. 

Why Google Can’t Buy Yahoo’s Search & Advertising Patents

Given that Google bought Motorola for its patents to protect itself from patent litigation, many assume Alphabet-Google to be a likely bidder and buyer of Yahoo’s reported sale of its portfolio of ~3,000 1990s search, advertising and ecommerce patents.

Au contraire, big antitrust vulnerabilities and a decade of Googlian hostility to the intellectual property rights of competitors effectively rule them out of this Yahoo auction.

Google’s lawyers have to appreciate that Google bidding on Yahoo’s patents would self-shine antitrust spotlights exactly where Google does not want them shined, and would attract attention to Google’s ignominious pattern of disrespect for the property of competitors and the bloody trail of intellectual property infringement lawsuits Google has uniquely provoked over the last fourteen years.

Why Google can’t buy Yahoo’s search, advertising & ecommerce patents.

FCC Privacy Regulation Claims: “Believe it or not!”

With due credit to "Ripley's Believe it or Not!®,"so much odd and bizarre is happening at the FCC in the "name" of “privacy” that the topic calls for its own collection of: "Believe it or Not!®" oddities.

Title II Privacy Proposed Rules

The FCC claims consumer privacy is important, but preempted existing FTC privacy regulation of broadband providers before they had any replacement privacy protections in place, so U.S. broadband consumers have been left without any federal privacy protection for over a year! 

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Q&A One Pager Debunking Net Neutrality Myths