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How the Internet Cartel Won the Internet and The Internet Competition Myth

Summary: The substantial evidence catalogued here provides proof of the Internet’s cartelization, extreme concentration, winner-take-all tendencies, and mythical competition. The public data shows that the tacit Internet cartel of Google, Amazon and Facebook is 7-8 times more concentrated than the top three offline companies and that the top ten Internet economy companies are >10 times more concentrated than the top ten offline economy companies.

Public data that Google, Amazon, and Facebook have acquired ~350 potential competitors and the Internet Association overall has acquired ~900 potential competitors, indicates that the apparent cartelization of Internet companies’ investment, acquisition, and innovation processes ensure no innovative “garage startup” has a plausible competitive opportunity to seriously threaten the Internet cartel’s dominance.

Public data also ironically shows that almost all the Internet Association’s members are anti-competitively threatened by one of more of the Google, Amazon, or Facebook, winner-take-all online onslaughts.

U.S. antitrust authorities have enabled a cartelized and extremely concentrated Internet by taking their eye off the purpose of antitrust law -- protecting the process of competition, by first protecting the process of innovation by dominant online platforms.

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Google-Facebook Ad Cartel’s Collusion Crushing Competition Comprehensively

 

Why are none of Google’s many paid experts not publicly defending Google and Facebook’s 2014 decisions to stop competing against each other in search and social? And why are they not trumpeting the pro-consumer, pro-innovation, and increased efficiency benefits of accelerating their digital advertising dominance since those decisions?

The silence is telling, and maybe even suspicious, given the DOJ cartel enforcement “what to look for”  primer.

Why Amazon and Google Are Two Peas from the Same Monopolist Pod

Summary: Amazon’s monopolization ambitions, strategies, and tying tactics are eerily like Google’s.  Both these companies likely have not earned their respective dominances purely on merit, but also via illegal anti-competitive behaviors.

At a minimum, Amazon’s proposed acquisition of WholeFoods warrants an FTC “second request” for information, i.e. a fuller antitrust investigation of whether the acquisition could “substantially lessen competition” in any implicated relevant markets.

How the Google-Facebook Ad Cartel Harms Advertisers, Publishers & Consumers

How much smoke and fire must there be, and how many people must get burned, before the fire department will investigate and put out a forest fire?

Apparently, a lot, if the forest fire is in the digital ad market that Google and Facebook dominate, and U.S. antitrust authorities are the firefighters.

Where’s the fire here?

Google and Facebook, which don’t directly compete in search and social, together dominate over 70% of the digital advertising market. They also dominate about 80% of online referral traffic, the online oxygen upon which every Internet publisher depends for survival.

After fiercely competing directly with each other in search and social in 2013 and 2014, Google and Facebook abruptly and quietly stopped competing against each other in 2014 with no explanation.

Since then, Google and Facebook have accelerated their capture of almost all digital ad revenue growth and profitability, exposing that Google and Facebook have become a de facto cartel that has illegally divided up the digital advertising space.

In 2014, Google and Facebook apparently decided they could each optimize their growth and profitability by colluding as dominant market complements to each other, rather than competing head-to-head as less efficient search-social competitors.

The economic motivation behind Google and Facebook’s apparent illegal market division is this.

The Trump DOJ “Slam Dunk” Antitrust Case Against Alphabet-Google

What’s quintessential illegal monopoly behavior?

A dominant company that is proactively, consistently, and purposefully focused on eliminating most of its business competition, not just competing on the merits, but also via illegal collusion, predation, anti-competitive acquisition, and obstruction of justice.

That quintessential illegal monopoly behavior belongs to Alphabet-Google 2007-2017.

The public evidences of Google’s patterns of collusion, predation, anti-competitive acquisition, and obstruction of law enforcement are substantial and hiding in plain sight.

They are just waiting for DOJ antitrust leadership, investigators and prosecutors to connect the dots in an up-to-date theory of the case, after organizing and synthesizing the substantial investigative evidence that already resides in the DOJ’s and FTC’s antitrust files, because of ten different U.S. Google antitrust-related investigations of Google by either the DOJ or FTC from 2007-2013.

In addition, some law enforcement conclusions and actions involving Google from 2007-2013 have been proved either wrong or ineffective with the benefit of hindsight, that now need to be addressed.

Why US Antitrust Non-Enforcement Produces Online Winner-Take-All Platforms

If one considers the evidence, it is evident that U.S. antitrust enforcers have enabled the current “new normal” of online winner-take-all platforms: Alphabet-Google in e-information, Amazon in e-commerce, Facebook in e-social, Uber in e-transportation services, Airbnb in e-accommodation services, and a “unicorn” queue of online winner-take-all platform wannabes.

Summary of Conclusions

U.S. antitrust officials should be alarmed by the extreme early concentration of a relatively young twenty-year old, U.S. online company marketplace.

Five online winner-take-all platforms -- Google, Amazon, Facebook, Uber and Airbnb -- already command ~80% of U.S. online companies’ revenue share and market capitalization.

And they are collectively capturing 82% of U.S. online companies’ revenue growth share, meaning they are growing more dominant not less.

Why Amazon Buying WholeFoods Will Attract Serious Antitrust Scrutiny

In proposing to buy WholeFoods for $14b, Amazon has surprisingly invited unwelcome serious antitrust investigation into, and public discussion about, Amazon’s core conflicted retail/MarketPlace business model and the many alleged predatory, discriminatory, and unfair standard Amazon business practices, that Amazon commits, not only in the grocery business segment, but in all other retail segments.

In statingthe parties expect to close the transaction in the second half of 2017,” that means Amazon expects no serious antitrust investigation of whether the transaction “substantially lessens competition,” and thus no “second request” from antitrust authorities requesting more information and questions to answer.

If a “second request” comes, which is likely, there is no way the companies can continue to “expect” the deal will be approved in 2017. That’s because such an investigative process effectively does not have any deadline for the reviewing authority, DOJ or the FTC, to either: approve, approved with conditions, or challenge the deal.

The Internet Association Proves Extreme U.S. Internet Market Concentration

Those who think the U.S. Internet market is competitive, and not extremely concentrated, need to read on.

In a nutshell, for the first time, publicly available evidence shows that the cumulative effect of well-known “winner-take-all” platforms (WTAPs) Google, Amazon, Facebook, and Microsoft, is a “four-winners-take-all Internet sector.” Four different dominant platforms collectively command ~80% of overall Internet market share in revenues, new absolute annual revenues generated, market capitalization, and employees.

Imagine if the 94% of the economy that is offline-based, were as extremely concentrated as the 6% of the economy that is online-based/the Internet sector, per the Internet Association.

That would be an offline economy with basically one information company, one sharing company, one retailer, and one business software company, that collectively commanded 80% revenue share of the 94% of the economy that is offline based with ~4,000 publicly traded companies.

Trump Administration Lets Last Google Government Guardian Go - Michelle Lee

The abrupt resignation of Michelle Lee as head of the U.S. Patent and Trademark Office, completes the Trump Administration’s housecleaning of Google’s government guardians in the Executive Branch, that apparently were dutifully placed to watch over Google’s commercial  interests in all the Federal policy and enforcement offices of most commercial importance to Google from 2012-2016.

Ms. Lee’s resignation is relevant to this blog and to Google’s going forward antitrust risk in the U.S., because Ms. Lee played a leading role in the FTC’s abrupt and chaotic closure of all Google FTC antitrust investigations January 3, 2013, shortly after the 2012 election.

Examining her role is relevant to determining if Google’s alleged antitrust violations were dismissed legitimately on the facts and legal merits, or because of improper Google political interference in a law enforcement matter.

Why EU Monopoly Search Ruling Will Be a Tipping Point for Alphabet-Google

The expected guilty EU antitrust verdict against Alphabet-Google’s flagship “general search service” for abusing its dominance, will be a tipping point for Alphabet-Google this summer. It will effectively divide Google’s history into the two-decade-long, Google pre-monopoly-enforcement era, from the impending Google monopoly-enforcement era, that will likely last a decade plus, if the only plausible proxy, Microsoft, is any indicator.

For the last decade overall, and the last seven years in the EU, Google, its lawyers and PR team have masterfully delayed this inflection point from becoming a reality. Their delay tactics bought the company invaluable time as a business to broadly extend, entrench, and consolidate its massive monopolization across several of the most crucial functions of the Internet ecosystem.

As a stock, the delays have helped to fortify the company’s financial resilience with the Alphabet restructuring, and with Alphabet-CFO Ms. Ruth Porat’s sage belt-tightening and skilled investor whispering, which has been instrumental in helping increase Google’s stock 87% in her two years in the job.

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