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December 2009

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

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

 

Google's non-neutral traffic carriage deal with BT?

In a new development highly pertinent to the FCC's proposed open Internet regulations, the Guardian reports that: "BT and Google in talks over creating video delivery network for ISPs; BT Wholesale developing Content Connect to deliver online video stored on an ISP's network rather than the internet."

  • In a nutshell, this highly illuminating Guardian article explains that Google's YouTube is in talks to pay BT to store YouTube content inside the ISP (BT's) network in order to get prioritized delivery.
  • This proposed arrangement drips with irony because it directly contradicts Google's strong public net neutrality stance in the U.S. and the FCC's "Google exemption" in the FCC's NPRM that would ban an ISP from charging Google et al more for additional services, even if both sides agreed on the differential terms. 
  • It is also reminiscent of the WSJ front-page story 12-15-08, "Google wants its own fast track on the web," highlighting Google's secret attempt to cut non-neutral U.S. carriage deals for only itself.   

Let me be clear, it makes perfect sense and it is legitimate for content/application companies and ISPs to innovate to ensure quality of service both for the content/application provider and other users.

PFF's Esbin debunks net neutrality assertions

I strongly recommend Barbara Esbin's excellent PFF white paper that systematically debunks many of the core assertions of net neutrality proponents. 

Barbara's clarity of thought, and her reasonable and well documented analysis proves that so many assertions of supposed "fact" made by net neutrality proponents simply can not withstand close scrutiny.

  

 

 

 

 

Schmidt Goobris: "we should have 100% share"

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.   

 

 

 

 

First Amendment 2.0 Ratified by 3 FCC Commissioners? The Principle-less-ness of Net Neutrality

The foundation of American Democracy for over 200 years has been respect for the U.S. Constitution and the rule of law. The advent of the mainstream Internet in the 1990's created a new and exceptional medium for free expression, much as telephone, radio, movies, TV, faxes, dial-up, email, texting, etc. have created new technological mediums for free expression.

  • The argument that the Government must regulate broadband providers in order to preserve 200 year-old First Amendment rights is disingenuous, duplicitous, and dystopian.  

Current justifications for new net neutrality regulations to implement a "21st Century First Amendment" via three votes by un-elected FCC commissioners as net neutrality proponents like Marvin Ammori advocate, could not be a more radical assault on America's real institutions of democracy. 

 If net neutrality supporters really cared about   advancing American Constitutional Democracy, they would respect that the U.S. Constitution is designed to prevent Government tyranny of the people by creating powerful institutional checks and balances, a Bill of Rights, and definitive processes to change laws or amend the Constitution.

Why/how did Google outbid Apple for AdMob? Schmidt: Google Apple not "primary competitors"

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:

Read May's Great Op-ed: "Voiding the Constitution"

Kudos to Randy May of the Free State Foundation for his outstanding op-ed in the Washington Times today: "Voiding the Constitution: FCC rules could counter free speech."

  • Randy's must read piece explains why net neutrality rules would perversely accomplish the exact opposite of what net neutrality proponents claim.

At core net neutrality proponents are trying to advance the preposterous notion that competitive broadband companies, the biggest enablers of free speech in the country, are somehow more of a threat to Americans' free speech than the Federal Government, which, unlike broadband companies, has extensive potential coercive power to limit free speech, if not for the constraint of the U.S. Constitution's First Amendment.    

 

 

 

 

 

Googleopoly V -- Why the FTC Should Block Google-AdMob

Below is the abstract of my latest white paper in my five-part "Googleopoly" series of antitrust white papers. The full white paper is at this link and at www.googleopoly.net.

 

Googleopoly V* -- Why the FTC Should Block Google-AdMob

The Top Ten Reasons Why Google-AdMob Would “Substantially Lessen Competition”

 

By Scott Cleland,** President, Precursor LLC

December 16, 2009

 

Chrome is not an Internet Browser and not open, but closed to the Internet's Domain Name System

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. 

Google-Yelp: Google's Monopolization Strategy is Coming into Clearer Focus

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.

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Q&A One Pager Debunking Net Neutrality Myths