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Google's Earnings Spotlight Its Antitrust Liabilities

Google's 3Q11 earnings call and release provided lots of new and relevant evidence to the many antitrust investigations of Google going on around the world.

  • See my Forbes Tech Capitalist post here that explains the four big antitrust takeaways from the Google earnings call.

Google 21st Century Robber Baron

See my Forbes post "Google 21st Century Robber Baron" which briefly tells the story of Google's Robber Baron rap sheet, in advance of Google's Wednesday Senate antitrust hearing.

  • The post is documented with 79 links to the supporting evidence.

The post also explains why Google's Board of Directors have been AWOL while all this scofflaw behavior has been going on.

FTC-Google Antitrust Primer: Top Ten Q&A

Find an FTC-Google Antitrust Primer here that asks and answers the Top Ten Questions about:

  • Google's admission it has received a subpoena and is under formal investigation by the Federal Trade Commission for antitrust violations; and
  • What the FTC is likely investigating and thinking, given that the FTC cannot comment on an ongoing investigation.

This primer is based on a combination of new analysis and an update of the best of four years of Google antitrust research, which can be found at: www.Googleopoly.net.

The Top Ten Q&A are:

Google has 93.7% Share of U.S. Search Revenues & Is Rapidly Taking Share

 

With reports of the FTC's looming antitrust investigation of Google, it is highly-relevant that Google now has ~93.7% of U.S. revenue share of search advertising and that Google has taken ~26% of the search advertising revenue share that it did not have a year ago.

  • Google continues to relentlessly gobble up massive search advertising revenue share from its only significant competitors, Yahoo and Microsoft (which have combined forces in search in the last year), in part because:
    • Google's relevant search revenues are 24x bigger than Yahoo's and 39x bigger that Microsoft's; and
    • Google is growing its huge search revenue base so much faster -- +27% to Yahoo's -19% and Microsoft's +14%.
      • (These revenue share calculations are relatively easy to do -- they are explained in detail at the end of this post.)

 

Many do not realize that antitrust authorities already believe that Google is a monopoly, because the most commonly cited market share numbers in the media are from ComScore, which tracks share of searches not search advertising revenue share.

FCC is Losing the Wireless Future

It will be surprising if the Republican FCC Commissioners and a bipartisan majority of Congress do not oppose the FCC's unwarranted war on wireless competition policy.

 

  • The FCC appears to be itching to start another political battle over competition policy with its upcoming fifteenth wireless competition report to Congress, by making another political decision devoid of supporting evidence or merit, that the wireless market does not have "effective competition."
    • Such a fantastical political finding, helps the FCC to ignore Congress and the law yet again, and also to unilaterally impose new sweeping economic regulations on wireless, including net neutrality.

 

The linchpin of the FCC's de-competition policy to restore the FCC to its pre-1996 monopoly regulation glory days, and to put the FCC in more control of the communications sector going forward, is to politically define away the existence of "effective competition," in order to justify FCC regulation of the mobile Internet.

 

Paid Prioritization: The Demonization of Market Economics

Now we know what "real net neutrality" and "openness" are, and that they are the antithesis of free market economics or competition.

As the FreePress-led letter to the FCC made clear on Friday: "Paid prioritization is the antithesis of openness. Any framework that does not prohibit such economic discrimination arrangements is not real net neutrality."

What is "paid prioritization?"

  • It is quality of service guarantees, market economics, supply and demand, market-based pricing, investment incentives, competitive differentiation, and reasonable network management.
  • Now we know "real network neutrality" and "openness" is more uneconomics from FreePress and the extreme left.

 

Remember FreePress' last Uneconomics 101 lesson was that "above-cost pricing" was an "unfair business practice."

Why AOL's Google Dependency is an AOL-Yahoo Antitrust Issue

Press reports of AOL's interest in buying or partnering with Yahoo appear to have missed another potential serious deal complication -- antitrust scrutiny.

 

  • Let me be clear, I am not suggesting an AOL-Yahoo combination on its own would raise direct traditional antitrust issues, but its hard to see how it would not attract substantial antitrust/collusion scrutiny given all the indirect antitrust red flags an AOL-Yahoo tie-up would raise -- i.e. Google vs Yahoo-Microsoft, Google-ITA Software, Google's tying of search and Google Maps for Google Places/Android, etc.

 

First, AOL is financially-dependent on Google; Google is Yahoo's biggest and most stable long-term client feeding AOL with about a fifth of its revenues -- via a recently signed 5-year agreement for Google to continue to be AOL's search monetization engine. This deal was negotiated by AOL's CEO, a former longtime senior executive at Google. Simply in antitrust terms, AOL can be viewed as a satellite of Google, because AOL has hitched its financial/business/growth wagon to Google Search, Google Mobile/Android and potentially Google Places.

Japan -- Powered by Google

Japan effectively has outsourced the organization, storage and access to its nation's information, culture, history, and online commerce to one entity, Google, in consenting to a national monopoly search engine/ad platform for Japan going forward.  

  • Unlike Japan's neighbors, China, Korea, and Russia, Japan apparently has chosen to not promote an indigenous Japanese search engine/advertising platform, or to ensure search competition -- a fateful tacit decision that heralds that Japan will more likely become a de facto third world online economy long term.   

Apparently Japan's Fair Trade Commission or Government have not thought through all the huge ramifications of putting all their information eggs-in-one-basket from a competition, cultural, political, economic, privacy, or national security perspective.

What else does Google secretly track? Top 10 questions for privacy investigators to ask

Current privacy investigations of Google deserve to be much more comprehensive than just Google's latest StreetView wardriving scandal, given that:

Google now tying website speed to search ranking -- Why is that anti-competitive?

Google announced 4-9-10 that "we've decided to take speed into account in our search rankings" in a Google blog post by Amit Singhal and Matt Cutts entitled: "Using site speed in web search ranking." (Thanks to the Register's Cade Metz for flagging this issue.)

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Q&A One Pager Debunking Net Neutrality Myths