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10 questions for those questioning if competition policy works

Both the FCC and FTC Chairmen appear to be suggesting that the current fifteen-year competition policy experiment in law to promote competition and reduce regulation in communications will ultimately fail -- requiring new preemptive common-carrier-like nondiscrimination regulation of ISPs to preserve a free and open Internet.     

  • In his September 21st speech, FCC Chairman Julius Genachowski's first reason justifying the need for preemptive new FCC net neutrality regulations was limited ISP competition:
    • "One reason has to do with limited competition among service providers. As American consumers make the shift from dial-up to broadband, their choice of providers has narrowed substantially. I don’t intend that remark as a policy conclusion or criticism -- it is simply a fact about today’s marketplace that we must acknowledge and incorporate into our policymaking." 
  • FTC Chairman Jon Leibowitz, in a 10-4-09 letter to the editor of the Washington Post in response to the Post's editorial, "The FCC's Heavy Hand," said:

Avoiding the slippery slope of network neutrality regulation -- regulate down for all not up for some

Regulate down for all not up for some is the excellent core message of the Wall Street Journal's op-ed "Google Exceptionalism," which spotlights the slippery slope toward Internet regulation of selectively applying new net neutrality regulations to only some "networks" predicated on fairness.

The WSJ op-ed helps focus the debate on what has helped make the Internet so successful --the bipartisan Internet policy statement in the 1996 Telecom Act that it is the policy of the United States  "to preserve the...competitive free market... Internet... unfettered by Federal or State regulation.For fifteen years, bipartisan consensus has resisted the siren song of some to regulate or tax the Internet, and in turn this bipartisan consensus has allowed the Internet to flourish.  

The WSJ op-ed also helps focus the debate on the perils of abandoning regulatory restraint toward the Internet based on neutrality/fairness.

The FCC Chairman's proposed rules to preemptively regulate a segment of the Internet to preserve an open Internet, risks reversing the current successful dynamic of fairly "regulating down" with less regulation rather than unfairly "regulating up" with more regulation for some. 

What Do DOJ's Google-Book-Deal Views Signal?

DOJ's 28-page Statement of Interest to the Court responsible for deciding the fate of the Google Book Settlement speaks volumes. 

First, it ensures the current proposed settlement is effectively dead.  

  • It is hard to conceive a U.S. Federal District Court Judge approving a settlement, which the United States Government indicates may be illegal under three completely different bodies of law (class action, copyright and antitrust), and also may be per se illegal in multiple different ways.

Second, despite the DOJ's encouraging tone in the press release, the DOJ statement itself set a very high bar for the parties to overcome. Substantively, the DOJ is insisting on radical changes in the settlement that practically would gut the unique and self-serving going-forward public benefits of the deal for the parties.   

  • In a nutshell, the DOJ's is effectively urging the deal be radically pared back from covering:
    • ~All books -- to just books-in-print (a fraction of the seven million books Google has copied);
    • U.S. and foreign works -- to just U.S. works;  
    • Scanning and all derivative uses -- to just scanning and snippets;
    • Retrospective and prospective impacts -- to retrospective and heavily-scaled-back prospective impacts; and  
    • Just the parties who get special public benefits -- to enabling most outsiders to share equally in the settlement's public benefits. 

Third, it raises the question if there is still a basis for the parties to settle, because the DOJ recommended fixes fundamentally and substantially limit what the parties can extract from the settlement.

Wireless Innovation Regulation -- "Believe it or Not!"

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

Skype co-founder Niklas Zennstom, the co-founder of illegal-music-downloading site Kazaa, who had to avoid entering the U.S. because of copyright-infringement liability... is now seeking a U.S. court injunction to shut down eBay's Skype for alleged copyright violations!

Googleopoly IV: Monopsony Control over Digital Info Competition -- New White Paper

My latest Google antitrust white paper, "Googleopoly IV: The Googleopsony Case," is the first antitrust analysis which connects-the-dots between Google's search advertising selling monopoly and Google's information access buying monopoly or "monopsony" by explaining and documenting how Google is harming competition in digital: news, books, broadcasting, artwork, documents, and analytics; and harming consumers seeking quality digital information that is not free.

Uneconomics and Texting

George Ou's good post yesterday on "Being Rational on Text Pricing" rightly takes to task the complaint that text messaging should be priced at marginal costs and ignore total costs, upgrade costs, or competition. It also prompts me to join in to address the issue.

Lets get to the quick here. 

The folks arguing for text pricing to be based on marginal costs are trying to politically redefine traditional economics in the datatopian Chris Anderson vision of the "economics of abundance" -- that because the marginal cost of computer processing, storage, and bandwidth are getting increasingly small -- the price should be free!

  • I call this political thinking that "information wants to be free" and the "economics of abundance" school of thought -- simply -- uneconomics.
  • It ignores the real world, real economics, the reality of private property, market forces of incentives and disincentives, etc.  

Does anyone think that the infrastructure that enables the instantaneous reliable delivery of roughly a billion text messages every day wherever one happens to be -- costs basically nothing to pull off and thus should be free?  





A "Judge Greene" of the Google Book Settlement? -- Handicapping the process' four outcomes

There's been scant analysis of how the Google Book Settlement process has been altered going forward given recent major developments:

  • The "hornet swarm" of objections to the Google Book Settlement, and 
  • Google's recent preemptive concessions on:
  • To date the discussion of outcomes has been largely binary, will Federal District Court Judge Chin approve or disapprove the proposed Book Settlement?

Yet more evidence of Google's hostility to privacy -- Part XV -- Privacy vs. Publicacy Series

Why did it take a high-profile FTC letter to Google for Google to finally make public a simple privacy policy for their be-leaguered Book Settlement after privacy has been a major Book Settlement issue for months?

  • For that matter, why did it take a high-profile public shaming by Saul Hansel of the New York Times (here & here) for Google to just put a link to its privacy policy on its home page, which is industry standard practice and required by California law?

The increasingly obvious answer is that Privacy International was on target in concluding that Google is actually "hostile to privacy."

However, it is more than that, as this eight-month, fifteen part privacy vs. publicacy series can attest.

Google kicked a hornets nest in Book Settlement -- What the angry swarm tells us about Google's future

With the German Government just the latest angry hornet joining the growing swarm of opposition stinging the Google Book Settlement, how did Google's book digitization initiative go so wrong? 

If one listened to Google, their problem is two-fold:

  • First, it is just a bunch of Luddite ingrates who are too small-minded to grasp Google's magnanimity to humankind and world knowledge.  
  • Second, without competitors spreading misinformation, there would only be a world chorus of gratitude.

As I have asserted many times before in this blog, Google is its own worst enemy.

  • Google reflexively looks everywhere but inward when determining the origin of its external problems. 

So how did such an angry swarm of opposition engulf the Book Settlement making it increasingly unlikely to be approved by the Court?  

Google Book Settlement "absolutely silent on user privacy" -- Part XIV -- Privacy vs Publicacy Series

"The settlement as it exists now is absolutely silent on user privacy" said Angela Maycock of the American Library Association at a Google Book Settlement panel per the San Francisco Chronicle.

  • This should not be surprising because privacy is simply the flip side of the anti-competitive concerns surrounding the Book Settlement.

I posit that privacy protections were not included in the Book Settlement for two big reasons -- the first reason is more privacy related and the second reason is more competition related. 

First, Google is a big adherent of the Web 2.0 movement that believes that transparency is a more important value than privacy.


Q&A One Pager Debunking Net Neutrality Myths