Conflict of Interest

Expect privacy concerns to be the eventual catalyst that ultimately bursts the Internet investment Bubble 2.0. It is rare when there is a profound disconnect and suspension of reality between industry behavior/investment expectations and customer wants, needs and expectations, but that is precisely what is at work in Bubble 2.0.

• Almost by definition, investment bubbles are unsustainable; what goes up must come down, it is only a matter of how and when -- not if.
• Simply what fuels Bubble 2.0  is the patently false core assumption that the current unfettered, widespread, and largely clandestine data mining of individuals private information in order to target specific individuals with personalized online advertising:
  • Is aligned with real user interests;
  • Is a forthright business practice consumers are aware of and have meaningfully consented to;
  • Will not be legally constrained in the future; and
  • Will become the accepted norm -- meaning that the populace and governments will adapt to the wishes and desires of the online-ad- industry and not the other way around.
• In a word, is online tracking, profiling and data mining a consumer-driven model? -- or a consumer-dragged model?

This is deja vu for me. I've seen this movie before when I had a front row seat as the original dotcom Bubble 1.0 wiped away $4 trillion in market valuation in a few weeks.

"Google Cuts Overstock Ranking" is the WSJ headline today. On the heels of Google's recent high-profile demotion of JC Penny's ranking and yesterday's antitrust complaint from French company 1PlusV, people are beginning to see that Googleopoly does indeed have the awesome power to pick winners and losers in the Internet economy.

Anytime a company tries to sell or market themselves on the Internet to maximize links, the currency of the Google Internet content economy, they have to worry if Google will accuse and execute them for the offense of competition or capitalism, and then be buried where they cannot be found by Google's unique/monopoly worldwide mass market Internet audience.

• Google's not so subtle message to everyone is that Google is the world's Supreme Ranker, and anyone that tries to increase their rank in a way that the Supreme Ranker frowns upon, swift Google justice will befall them.

What should concern antitrust authorities, the DOJ, FTC, the EU and the Texas AG, is that there are more and more public examples of how Google is lording over the Internet content economy as lawmaker, cop, judge, jury and executioner -- all rolled into one.

There is no due process, transparency, accountability or appeals in the Google Justice system because Google's motto is "don't be evil" -- so by definition any decision by Google is tautologically just and infallible.

See a preview below of Google's likely official public apology for collecting kids' partial Social Security #s and other private information -- without the permission of their parents.

Per Google's Official Blog:

"We are deeply sorry, very very sorry, and even oh-so-sorry for collecting partial social security numbers, date and place of birth on kindergartners and grade schoolers participating in the Doodle-4-Google contest.

The DOJ should call Google's bluff that it would fight the DOJ in court if the DOJ tries to block Google-ITA,  because Google will fold precisely because Google has so much to lose from going to war with the U.S. Justice Department over a $700m deal.

• If DOJ decides to sue to block Google's acquisition of ITA Software, expect Google to walk away from the deal to maintain the status quo and to choose to not make their antitrust predicament massively worse by their own behavior.

While Google blusters they have a strong case in court on Google-ITA, the last thing Google should want is for all their political and PR antitrust defenses to be subject to vivisection, sandblasting, and ridicule in public court for everyone to see.

Mobile content producers do not have a truly competitive choice between Google's 10% fee One Pass service and Apple's 30% fee subscription service, as much as they have a value system choice between Google's Internet commons model and Apple's property-rights-driven market.

• Google's One Pass offering looks eerily like its Google TV offering, where major video content owners faced the platform choice between dumb content and Content is King."
  • Given that choice, content-is-king-oriented owners broadly rejected Google's property-hostile, dumb-content system/model.
• As mobile content providers and carriers threatened with "dumb content" and bandwidth/spectrum commodification from Google's "free" commons model assess their real long term strategic competitive and value-creation options, they will increasingly look toward, and forward to, the nascent Microsoft-Nokia alliance offering and RIM's offering for content-is-king allies and true competitive choices.

As much as Google tries to fool Little Red Riding Hood content owners that their Grandma always had such big eyes and big teeth, most mobile content providers will spot the Google commons wolf in disguise.

Google search executive Amit Singhal exposed two fatal flaws in Google's antitrust defense in an excellent and revealing interview with James Temple of the San Francisco Chronicle.

The core of Google's antitrust defense (overall, in Google-ITA, and in the Google Book Settlement) are two foundational claims:

• Everything Google does is for users and is pro-user -- so tautologically Google cannot be doing anything wrong; and
• Everything Google does is innovative and is pro-innovation -- so tautologically Google cannot be doing anything wrong.

I. Does Google only work for user interests?

Beneath Google's saccharine claim that they only have users interests at heart, is a deep cynicism that everyone is stupid, especially antitrust authorities.

Does Google think antitrust authorities are so stupid that:

Do the actions of the FCC match the FCC's words of support for the President's commitment to the "least burdensome tools to achieve regulatory ends?"

• Does the FCC truly agree with the President's State of the Union that: "We can't win the future with a government of the past?"

• There is much troubling evidence that the FCC mindset is firmly wedded to the regulatory past and not committed to competitively "winning the future."

There are three disturbing trends at the FCC: preservationism, pessimism and silo-ism -- that all strongly indicate that the FCC's trajectory is more geared toward losing the future than winning the future.

I. FCC Preservationism (Shackling the future with the mindset, approaches and legacy networks/regulations of the past.)

Most of the last year the FCC has been obsessed with FCC historical preservation, i.e. strongly considering restoring the FCC to its past glory days with new Title II common carrier regulation of the Internet, but then settling on a 1934 era interpretation of the FCC's Title I authority at its most boundless.

Google's oft-stated goal to "change the world" and its famed mission to centralize all of the world's information to make it universally accessible, self-appoints Google to be the world's omni-information gatekeeper, distributor, librarian, publisher, editor, programmer, and broadcaster.

In building its Googleopoly, Google represented itself to everyone as unbiased and neutral in order to gain everyone's trust.

A core concern with Google's centralized information power and opaque black box system is that Google has the unaccountable power and constant opportunity to decide what information people around the world access, and also to decide what information Google does not want them to find.

Today in Politico's top story "Tech War: Google vs Microsoft" by Elizabeth Wasserman, I was quoted saying: "It's scary that the monopoly information access point of the world is going after voices of dissent."

• What do I mean about going after dissenters?
  • Read Brian Deagon's Investors Business Daily 12-10 piece "When Analysts Look Over Their Shoulders," which chronicles how the Google Dissent Police bullies the press to not talk with, or quote, Google critics they don't like.

If ever there was a prime example of "regulatory dissonance" it would be:

• An Administration engaging in a high-profile campaign to promote regulatory restraint to avoid and fix "burdensome regulations" (in an Executive Order, in the State of the Union, and in a Presidential Speech at the Chamber of Commerce in the span of two weeks), and
• The recent hiring of FreePress Chairman Tim Wu as a senior policy advisor at the Federal Trade Commission (FTC).
  • (FreePress is well-known as the single most radical anti-capitalist, anti-property, hyper-regulatory activist group in D.C., and
  • Tim Wu is well known for proposing sweeping preemptive regulation of competitive industries with no proof of a regulatory problem -- in pushing for preemptive net neutrality regulations that culminated in the FCC's Open Internet Order, and for preemptive "Carterfone" wireless regulations of the FCC's 700 MHz auctions.)

Has Google shifted its legal strategy from its scorched earth legal tactics to more brand-friendly 'Settlements 'R' Us' political tactics?

• And is Google politically ramping up its lobbying against "search regulation" to try and minimize the restrictions it has to abide by in order to settle the phalanx of serious law enforcement investigations and lawsuits it is facing on antitrust, privacy and intellectual property?

I. There is emerging evidence that Google may be in settlement court-regulation-submission mode.