Conflict of Interest

Google won't allow you to opt-out of their location tracking for search, we learn from CNET's Chris Matyszczyk's outstanding post "How Google stops you hiding your location."

• Kudos to Mr. Matyszczyk for spotlighting this latest "creepy line" Google default mandate.

What does this mean?

First, it means that Google has not learned much from its serial privacy problems, like Google setting a default that everyone's house should be included in StreetView photographing and Spi-Fi signal recording, and everyone that signed up for Google Buzz by default should share their Gmail addresses with the public.

Second, it means that Google profiles and tracks your location by default and that you can't opt out from Google knowing where you are, you can only select what local setting Google will use to customize your search results.

Congress needs to conduct oversight hearings to learn why the FTC is apparently giving Google special treatment, and more specifically why the FTC inexplicably dropped its Google StreetView spi-fi privacy probe without any charges, before it even learned all the facts, and without any accountability mechanism in place to protect consumers or prevent repeat violations.

Google's wanton wardriving in 33 countries for over three years secretly recording people's WiFi transmissions, including full emails and passwords, arguably is the single broadest privacy breach in the Internet era. And the FTC did nothing. And the FTC sees no need for any further action. Amazing.

What's wrong with this picture? A lot. A better question might be what's right with the FTC-Google privacy enforcement picture?

With Canada, Spain, the UK, and 38 U.S. states all cracking down on Google's wanton wardriving spyfi scandal, where is the U.S. Federal Trade Commission (FTC), the supposed lead agency on protecting consumers online privacy?

The FTC's silence and apparent absence from the online privacy enforcement playing field is particularly perplexing and alarming... because now it appears that we have a company that is out-of-control in tracking consumers' private actions online, and creating total information awareness power, while we have a supposed lead privacy regulator that appears not to be leading in protecting consumers' privacy...

We learned today that Google has the lowest foreign tax rate of the top five U.S. tech companies, an eyebrow-raising 2.4%, and that Google "cut its taxes by $3.1b in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda," per an outstanding investigative expose by Jesse Drucker of Bloomberg.

This exceptional tax dodging feat, while reportedly technically legal, nonetheless raises some important questions that no one has yet asked Google.

Japanese online retailer, Rakuten, has formally objected to the Yahoo-Japan/Google monopoly deal in a complaint to Japanese antitrust authorities (JFTC).

• I expect others in Japanese industry to also complain both publicly and privately to the JFTC.
  • First, the Yahoo-Japan/Google partnership would control over 90% of the Japanese search and search advertising business and also subordinate all Japanese online businesses, that depend on search to be found and/or monetized.
  • Second, the JFTC approval was a secret technical decision that amazingly did not consult or consider the views of any other Japanese stakeholders, even though the decision could eventually put much of Japan's online industry out of business in the years ahead.

In my Tokyo speech to industry stakeholders last month, I explained how a Yahoo-Japan/Google search advertising monopoly inevitably would lead to dependency, decline and disintermediation for Japan's high tech industry and economy.

It is logical, sensible, and basic survival instinct for Japanese stakeholders -- whose fate would be totally at the mercy of a Japanese Googleopoly -- to voice serious objections privately and publicly to Japanese regulators.

The current harm to consumers from the latest unnecessary incident of retransmission brinksmanship is the clear result of FCC regulatory failure.

Fellow ardent free marketer, Randy May of the Free State Foundation, has a dead on piece that I highly recommend that exposes that the current broadcast retransmission negotiating process -- as no "market" that a free marketer would recognize.

• A set of FCC rules that still fantastically assumes a monopoly video market exists, when one clearly has not existed for well over a decade, creates a profound regulatory failure that distorts the market and harms consumers.

The reason some consumers currently are blacked out from their favorite sports programming is because the FCC has known for a long time, that it has a broken, out-of-date, and counter-productive retransmission negotiation process, and that it has not done anything to bring the process into the 21st century or to correct the dysfunctional imbalance that causes predictable serial disputes that harm consumers.

Simply, if the FCC spent less time on trying to fix potential unproven problems, like net neutrality and Title II regulation for which the FCC does not have legal authority, and more time on fixing actual problems harming consumers on their watch that they do have the authority to fix -- American consumers would be much better off.

*****

Google announced it is working on an economy-wide Google Price Index, but has not decided whether to make it public, per Google Chief Economist, Hal Varian, who spoke at the National Association of Business Economists conference this week.

• This development has under-appreciated implications for insider trading and also spotlights how Google's online dominance of market-relevant information suggests market failure and a new potential systemic vulnerability to the integrity of global capital markets.

I.  Insider Trading

In March, Google CEO Eric Schmidt said: "One day we had a conversation where we figured out we could just try and predict the stock market... and then we decided it was illegal. So we stopped doing that."

Now any hedge fund (or market regulator not born yesterday) understands that if Google is actively working on a Google Price Index, Google has not stopped trying to use its uniquely comprehensive and timely, repository of sensitive market information to predict information highly useful to predicting the stock market.

Google's blog post "What we're driving at" announced that Google has "developed technology for cars to drive themselves." Google stated: "Larry and Sergey founded Google because they wanted to help solve really big problems using technology... Our goal is to help prevent traffic accidents, free up people's time and reduce carbon emissions..."

This project raises some interesting questions no one has asked Google yet.

I'm in Tokyo Japan and just got done giving the keynote speech to about 100 Japanese industry representatives at a forum on the negative impact on competition and innovation of the partnership between Yahoo-Japan and Google, which will control over 90% of the Japanese search advertising market.

• The remarkable thing about the event was that it was literally the first public debate or 'open' discussion of the deal among affected stakeholders in Japan since the deal was approved secretly a few months ago!

I explained the three "Ds" of the deal: dependency, decline and disintermediation (see the full speech below.) There was a Google-friendly panel of two professors and a journalist that critiqued my speech and I was afforded full opportunity to rebut all their points.

It is amazing to me that a deal that has such far-reaching negative effects on Japanese industry, Japan's economy, identity and culture, as this, was decided without any consultation or input from industry or other parts of Government affected by the deal.

The DOJ busted six companies, Google, Apple, Intel, Adobe, and Intuit for "naked restraint of trade" in collusively agreeing to not poach each others employees and reducing their employees' ability to be paid what a fair market would bear. See the DOJ statement; complaint; Final Judgment. (and Google's spin that they were very busy changing the world and that everybody was doing it... self-justification -- is here.)

• This is a logical extension of the FTC investigation last summer that forced Google and Apple to cease having overlapping board seats because that was judged anti-competitive collusive behavior.
• Moreover, Google and Apple were at the center of this DOJ antitrust prosecution, in that three of the five illegal agreements involved each of them.

What's notable here?