A core question for the FTC to answer in its hearings on “Competition and Consumer Protection in the 21st Century,” is what are the FTC’s underlying competition expectations?

Why have telecom, cable, and wireless network communications’ convergence with information technology turned out to be pro-competitive, but the Internet platforms’ reverse convergence of information technology with communications networks turned out to be anti-competitive, i.e. naturally winner-take-all?

Asymmetric governmental competitive expectations are why.

Congress’ stated purpose in passing the 1996 Telecommunications Act was “to promote competition and reduce regulation…” [bold added] and Congress’ antitrust savings clause clearly did not change the applicability of antitrust laws to communications networks.

In stark contrast, as an unregulated information service, information technology companies’ networks operated outside of the FCC’s pro-competition mandate, despite the well-known monopolistic behavior of consumer/business software provider Microsoft at that time.

In 1994, the DOJ-Microsoft consent decree forbid Microsoft from using its operating system market power to squelch competition. In 1995, DOJ filed an antitrust suit against the proposed Microsoft-Intuit acquisition, which resulted in Microsoft dropping the transaction. In 1998, DOJ successfully sued Microsoft for abusing its market power to foreclose Internet browser competition, a decision that was upheld upon appeal in 2001.

There can’t be a “free exchange of ideas” without transparent competition for the exchange of ideas.

This is a timely point for three reasons.

First, the DOJ announced: “The Attorney General has convened a meeting with a number of state attorneys general this month to discuss a growing concern that these companies [Google Facebook Twitter] may be hurting competition and intentionally stifling the free exchange of ideas on their platforms." [Bold added.] This “competition” concern ultimately falls in the lap of the DOJ’s Antitrust Division and State Attorneys General.

Second, Senator Hatch, the former Senate Judiciary Committee Chairman who championed the DOJ monopolization case against Microsoft in Congress, wrote the FTC “to urge the Federal Trade Commission  to reconsider the competitive effects of Google’s conduct in search and digital advertising. …much has changed since the FTC last looked at Google’s conduct regarding search and digital advertising.”

Evidently antitrust non-enforcement can have big consequences.

It can cause big un-ignorable problems that get the attention of the President, all of Congress, and both political parties. That rare feat of collective attention-grabbing can point them collectively in the same rough direction – back to antitrust authorities that could have, or should have, prevented many of the messy Internet platform unaccountability problems that they collectively are wrestling with resolving now.   

Before the FTC has its first retrospective review hearing on its own institutional performance this fall, it has been getting an implicit earful from its governmental superiors that it actions and inactions have apparently created broad and serious negative consequences for competition.

Senator Orrin Hatch wrote the FTC urging it to reopen its antitrust investigation of Google based on the evidence of serious anticompetitive and deceptive problems apparently flowing directly from the FTC’s 2013 Google non-enforcement decision. It is particularly noteworthy antitrust probe tasking, because then Senate Judiciary Chairman Orrin Hatch was the leading Republican supporter of the Clinton DOJ’s successful Sherman Act monopolization prosecution of Microsoft when Makan Delrahim was his Senate Judiciary Chief Counsel.      

President Trump’s tweets have mega-spotlighted what he views is the unfairness and lack of neutrality in Google search rankings and in how Google, Facebook, and Twitter appear generally biased against conservative views. In an interview with Bloomberg he said Google, Facebook, and Amazon are in an “antitrust situation.”

Just like there is a strong inevitability case that it is a matter of when and not if U.S. online privacy/data protection legislation will pass, there is also a compelling common-sense case why U.S. Federal privacy and data protection legislation should and will effectively preempt or supersede state Internet-related privacy laws.   

California’s June passage of an EU “GDPR-light” privacy bill, has teed up the reality that states can and will fill the vacuum left by Congress’ long inaction in addressing consumer privacy protection in the 21^st century – until Congress legislates.  

The fact that California is taking the lead in filling a Federal vacuum, does not mean that pending state Internet-related privacy laws will survive or be determinative long term when Congress ultimately fills the gaping vacuum.

What is happening now in the states on privacy and data protection is tactical and opportunistic, not a strategic and lasting legal or power shift.  

Let’s look at some numbers for perspective here.

After almost twenty years of the world following America’s lead in minimizing Internet privacy rights for consumers to minimize “friction” for Internet platforms’ maximal scaling and scoping of its products and services globally, that privacy pendulum began to reverse direction and gain momentum when two plus years ago the EU passed its popular General Data Protection Regulation, “GDPR,” for the EU’s 512m citizens, 411m Internet users, and 28 nations.

As the FTC prepares for their public hearings on “competition and consumer protection in the 21^st century” this fall, it would be reasonable and instructive for the FTC to seek to better understand the root cause of the need for these once-in-a-generation FTC hearings and to confront some of the most evident serious effects of this root cause problem.

First this analysis asks and answers “what most stunts the FTC’s antitrust and consumer protection law enforcement mission?

Second it asks a dozen of the most important questions the FTC should be asking to zero in on what problems are evidently happening with competition and consumer protection in the marketplace that the FTC’s mission and efforts evidently have been unable to deter, address or resolve since the Pitofsky hearings in 1995.

Third it provides research, evidence, analysis, and causation models that provide insight into the root cause-effects dynamics at play here, and that have been submitted to the FTC. (Find the White Paper series parts: 1, 2, 3, and 4.)       

I.                  What most stunts the FTC’s antitrust and consumer protection law enforcement mission?

Submission for: U.S. FTC  Fall 2018 Hearings on “Competition and Consumer Protection in the 21^st Century” Topic #2: “Competition and Consumer Protection in Communication, Information, and Media Technology Networks” FTC Project # P181201 (PDF of this filing is here.) 
 

The Unfair and Deceptive Online-Offline Playing Field of Divergent U.S. Competition and Consumer Protection Policy
Internet policy* has been the determinative dynamic of U.S. competition and consumer protection in the 21^st Century. Government exemptions/immunities evidently heavily favor regulatory arbitrage over free market competition, and drive the evident divergent reality where most of U.S. competition and consumer protection problems occur online not offline.

*U.S. Internet industrial policy in the 1996 Telecom Act effectively exempts only Internet companies from: all U.S. communications law, regulation, and public responsibilities; most non-communications Federal/State regulation; and civil liability for whatever happens via their platforms and business models.

August 7, 2018, By Scott Cleland, President, Precursor® LLC  info@precursor.com & Chairman, NetCompetition®  

What business trade-offs must Alphabet-Google make to continue to grow revenues at its 25% annual rate -- i.e. +$27b in new revenues in 2018, +$35b more in 2019, and +$45b more in 2020 -- to become another company worth a trillion dollars?

Alphabet-Google has decided apparently, whatever it takes.    

Maybe no single Google action tells us more about where Alphabet-Google stands in its twentieth year as a company and what it believes it must do to succeed as it wants in the next twenty years, than “Google Plans to Launch a Censored Search Engine in China” – the main driver of Google’s apparent new China-first growth strategy revealed in The Intercept’s scoop this week.

That’s because it is hard to imagine how one Google service could go more against everything Google has publicly promised and stood for as a company, or more deform and deface the authenticity of the many positive principles undergirding Google’s world-leading, global brand identity.

Consider the questions that this Google China-first growth strategy surfaces.

Search bias the new normal? Customizing Google’s search engine into a comprehensive, one-sided Android Chinese censorship app, for ~800m Chinese Internet users shows what Google can do to a large segment of the world’s Internet users and apparently what Google is willing to do if the price is right.

It begs the question of which customized version of Google Search is anyone getting now? And is it programmed to be objective, or biased to promote one political view over another?

A Case Study of Alphabet-Google’s 2004-2018 Privacy Track Record of Evident Unfair and Deceptive Over-collection of Consumers’ Personal Data Exposes an Evident Gap in the FTC’s Remedial Authority to Protect Consumers

Submitted as a public comment for the FTC’s fall 2018 “Competition and Consumer Protection in the 21^st Century Hearings.” Topic #5: “The Commission’s remedial authority to deter unfair and deceptive conduct in privacy and data security matters” FTC Project Number: P181201; (PDF FTC submission here)

July 30, 2018; By Scott Cleland; President, Precursor® LLC  info@precursor.com & Chairman, NetCompetition®

Conclusion

This case study of Alphabet-Google’s track record of unfair and deceptive privacy and data security practices provides a compelling body of evidence of 17 major business practice examples over a fifteen-year period that indicate the FTC evidently does not have enough remedial enforcement authority to deter Google, or other Internet platforms, from engaging in unfair and deceptive conduct in privacy and data security matters.

It is also evident from Google’s words and actions chronicled below that it legally does not believe its users have a “legitimate expectation of privacy” concerning the information they provide to Google.

The likely probability of an eventual U.S. v. Alphabet Sherman monopolization case improved further now that we know how weak Alphabet-Google’s likely primary U.S. antitrust defense of Android is.

This means not only is a potential U.S. v. Alphabet antitrust case stronger than the seminal successful and upheld U.S. v. Microsoft precedent, but Google’s relative antitrust defense is much weaker too.

Google’s CEO Sundar Pichai’s public Android antitrust defense has fatal flaws.

First, Google-Android claims Apple iOS is a direct competitor when factually in an antitrust context it is not.

Google’s CEO is deceptively claiming the licensable Android mobile operating system is a direct competitor to Apple’s un-licensable iOS operating system when Google knows full well it is not.

That’s because legally it is established antitrust precedent in U.S. v. Microsoft (that was upheld unanimously by the DC Circuit Court of Appeals) that Android and iOS are not part of the same market for antitrust purposes.

Evidently Android and iOS are not direct competitors, because they have:

1.      Different customers: Android licenses to OEMs; Apple sells to consumers.

2.      Different product: Android licenses software; Apple sells hardware.

SUMMARY

The impending EU-Google-Android abuse of dominance conviction and expected record fine and substantial behavioral prohibitions, begs the question of how U.S. antitrust enforcers will eventually act on the outcome of their own Google-Android investigation?  

Conventional wisdom is wrong that the 2013 FTC decision to shut down its Google search bias antitrust investigation because of insufficient evidence to justify legal action, indicates there is no sufficient evidence to justify legal action in a potential U.S. antitrust case against Google-Android.

These are completely different antitrust cases alleging completely different case theories, abuses, harms, and facts.

The cumulative public evidence to date indicates that the Trump FTC/DOJ will eventually file an Android-related Sherman antitrust monopolization case against Alphabet-Google.