You are here

How Youtube affects Google's net neutrality position

Google's $1.6 billion purchase of youtube dramatically affects Google's leadership position in the net neutrality debate.

First, Google can't continue to claim its business "neutral" in the debate -- it now has its own dog in the fight -- its now a vertically integrated media company. Before Google liked to wax eloquently that their motives on net neutrality were "purely altruistic;" they said they were fighting, not for their own gain, but for the little Internet entrepreneurs toiling away in garages that needed protection from capitalists and market forces.

Now it is clear that Google is simply using the public policy process to leverage commercial negotiations for Google's commercial advantage with youtube. People need to remember that key to Google's exceptional finanical success is their abilty to dump most all their normal distribution costs on the consumer. Its by shifting their biggest cost to the consumer, that they enjoy 80+% gross profit margins, have ten billion dollars in cash, a hundred billion plus market capitalization, and can afford to pay $1.6 billion for a company that has no profits and little revenue. Remember these numbers when Google is publicly indignant about having to pay more for new innovative Internet bandwidth that can better carry video.

Second, using Google's original net neutrality logic, the purchase of youtube gives Google more means and motive to give... preferential treatment or "discriminate." Will the Google "searchopolist" with 50% share of the search market pledge to not "block, degrade, or impair video or other content of consumers or competitors? Will they agree to not discriminate against any of "the people's" youtube videos by giving them a higher/lower search ranking than others based on how much they pay for the search keyword or advertising? Will they keep youtube "democratic" where everyone's video is treated exactly equally with everyone elses video? Will they keep youtube "free" or will they begin charging the consumer to pay for youtube by watching google sponsored ads to pay for their $1.6 billion investment?

While Google's public policy hypocrisy and self-serving competition double standard clearly annoys me, I fully expect Google will and should operate as capitalists and leverage their youtube investment in the way that makes most business sense. That's competition. That's capitalism. That's a free and open Internet.