Online-offline asymmetric regulation is the biggest persistent competition problem in the economy for the next decade. 

Asymmetric commercial treatment by the Government predictably produces asymmetric market outcomes. Everyone knows how an unfair playing field or unfair rules of the game produce favored winners and disfavored losers.

Internet myth is that Google, Facebook, Amazon, Uber, Airbnb, and their “intermedia” Internet Association brethren deserve to be winner-take-all because they are more innovative and better for consumers than offline companies.

The reality is that these companies common “winner-take-all special sauce” is old-fashioned regulatory arbitrage, of its special Section 230 intermediary immunity from liability, regulation, and accountability.

To date, the intermedia’s decade-long, bankrolling and public leadership of the Title II net neutrality regulation of broadband effort, has been a spectacularly effective diversion of public and government attention from the intermedia’s regulatory arbitrage of their winner-take-all, asymmetric regulation advantages.

Congress is learning a predictable lesson that blanket immunization of a technology from accountability to law enforcement, and normal societal responsibility to others, creates unjust and destructive outcomes from a double standard of justice.

Google, Amazon, Facebook, Uber, and Airbnb are also learning a predictable lesson that opposing the unopposable for self-serving business reasons spotlights their increasingly indefensible “Monopoly” “get-out-of-jail-free” card, Section 230 immunity, that’s available only in the U.S. for online platforms.

This lesson is happening because a bipartisan Senate bill -- the “Stop Enabling Sex Trafficking Act” (SESTA S.1693) -- proposes to amend Section 230 of the 1996 Communications Decency Act to clarify that its immunization of online platforms from liability was never intended to shield knowing enablement of child sex trafficking from criminal prosecution.

Tuesday, a Senate Commerce Committee hearing will spotlight the gravity and depravity of how this well-intentioned, Internet-infancy, law to advance freedom of speech online, has caused unacceptable unintended consequences today for the most vulnerable among us.

With freedom comes responsibility.

A Tuesday Senate hearing on the Stop Enabling Sex Trafficking Act, SESTA, S.1693, will spotlight the strong objections of intermedia platforms like Google, Facebook, Amazon, Uber, and Airbnb, which oppose it as a slippery slope towards being subjected to the same public accountability standards as offline companies. 

SESTA is a bipartisan bill that seeks to narrowly amend Section 230 of the Communications Decency Act of 1996, to clarify that Section 230’s immunity from intermediary liability was never meant to immunize sex trafficking as a form of protected freedom of speech. 

The problem SESTA targets is best explained by a 2017 report by Consumer Watchdog and the Faith and Freedom Coalition, that spotlights how child sex trafficking effectively is enabled and legally protected in America via Section 230 immunity.  

The report documents how “for years, one company – Backpage.com – has dominated online trafficking in minors for sex;” and how Backpage is suspected to be involved in “73% of all suspected sex trafficking reports in the U.S.”

The 48-page report also chronicles in detail how Alphabet-Google has long bankrolled and organized much of Backpage’s legal support that has enabled Backpage to evade justice for several years by exploiting Section 230’s sweeping immunities from online intermediary liability. 

Trust in Google was built in part on the promise in its uniquely unequivocal “don’t be evil” corporate motto. 

If Google doesn’t consider purposeful enablement of child sex trafficking evil, what does it consider evil?

Please don’t miss my Buzzfeed Op-Ed on: “The Power of Facebook, Google & Amazon Is an Issue for Left & Right” -- because it would hold abuses of unaccountable power accountable.

Be sure to see the surprising effect that Google, Amazon, and Facebook, i.e. the “intermedia,” have had on U.S. economic growth 2012-2016!

iHypocrisy?

After fourteen years of diligently dodging any public position on net neutrality on principle, while operating the largest non-neutral, non-free, non-open, Internet network of smart devices on the planet, Apple Inc. is now taking a “principled” public position for net neutrality, and a free and open Internet, because Apple now tells the FCC in its net neutrality public comments that Apple now believes in the principles of consumer choice, no paid fast lanes, transparency, competition, investment, and innovation. iHypocrisy.

Let me be crystal clear here.

I am a longtime iPhone user and big Apple fan. I have long publicly defended their freedom to maximize the value of their patented innovations and property-rights driven business model and value creation strategy. I strongly defend their right to free speech and their right to reverse their “principled” position when their business needs warrant it, like wanting to save money on bandwidth for Apple’s new streaming services because it is losing money on streaming now that it invested a billion dollars in new video content over the last few months.

SUMMARY:

In 2015, the FCC’s Title II Open Internet broadband order was predicated on a demonstrably false central competitive premise: that the Internet’s edge was competitive while the broadband Internet core was not competitive. The facts prove the opposite.

The 2015 FCC’s competition premise is myth.

While there is plenty of information in the record, and in the July 17 comments, that broadband is  competitive, until now there has been little data and research on the overall competitiveness of the Internet edge providers, save for NetCompetition’s July 17^th comments that showed how concentrated the Internet edge is using the Internet Association as a proxy.

To further rebut comments that were predicated on the demonstrably false central premise that the Internet’s edge is competitive, NetCompetition submits additional Internet competition research below.

Summary: The substantial evidence catalogued here provides proof of the Internet’s cartelization, extreme concentration, winner-take-all tendencies, and mythical competition. The public data shows that the tacit Internet cartel of Google, Amazon and Facebook is 7-8 times more concentrated than the top three offline companies and that the top ten Internet economy companies are >10 times more concentrated than the top ten offline economy companies.

Public data that Google, Amazon, and Facebook have acquired ~350 potential competitors and the Internet Association overall has acquired ~900 potential competitors, indicates that the apparent cartelization of Internet companies’ investment, acquisition, and innovation processes ensure no innovative “garage startup” has a plausible competitive opportunity to seriously threaten the Internet cartel’s dominance.

Public data also ironically shows that almost all the Internet Association’s members are anti-competitively threatened by one of more of the Google, Amazon, or Facebook, winner-take-all online onslaughts.

U.S. antitrust authorities have enabled a cartelized and extremely concentrated Internet by taking their eye off the purpose of antitrust law -- protecting the process of competition, by first protecting the process of innovation by dominant online platforms.

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Why are none of Google’s many paid experts not publicly defending Google and Facebook’s 2014 decisions to stop competing against each other in search and social? And why are they not trumpeting the pro-consumer, pro-innovation, and increased efficiency benefits of accelerating their digital advertising dominance since those decisions?

The silence is telling, and maybe even suspicious, given the DOJ cartel enforcement “what to look for”  primer.

Summary: Amazon’s monopolization ambitions, strategies, and tying tactics are eerily like Google’s.  Both these companies likely have not earned their respective dominances purely on merit, but also via illegal anti-competitive behaviors.

At a minimum, Amazon’s proposed acquisition of WholeFoods warrants an FTC “second request” for information, i.e. a fuller antitrust investigation of whether the acquisition could “substantially lessen competition” in any implicated relevant markets.

How much smoke and fire must there be, and how many people must get burned, before the fire department will investigate and put out a forest fire?

Apparently, a lot, if the forest fire is in the digital ad market that Google and Facebook dominate, and U.S. antitrust authorities are the firefighters.

Where’s the fire here?

Google and Facebook, which don’t directly compete in search and social, together dominate over 70% of the digital advertising market. They also dominate about 80% of online referral traffic, the online oxygen upon which every Internet publisher depends for survival.

After fiercely competing directly with each other in search and social in 2013 and 2014, Google and Facebook abruptly and quietly stopped competing against each other in 2014 with no explanation.

Since then, Google and Facebook have accelerated their capture of almost all digital ad revenue growth and profitability, exposing that Google and Facebook have become a de facto cartel that has illegally divided up the digital advertising space.

In 2014, Google and Facebook apparently decided they could each optimize their growth and profitability by colluding as dominant market complements to each other, rather than competing head-to-head as less efficient search-social competitors.

The economic motivation behind Google and Facebook’s apparent illegal market division is this.