You are here

Dismantling Google's reasons why NN should not apply to them

I was able to ask the only question from the audience of the Educause net neutrality panel today.

  • After introducing myself and disclosing that is funded by broadband companies, I asked Rick Whit of Google the following very important questions:
    • "If non-discrimination is an important principle of the Internet, why should it not apply to all Internet access technologies in a neutral way?
    • And why shouldn't net neutrality apply to all internet access technologies that have the potential to block content like:
      • Microsoft's ~90% share of the browser market; or
      • Google's 65% share of the search market in the US and Google's 75% market share in Europe? 

Mr. Whit's first weak line of defense was that the term is really "network" neutrality implying it was not about "Internet" neutrality.

  • Oops! Seems Mr. Whit is so new to Google that he hasn't had the time to read Google's very own brief: 
    •  "Guide to Net Neutrality for Google Users

      "Net neutrality" is an issue that will shape the future of the Internet.

      What is Net Neutrality?

      Network neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. The Internet has operated according to this neutrality principle since its earliest days."

    • Mr. Whit it appears your company thinks "net neutrality" is about the Internet, not just broadband networks.

It is also a joke for Google to act like it is not a network company!

  • Google has assembled the largest "network" of grid computing in the world! What do you think connects Google's million plus servers together?
    • A private Google "network!"
    • Why has Google assembled  "dark fiber" if it does not have a "network" to use it? 
  • Why should Google's "network" be free of regulation, when every other similar "network" would be regulated?
    • The answer is that Google is lobbying for a classic competitive double standard: regulate and slow down Google's potential competitors, but leave Google completely free of regulation to "compete".

Mr. Whit's second weak line of defense was saying that there is only cable and telecom competition (duopoly), ridiculing BPL and other alternative technologies, and said in contrast that there were "hundreds of search engines."

  • The facts, tell a different story Mr. Whit.
  • To guage all markets' levels of market concentration, the Department of Justice Antitrust Division uses the Herfindahl-Hirschman Index   "a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers."
    • In April 2007, Hitwise had US search market share at Google 65.26%; Yahoo 20.7%; Microsoft 8.46% and 3.69%.
      • If you sum the squares (4259+428+72+14= 4773)you get an HHI index of 4773 -- above 1800 the DOJ considers a market "concentrated".
    • In January 2007, the latest FCC data on Broadband market share has a breakdown by technology (not company because that data is not available), DSL 35%, Cable modem 44%, wireless 17% and satellite
      • If you sum the squares, (1225+1936+289+1=3351) a concentrated market.
    • So on the rough comparison both industries are "concentrated" but the search market is 42% more "concentrated" than the broadband market.
      • If you look at the trend in these two markets you realize Google's dominance of search is increasing rapidly, by 11% in the last year alone from 58.64% in April 06 to 65.26% in April 07.
      • If you look at the competitive trend in the broadband market you see the exact opposite, the share leaders cable and DSL are rapidly losing share to wireless.
        • For example, of the 13.5 million new broadband lines added in the last FCC reporting period, 23% were DSL, 15% were cable and 58% were wireless.
    • My point Mr Whit, is that the core facts that antitrust authorities measure, the US search business is more concentrated and getting more so in comparison to the broadband market, which is 42% less concentrated than search and it is becoming less concentrated each day.
    • My further point here, is if market concentration of broadband access technologies is concentrated enough that you believe net regulation is necessary, why should it not apply to Internet access technologies like search which are even more concentrated, than broadband?
      • Google has little factual basis to argue that search is so competitively different that they deserve totally asymmetric regulation -- meaning broadband gets a lot and search gets none.

      Mr Whit's third weak line of defense is saying entry barriers for search are low.

      • Excuse me?
      • While it may be easy and cheap to declare yourself a search engine on the web, it is another to be able to enter and compete with the scale necessary to take share from Google.
        • "Little" companies like Microsoft and Yahoo can't.
        • Despite Google's spin, new entrants are no threat to Google because they have no "network effects" and Google does.
          • New entrants can't afford the multi-billions of dollars to build a grid computer network of over a million servers to compete with Google.     
          • New entrants can't afford the hundreds of millions of dollars of investment to scrape and cache a similar amount of searchable info as Google.
          • New entrants can't finagle or afford to pay MySpace or AOL billion dollar deals to become the exclusive search engine for that audience.
      • Google's spin for the masses may work, but it doesn't wash with anyone who is sophisticated about competition or antitrust.

      Bottomline: Google is proposing ruinous regulation for their biggest potential competitors, and want to be immune even though Google's competitive situation is more concentrated than broadband.

      • If Google's motives were pure, why won't they eat their own cooking?