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Non-neutral Ironies of Amazon Blocking Kindle Content

Amazon's decision to seize e-copies of George Orwell's "Nineteen Eighty Four" and "Animal Farm" from Kindle users after Amazon had sold and already delivered the e-books to customers -- drips with irony. 

  • For those who have missed the widespread uproar over Amazon's actions see NYTimes or Google "Amazon 1984." 

Irony #1: Fans of George Orwell's political satire know that Animal Farm is all about animals who originally profess equality for all the farm animals, but once in power become corrupt and establish rules that make those in power much more equal than others. 

Net neutrality proponents managing their networks?

Even some strong proponents of net neutrality now apparently recognize:

  • Bandwidth is not unlimited or free;
  • The real need for reasonable network management; and that
  • Internet networks can have legitimate economic reasons to -- limit bandwidth, block access, or offer slow/fast lanes -- that are not necessarily in violation of net neutrality or anticompetitive. 

An excellent New York Times article provides real world examples of the above points.

The article, which I recommend reading, explains that many Internet companies are coming to the realization that many users cost more to provide access to than an Internet advertising model can economically support.

Implications of Skype's IPO for eBay-Skype & Wireless Net Neutrality

Given that eBay's announced spin-off/IPO of Skype in 2010 is a material market event, this high-profile IPO represents a potentially tectonic development in eBay-Skype's (and FreePress') push for wireless net neutrality/Carterfone regulations and applying the FCC's broadband principles to wireless providers for the first time. There are much broader implications of this market development than many appreciate.

Some brief background information is helpful to understand the broader implications:  

  • Reports suggest that eBay's plans for a public IPO in 2010 is a result of eBay not being able to get a high enough private market price ($1.7b) for Skype and the fact that current market conditions are not ripe for initial public offerings. (eBay originally paid $2.6b for Skype and added an additional $500m later, then subsequently wrote down $1.4b of Skype's value.)
  • eBay-Skype unsuccessfully petitioned the FCC in 2007 to apply monopoly-era Carterfone regulations to wireless. The FCC did not grant the petition.  
  • The issue resurfaced again in Washington as FreePress, in a 4-2-09 letter to the FCC, argued that net neutrality should apply for the first time to wireless networks and specifically that Skype's voice application should be able to make calls over carrier's 3G networks.     

So how does eBay-Skype's pending IPO change the landscape?

Is Some Internet Competition Devolving?

"eBay Retreats in Web Retailing," the WSJ top story today, suggests some Internet competition may be devolving. 

What does it mean that eBay has decided to retreat from competing in web retailing against Amazon and other online retailers of new goods, in order to focus on:

  • Selling secondary-market/used goods, and
  • Brokering overstocked, clearance, or out-of-season goods? 

First, it is a stark reminder of the Internet's unbeatable network effects where the strong tend to get stronger and the weak tend to get weaker.

Why eBay's deals stoke Google-Yahoo investigation fire -- less competition among friends?

Just when the DOJ is investigating if the Google-Yahoo ad partnership is anti-competitive, eBay bursts onto the antitrust stage with "investigate us too!" acquisitions of Bill Me Later and more classified ad businesses. (See NYT article  and post, and WSJ article for excellent background.)

Why are the eBay acquisitions relevant to the Google-Yahoo investigation? 

First, they spotlight how dominant and incestuously interdependent the primary Internet players are.

The privacy problem is Unauthorized Tracking; the privacy solution is a Meaningful Consent Standard

There was a major tectonic shift in the Internet privacy debate today at the Senate Commerce Committee hearing on Internet privacy. 

Exposing the Biases in the Broadband Policy Debate -- My new white paper

Invited to speak at the ITIF forum on ITIF's white paper: "It's Time to End the Broadband Policy Wars" -- I so strongly disagreed with the framing bias of that white paper and the broadband policy debate in general that I decided I needed to counter it by writing my own white paper:

  • Don’t be Fooled by the National Broadband Policy “Straw Man”


    Exposing Three Hidden Policy Biases of Broadband Policy Proponents

The abstract of my six page paper is below:

eBay's non-neutral two-tier Internet model via deal

eBay sellers are complaining that eBay's change in its business model discriminates in favor of with a special no-fee selling tier and also violates eBay's longtime commitment to a "level playing field" -- per an article in the New York Times:  

  • "Many believe that eBay has violated the sacred tenet of the “level playing field,” which its founder, Pierre Omidyar, established as one of the company’s basic principles."...
  • "“As an independent seller, I felt betrayed,” Mr. Libby said. “I’ve paid eBay many hundreds of thousands in fees over the past several years and believed them when they talked about a level playing field. And they just plain and simple are going back on their word.” “There is fair, and there is outright stabbing you in the back,” he said."

As an ardent free market proponent, I strongly defend eBay's freedom to price discriminate, and offer more than one selling tier in their Internet model.

  • A diversity of demand produces a diversity of supply -- that's one of the things that free markets do so uniquely well.

However, given eBay's self-serving, hypocritical, and sanctimonious support for net neutrality and a one-tier Internet, I must spotlight eBay's outrageous, indefensible, and anti-competitive double standard between its own business practices and eBay's position to make eBay's practice illegal for eBay's competitors. 

Nielsen: US leading in Mobile Internet Penetration -- More evidence the US is not falling behind

New facts from independent sources continue to undermine the political charge that the U.S. is falling behind in broadband, the thinly-veiled charge that Big Government proponents use to justify the need for a national broadband industrial policy to replace the current free-market national Internet policy.

  • A new report by Nielsen, the independent market research firm: "Critical Mass: The worldwide state of the mobile web"
    • Ranks the U.S. #1 out of the 16 countries they measure in mobile Internet usage penetration -- ahead of the UK, Germany, France and Italy and others. 
    • The report also concludes that penetration of 3G-broadband-capable handsets is greater in the U.S. than in the EU (28% vs 25% of consumers respectively.)

Why are these new independent findings important?

First, broadband mobility is as important to Americans as stationary broadband speed.

Is the "Long Tail" just a Tall Tale?

A new article/study by Harvard Business School Professor Anita Elberse challenges the validity of the Silicon Valley mantra/theory that the Internet created a new "long tail" of demand for niche products that would ultimately undermine and overwhelm the offline trend towards "big hits."  

  • Thank you to Lee Gomes of the Wall Street Journal whose excellent article: "Study Refutes Niche Theory Spawned by Web" brought the new Elberse research to my attention.
    • From Mr. Gomes article: "Prof. Elberse looked at data for online video rentals and song purchases, and discovered that the patterns by which people shop online are essentially the same as the ones from offline. Not only do hits and blockbusters remain every bit as important online, but the evidence suggests that the Web is actually causing their role to grow, not shrink."

Why this is such important new research is that much of the Silicon Valley 'pixie dust' that fuels so many of the new business models involving social networking, crowdsourcing, etc. is predicated on the "Long Tail" book/theory by Wired magazine editor Chris Anderson.