1 Oracle v. Google case + 1 EU Android Tying Case = 3

While the U.S. Oracle v. Google Java API copyright case that will recommence in public court this month has been completely independent of the EU Google-Android antitrust case, in sovereign jurisdiction, type of law, legal process, timetable and alleged offense, these two cases ultimately could have huge, much underappreciated implications for each other, because they are both about the same thing -- purposeful illegal actions that Google chose to do to extend its search-related dominance into mobile via  Android.

Summary

In a nutshell, this piece explains why the sum of the Oracle v. Google and EU-Android antitrust cases is greater than the parts. Together they expose:

1. A more complete Android dominance story: ill-gotten first-mover-advantage combined with cumulative ill-gotten tying network effects;
2. An Android OS that isn’t really free or open source software, but practically a cross-subsidized, hybrid-open-proprietary, Android-Java OS that effectively fixes a predatory price of zero for a dominant mobile OS that now is known to have a material incremental cost -- a needed Java license; and
3. A clear Google anticompetitive pattern of behavior of abusing different sorts of APIs that could help expand the EU-Android-tying case into potentially a broader Google monopolization case.

Brief Background

The epic flaw in the FCC’s Title II privacy NPRM is that it purports to best protect consumers’ private information by only regulating broadband providers’ use of that private information, while emphatically protecting dominant edge platforms from FCC privacy regulation when they use that same FCC-regulated private information indiscriminately without consumers’ meaningful knowledge or consent.

Yes you read that right.

Apparently the FCC thinks it is more important to protect dominant edge platforms from FCC privacy regulation, than it is to protect consumers’ private information.

The issue of privacy lays bare the FCC’s contorted and arbitrary logic of both its Title II cleave that only ISPs can be gatekeepers, and that the goal of net neutrality, protecting dominant edge platforms from ISP interference, is logical and appropriate to apply to privacy. If it was, that would perversely mean that the purpose of the FCC’s privacy rules should be to protect edge providers’ businesses, not consumers’ privacy.  

If you want to see a visual representation of this problem, please see the attached one-page graphic here.

It visually exposes the illogic and hypocrisy in the FCC regulating only ISPs on privacy and not edge platforms, when several #1 edge platforms are dominant in several markets, with much more national market share than the #1 ISPs in their markets.

This is a wrong policy because the edge platforms have much more gatekeeper power and much more private data collection opportunity than ISPs do.  

First, based on StatCounter’s market share data in the U.S. please consider the following.

Google dominates the following markets, mobile search, desktop search, and desktop browser, with 91%, 79%, and 50% U.S. market shares respectively.

The Intercept’s exposé “The Android Administration: Google’s Remarkably Close Relationship With the Obama White House, in Two Charts” is an eye-opening, must-read for anyone interested in Google’s outsized power and political influence, or in the integrity of the U.S. Government’s public accountability and impartiality in administering justice and the federal policymaking process -- free of commercial and financial conflicts of interest.  

Importantly The Intercept, was founded by the investigative journalists who first broke the Snowden-NSA scandal, and who have a stated mission that “journalism should bring transparency and accountability to powerful governmental and corporate institutions. They certainly have succeeded in their mission with this signature, enlightening, data-driven analysis.

What is the important context here?

According to the U.S. Office of Government Ethics, “the standards of ethical conduct for employees of the Executive Branch… are designed to address not only actual conflicts of interest, but also activities that give rise to the appearance of such conflicts.” [bold added]

FCC’s AllVid NPRM Is Anticompetitive, Anticompetitive, Anticompetitive

WASHINGTON D.C. – The following quotes are based on NetCompetition’s submitted comments on the FCC’s AllVid NPRM and may be attributed to Scott Cleland, Chairman of NetCompetition:

“Think for a moment. Would anyone think it “pro-competitive” if a government agency mandated an “Unlock the Big Box Stores” ruling so that WalMart, Target, or Best Buy could no longer install effective doors, locks, security guards or anti-theft devices on their store perimeters to protect the value of their inventory, all so that Google, Amazon, or eBay could take it for free and then profit from selling it online?”

“The companies that comprise the ~$200b pay TV industry are the video programming functional equivalent of Big Box stores, and the FCC’s AllVid NPRM is the functional equivalent of a looters pardon.”

“Consider how the FCC’s “Unlock the Box” looters’ mantra is profoundly anticompetitive and destructive.

First, the FCC has cherry-picked its facts to politically fictionalize a market with no choice when consumers enjoy exploding competitive choices for video navigation devices, and market competition and innovation are already rapidly obsolescing the cable set-top box via apps and app innovation – without the FCC.

Second, the FCC’s proposal is not unlocking the box, but unlocking the copyright, privacy, and contractual protections necessary for this ~$200b pay TV industry to create, protect and monetize the most valuable video content in the world.

Third, the FCC’s political proposal is apparently largely designed to benefit one exceptionally dominant and politically-well-connected company, Google.”

“That is why the FCC’s AllVid NPRM is anticompetitive, anticompetitive, anticompetitive; the exact opposite of the FCC’s pro-competitive claims.”

The European Commission has charged Alphabet-Google with abusing its dominance in the market for “general Internet search services,” by implementing an Android “strategy of mobile devices to preserve and strengthen its dominance in general Internet search.” The EU objects to a variety of secret Google contract conditions to manufacturer licenses to leverage the dominant (>90% share) Android OS to secretly restrict and foreclose competition in ways that ultimately harm consumer choice and innovation. The EU effectively charged that Google has already anticompetitively extended its >90% dominance in search to dominance in the >90% share of the “licensable smart mobile operating system,” and to dominance in the >90% share of the “app stores for the Android” market.  

• See the: EU Statement of Objections, EU Factsheet, and Google-Android Infographic.

Summary of 7 Top Takeaways from EU-Google-Android Antitrust Charges

1. Google- Android’s “open” defense is not the whole truth and nothing, but the truth.

2. EU is now world’s de facto antitrust top cop, not the DOJ-FTC.

3. Begs a big question: Why did the FTC silently bury the 2012 FTC staff report on Android-tying?

4. Android-tying is a relatively straightforward legal case.

5. Android-tying is very different from the search case.

6. Apple iOS is NOT an Android competitor for ANTITRUST purposes.

7. Android competition is on life support.

The 7 Top Takeaways Explained

The FCC’s AllVid proposal is déjà vu. We have seen Google-YouTube’s piracy-as-negotiating-leverage MO in action before.

Google’s puppeteering of FCC-sponsored piracy in the FCC AllVid set-top box proposal is not the first time Google has anticompetitively used piracy promotion to gain an anticompetitive  market advantage for YouTube’s monopsony power -- i.e. its market power from being the only repository in the world where one can access a copy of most every video created whether it is legal or pirated, and where Google often promotes pirated videos near the top of its search results.  

Don’t take my word for it, listen to Google executives’ own words in Google’s internal Gmails captured for posterity in The Statement of Undisputed Facts filed in the 2007 Viacom v. Google-YouTube copyright trial that settled in 2007.

These undisputed facts/Gmails spotlighted and organized below are damning for three reasons.

For the last year, Google was above state law in the U.S.; fortunately, it no longer is.

The U.S. Fifth Circuit Court of Appeals just ordered dismissal of the Machiavellian preliminary injunction Google won in Federal Court over a year ago that squashed a 2014 Mississippi State Attorney General subpoena and state law enforcement investigation of Google’s alleged facilitation of “dangerous and illegal activities through its online platforms.”

Forty State AGs backed MS AG Jim Hood in Court because the Federal injunction that Google won effectively neutered all State AGs from investigating or prosecuting Google for most any alleged Google violation of most any State consumer protection law.

Simply, the Appeals Court ruled that Google faced no “irreparable injury” in having to comply with the MS State AG’s broad subpoena, and that “[T]he normal course of state criminal prosecutions cannot be disrupted or blocked on the basis of charges which in the last analysis amount to nothing more than speculation about the future.”

In a nutshell, this court decision affects the Google big picture in three strategically important ways.

First, Google is again subject to state rule of law after a year of ill-gotten de facto immunity from state law enforcement investigation or prosecution.

Awkward.

EU antitrust chief Margrethe Vestager -- who formally has charged Google with abusing its search monopoly, and who also is formally investigating Google’s alleged contractual tying of its monopoly search app to create a monopoly Android operating system -- speaks Friday at the ABA antitrust spring meeting in D.C. on a panel with DOJ antitrust chief William Baer and FTC Chairwoman Edith Ramirez, at the awkward juncture when the EU is escalating its antitrust prosecution of Google while America’s DOJ and FTC apparently are ignoring the obvious antitrust case they know they have against Google.

In a nutshell, the obvious antitrust case against Google is this: the DOJ and FTC have long established Google is a monopoly demanding antitrust vigilance; U.S v. Microsoft settled that a licensed OS market definition excluding Apple is reasonable and that tying a monopoly OS to a strategic app harms consumers and innovation; Google’s contractual tying of its monopoly search to a nascent Android OS is a mirror image of what DOJ already proved monopolistic in U.S. v. Microsoft; Google apparently has monopolized mobile search and search advertising and prompted its only competitors, Yahoo and Microsoft Bing, to give up seriously competing with Google; and now the potential harms to consumers and innovation are escalating as Google is attempting to extend its Android mobile OS monopoly economy-wide to monopolize the Internet of Things.

(For a more detailed summary of this obvious Google-Android antitrust case with links to evidence, please see the appendix at the end of this post.)

The FCC’s just-passed, 3-2 unequal ISP privacy policy spotlights how badly the FCC has lost its way.

In prioritizing the equality rights of inanimate digital bits above the equal protection and equal opportunity rights the American people enjoy under our constitutional republic, the FCC is discriminating in favor of open cronyism over equal consumer protection and equal competitive opportunity.

Moody’s Investors Service has done everyone a service in exposing the FCC’s Title II reclassification and privacy policy for what it really is – arbitrary unequal treatment under the law.

When the FCC proposed these ISP privacy rules three weeks ago, Moody’s called the FCC’s proposal as it saw it in a Sector Comment March 14 entitled: “FCC’s broadband privacy proposal credit negative for linear TV and wireless providers – Over half a trillion in rated debt affected.” 

Moody’s clearly explains how applying rules unequally, requiring ISPs to get consumer permission to use data for advertising that Google, Facebook and edge advertisers do not have to get permission to use, creates unequal protection for users’ privacy and starkly unequal opportunity to fairly compete for digital advertising revenues going forward.

Moody’s explained: 

Google is the only major corporation publicly pressuring the FCC to require that all owners of proprietary video programming rights give away their valuable video property for free to Google and other companies online.

It is telling that to date no other major corporation has been willing to risk their brand publicly advocating for FCC-sponsored piracy to forcibly redistribute corporate wealth from Big Content to FCC-BFF-Google.

The evidence in this analysis will show that Google is the only entity in the world that has both the long-stated mission, i.e. “to organize the world’s information and make it universally accessible and useful,” and the global monopoly power and corporate functional capabilities to fully commercially exploit this FCC-sponsored piracy proposal.