Fraud

Anyone who hasn't read Google's letter to the FCC today  on the 700 MHz auction -- you have to -- its an absolute hoot! 

• I am amazed that a company so rich and successful in business could be so arrogant, impolitic, and ham-handed in Washington!  

First Google, despite what you may think, the US Government and FCC policy is not "for sale."  (And even if you think it is, at least try to be less obvious about your cynicism in public.)

• Does Google actually think "committing" to a minimum bid of $4.6B in the 700 MHz auction in return for its demands for a change in the 1993 auction law is somehow acceptable behavior for a publicly-traded company?
• Google is crassly and ham-handedly saying that their opening bid to effectively "buy" FCC policy starts at $4.6B!
• Hello Google! You "bid" at the spectrum auction not at the FCC for policy favors. One type of "bidding" is perfectly legal the other is not.
• As only dotcom billionaires can do, Google is disrespecting the FCC as just another type of "hired help" where it just needs to negotiate their "price."
• Any supporters of Google should be mortified at Google's disrespect for, and cheapening of the FCC policy process. Google should be ashamed and embarassed by this crass letter and tactic.  
• (It seems that Google is so used to buying off content providers that sue them for IP theft with "revenue sharing arrangements" that they seem to think they can buy-off whomever they want.)   

Second, the demand in their letter oozes with arrogance. Let's parse the final and operative sentence of Google's letter to see just how arrogant.

My detailed analysis over the last several weeks leads me to believe that the FTC is likely to block the Google-DoubleClick merger because it will enable Google to dominate online advertising and dramatically increase the opportunity for market collusion and price manipulation in the market for consumer click data, ad-performance tools, ad-brokering and ad-exchanges.

Antitrust is fact-specific and evidence-driven. To understand the true antitrust outlook for a merger one needs to become familiar with the core facts of the case. To date, media and investment coverage of this merger has been remarkably superficial.

• The executive summary and my new 35-page white paper: "Googleopoly: the Google-DoubleClick Anti-Competitive Case" can be found at Googleopoly.net. An audio file of my conference call on this merger outlook will also be on Googleopoly.net. The analysis and conclusions are driven by pages and pages of facts and evidence.
• The purpose of the paper is to present the detailed case theory, argumentation and evidence of why the merger is anti-competitive and harms consumers, content providers and advertisers.
• The paper:
• Defines the market;
• Explains why Google-DoubleClick are competitors;
• Explains why startups, Yahoo and Microsoft can't compete with Google in search;
• Spotlights the four anti-competitive network effects of the merger; and
• Shows how the merger harms consumers, content providers and advertisers.

I see three big takeaways from my white paper.

First, the more people learn about this merger the more concern they will develop.

CNBC's Larry Kudlow hosted a debate over Chairman Martin's proposed open access/net neutrality regulations for the 700 MHz auction.

Both sides were ably represented:

• John Rutledge of Rutledge Capital took the free market view and
• Gerry Waldron who represents Google and worked for Chairman Ed Markey took the pro-regulation view.

Watch and enjoy!

Given the issue of whether or not the 700 Mhz auction is being run for the benefit of the American taxpayer, there is a very interesting quote from a Justice Department official today on their view of "bid rigging" in a competitive government auction, in this case concerning a defense contractor.

• "The antitrust division is committed to protecting the competitive market for Americans," said Assistant Attorney General Thomas O. Barnett, who heads the department's antitrust division. "We will continue to bring to justice those who rig bids and thereby deprive the public of the benefits afforded by a competitive bidding process."

It is interesting to juxtapose this Justice Department quote of today with another quote from today in the Dow Jones article on the 700 MHz auction, which quoted the position of Gigi Sohn of Public Knowledge on "bid rigging":

• She acknowledged that effectively Google and public interest groups were asking the FCC to "rig the auction" to facilitate a third national broadband competitor to the incumbents - AT&T Inc. (T), Verizon Communications Inc. (VZ) and the cable companies.

The ends don’t justify the means.

Frontline's Reed Hundt is mounting a furious eleventh hour effort to finagle a backroom sweetheart deal for his company from the FCC, in the 700 MHz auction. He attacked the outstanding op ed in the Washington Post by Robert Hahn and Hal Singer in both the Post and in RCR.  Our former Big Government FCC Chairman, Mr. Hundt also apparently has lost his cool and perpsective in railing against the rollout of the new, innovative and already successful iPhone as somehow a market failure that only his company can cure.

Kudos to Robert Hahn and Hal Singer for their outstanding op ed in the Washington Post "Earmarked Airwaves."

• The editorial cogently presents the fork in the road that faces any major FCC decision: to follow law, which promotes competition and market-driven outcomes, or to freelance and try and "manage" competition and pick winners and losers in advance through "spectrum earmarking."
• FCC history is littered with freelance "managed competition" failures, but two are particularly ignominious and highly relevant to this 700 MHz auction:
• the illegal UNE-P scheme to rig telecom competitive outcomes following the 1996 Telecom Act; and
• the Nextwave auction scandal that kept 30 MHz of prime spectrum fallow and tied up in court for almost a decade.

At its core a spectrum auction is the quintessential type of competition. The auction law's purpose in 1993 was to use market forces, competition, to allocate the public's asset most appropriately, largely because previous FCC spectrum allocation processes were so ineffective, unfair and prone to serious abuse and graft.

• While no process is perfect, a clean competitive auction process has proven highly effective in rewarding US taxpayers and fostering a growing and highly competitive wireless marketplace that greatly benefits consumers.

This 700 MHz auction may be shaping up to be FCC Chairman Kevin Martin's legacy moment: will it be marked by promoting competition and market-based outcomes or will it be marked by standing on the auction scales to ensure the spectrum is "earmarked" to the predetermined, chosen "winner" -- in this case former Clinton-Gore FCC Chairman Reed Hundt's Frontline Wireless company.  

Can you believe it?

Google launches its new public policy blog today and the NetCompetition/Precursorblog is not one of the blog links under "What We Are Reading!" Horrors!

First of all, it is not very "authentic" of the Google bloggers to not admit that they regularly read Precursorblog -- we know they do!

• Of course they do.
• It's just one of those guilty pleasures that they do behind closed doors because it is not politically correct at Google to expose one's mind to conservative or free market thoughts.  

Second, don't you believe for a minute that Google does not want to know what their latest public policy or PR vulnerability is.

The following is the comment I posted to Google's first "authentic" blog post on net neutrality in Google's new public policy blog:

Welcome to the blogosphere! We congratulate Google for joining the NN debate more openly using your own "authentic" voice and not those of your surrogates. It is also about time for Google to be more specific on the issue of net neutrality.