FTC

The recent comments and actions of the EU’s top antitrust enforcer, combined with recent drastic actions by Google, speak volumes about the tough EU antitrust outcomes Google faces going forward. While the Brussels-based media appreciate the serious antitrust risk Google faces in the EU, it is not clear whether the U.S.-based media or investors are paying much attention -- yet.

In a nutshell, recent signals from the EU and Google suggest that the conventional wisdom in the U.S. and among investors is underestimating the real antitrust risk to Google in imagining there ultimately will be a relatively benign settlement or just a fine, and not appreciating the EU’s likely Prohibition Decision remedy will impose a non-discrimination/neutrality duty against anticompetitive self-dealing, which could result in significant to substantial changes to Google’s business model and operations -- potentially globally.

Less is not more. That’s real “common sense.”

When one’s actions demonstrably create a worse rather than better outcome net-net, like the FCC’s new Title II ISP privacy policy does, others would justifiably consider it a mistake.

While the FCC obviously complied with President Obama’s call for regulating broadband as a Title II utility, the FCC obviously ignored President Obama’s 2011 call  for a 21^st century regulatory system, where he said we are “making it our mission to root out regulations that conflict, that are not worth the cost, or are just plain dumb.”

Let’s consider how the FCC’s new privacy policy fails this President Obama stated standard for “modern” regulation.

When the FCC reclassified broadband to be a Title II telephone utility last year in its Open Internet Order, the FCC trumpeted one of the great net benefits would be increased consumer privacy protection.

Few outside of Alphabet-Google understand the immense market, economic, and technological power of an unaccountable monopoly over the underlying software that controls most all mobile devices in the world. Fortunately EU antitrust enforcers are some of the few who understand it.

Android, Alphabet-Google’s licensable mobile operating system, is an apparent EU/global monopoly facing an apparent EU antitrust case in its future.

This analysis explains why Android is a monopoly for antitrust purposes; what the crux of the Android antitrust case is; and why such a case would enjoy a uniquely solid foundation. 

Looking backwards makes it hard to see what’s right in front of you.

Looking backwards at 1934-era Title II telephone utility law, the FCC concluded in its 2015 Open Internet Order that only broadband providers could be “gatekeepers” warranting net neutrality regulation to “protect and promote the “virtuous cycle” that drives innovation and investment on the Internet.”

That’s because the FCC is apparently oblivious to the very different 21^st century communications “gatekeepers” right in front of them that command dramatically more potential “gatekeeper” market power than any broadband provider.

The FCC should listen to what one 21^st century communications provider, which commands well over a billion social and communications users globally, has to say about the dominance of edge platforms.

Wake up world, you’ve been disintermediated.

Google now essentially stands between you and most everyone and everything on the Internet.

Google’s dominant search engine + its dominant Android operating system (OS) + its world-leading Chrome web browser + its uniquely-comprehensive, Internet utility functionality of 193 products, services and tools = a virtual Google “Inner-net” regime.

Google’s Inner-net has practically assimilated most all of what the public open-source WorldWideWeb does for Internet users and much, much, more. And it also has practically insinuated Google-controlled code into a virtual intermediary position between most everyone and most everything on the Internet.

It’s the FCC-forcing-proprietary-video-to-be-free-to-Google stupid!

That’s a Jim Carville-esque paraphrase of the FCC’s AllVid commercial navigation device proposal to focus the mind.

The FCC spins its AllVid proposal as pro-competition in isolation when in reality the evidence will prove it profoundly anticompetitive overall.

What’s a consumer to think about what the FCC’s responsibility is for their privacy protection?

Let me try to explain to a consumer what the Federal Communications Commission (FCC) arbitrarily has done, and apparently intends to do, for consumer internet privacy protection going forward.    

By way of background, for the first decade of the Internet when consumers used dial-up technology, the FCC was responsible for protecting consumers’ private network information from commercial use without their permission.

For the second decade of the Internet when consumers came to use broadband technology, the FCC ceded its dial-up-Internet privacy protection authority to the Federal Trade Commission (FTC) which became responsible for consumer privacy protection from unfair and deceptive practices consistently across the entire American Internet ecosystem, regardless of who interacted with consumers’ private information.

Last spring, in order to assert legal authority to enforce net neutrality to protect edge providers from potential traffic discrimination in the FCC’s Open Internet Order, the FCC incidentally clawed back some privacy authority over Internet communications -- over the FTC’s strong objections.

Does the impartial administration of justice, the integrity of the U.S. Government, and the oath of all federal employees to support and defend the Constitution of the United States, require that private interests not be allowed to supplant the public interest?

In the next several weeks, expect the EC’s Competition Directorate to decide that Google is in fact dominant with >90% share of Internet search in Europe and that Google has abused its search dominance by biasing its own Shopping service over competitors. It also could formally charge Google for abuse of its search dominance in contractually tying Google Search and other search-driven apps like Maps, YouTube, etc. to Android to extend its search dominance to mobile search and to the operating system market where Android now owns >80% share.

In taking a most extreme and ultimately indefensible legal and PR position, that the EU antitrust case is “wrong as a matter of fact, law and economics,” Google has painted itself into a corner, PR-wise and politically, much more than many appreciate. Why?

The EC’s Antitrust Chief, Margrethe Vestager, is signaling that some Big Data may be anticompetitive. She recently told a conference: "These incredible powerful tools, like search engines and social media, are available for free. In many cases, that's because we as consumers have a new currency that we can use to pay for them – our data. …If a company's use of data is so bad for competition that it outweighs the benefits, we may have to step in to restore a level playing field."

The issue of whether privacy/data protection violations can be anti-competitive in Google’s case is now especially ripe.