Conflict of Interest

FreePress' standard gameplan is to avoid engaging issues on the merits by constantly attacking opponents as biased corporate "shils" or "astroturf" that no one should listen to. I have long been up front that I represent broadband interests. FreePress, and their supporters, however, do not live up to the transparency standard that they demand of others.  

For example, FreePress' urged Washington Post reporter Cecilia Kang to post that The Washington Post editorial opposing net neutrality "The FCC's Heavy Hand" should have disclosed the Post's ownership of cable properties. On that basic point of transparency/disclosure I agree. 

However, when it comes to the news, Ms. Kang appears to have failed to disclose her increasingly obvious bias for promoting FreePress and their net neutrality agenda.

Just a year ago, Public Knowledge wrote a letter to the FCC in strong opposition to long distance carriers blocking phone calls from "traffic pumping" sites that the carriers alleged were fraudulently gaming/arbitraging the access charge subsidy system. 

• ("Traffic pumping" is a regulatory arbitrage scheme where some rural carriers offer specialty-websites in order to bring basically one-way traffic to an access charge financial system designed for two-way offsetting traffic. The effect is that the rural carrier/specialty-site effectively turns the carriers into a one-way ATM machine where they can take money out of the system without having to put any in.)  

Now that Google is alleged to be doing the same thing that the FCC and Public Knowledge said carriers could not do, i.e. blocking calls to these same sites, where is Public Knowledge in objecting?

• If Public Knowledge's views are principled and truly based on forwarding the public interest, it should be only a matter of time that Public Knowledge formally and strongly objects to the FCC in writing -- for Google doing the same thing that Public Knowledge strongly objected to when carriers did it.
• Principle is principle.      

   

   

   

The crux of the Google Book settlement will be whether the Court effectively sanctions the creation of one de facto world digital book library, or whether it will facilitate the continued proliferation of many libraries of digital books throughout the world. 

• Put differently, will the legal settlement of the greatest alleged book theft in world history -- de facto concentrate control over access to digital books into the hands of only one entity -- Google (the alleged copyright violator)...
• Or will the settlement preserve the current longstanding competitive/cooperative system of  public, private, and academic libraries where control over access to books is dispersed among many independent and diverse organizations around the country and the world?  

The Internet Archive, a "non-profit library," recently petitioned the Court to try and ensure the diverse latter outcome and not the concentrated former outcome.

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?

Winston Churchill prophetically said: "history is written by the victors." This truism is timely now given Eric Auchard's great column "How the web devours history," that I built upon in my latest post: "Will history be the casualty of an 'ecommony?' If info is free who will pay to archive it for posterity?" 

Given the Internet's natural first-mover dynamic, global scale and scope efficiencies and powerful reinforcing network effects, which I have written extensively on, could the Internet's 'victor' effectively write history by deciding what information ultimately gets archived and found?

To answer that question requires establishing some important baseline points.

A tip of the hat to Andrew Orlowski of the Register for connecting some important dots others did not in his piece "Google cranks up the consensus machine."

• Andrew noted the exceptionally important precursor that Google's Marissa Meyer indicated in a Techcrunch interview that, going forward, Google would cross it's neutral search line and begin editing search results produced by its currently human-intervention-free algorithm.

This is a big deal because Google has long preached that much of the value and relevance of Google's searches is that the search algorithm is fully automated and thus objective and not biased by human input.

Andrew is wise to ask what standards Google will employ in deciding which search results to effectively censor and which search results to vault to the top of the first page? And will they share them with us or will they be opaque like the advertising Quality variable? 

• It is important to know what the standards will be because this is a very slippery slope with far reaching implications.

It will also be interesting to see if the guardians of free speech on the Internet also connect the dots that the heretofore "neutral" barrier is being breached for the Internet's dominant gateway to the world's information.

Lots to think about -- if this is indeed a paradigm shift for the Web 2.0 movement.

"On Nov. 17, Google began running ads on Google Finance, a financial-news site, and said it would soon start showing ads to some users of its Google News service as well." That was the big news in the Wall Street Journal's front page story "Google gears down for tougher times."

Is Google, which owns the world's largest Internet audience, with over 700 million users, a direct competitor to all media? You bet!

The anticompetitive significance and conflicts of interest in what Google is now doing are very large.

To date Google lulled its competitors into a false sense of security in building an audience for Google News and Google Finance but not directly competing with Google's supposed media partners for online ads.

• The Googleopoly is now behaving like any monopoly does.

The problem for media companies is that Google is a non-transparent black box, which represents itself to be an honest broker of ads -- when it is not. It obviously has a huge financial conflict of interest in serving ads.

• How can Google claim to be an honest broker of online ads when it controls ~90% of all online avertising profits in the U.S. and is planning to blatantly self deal and front run the interests of their media customers?

What Google is proposing to do is the conflict of interest equivalent of auditing their own books, or grading their own papers.

I consider myself of like mind with my friend Adam Theirer of PFF on most all issues of substance, however, I must take strong exception to his misguided take on Google and Googlephobia. 

In Adam's post "Googlephobia: Part 6 - the Left Begin to Turn on Google":

Google's CEO Eric Schmidt met with the New York Times Editorial Board last week, most likely on a charm offensive in response to the Rosenkranz Foundation oxford-style debate about whether or not "Google violates its 'Don't be evil' motto." 

• David Carr, a columnist for the New York Times who attended the Schmidt meeting and who wrote "Google seduces with utility", asked Mr. Schmidt if he should "be worried that I am putting all my digital eggs in in one multi-colored, goofy lettered basket,  he said. That depends on what you think of our company and our values. Do you believe we have good values?"

Once again, Google is truly its own worst enemy.

There are reports that the IRS is investigating whether tax exempt Mozilla, the foundation behind the popular Firefox browser, can legitimately claim tax exempt status when 88% of the Foundation's revenues come from Google in payments for being the default search engine for Firefox downloads. 

I believe the DOJ should also consider investigating the Google-Mozilla relationship to see if Google anticompetitively gained an advantage -- given the facts, timing and circumstances.