Innovation

The FTC is centering its Google antitrust investigation on Google's predatory search practices that anti-competitively abuse Google's dominant market power to thwart competition.

• As the dominant online information access gatekeeper, Google has unique market power over the one place online where every business needs to be able to compete in order to be found by potential customers.
• At core, Google's predatory search practices manipulate search results to anti-competitively advantage some Google content and disadvantage some competitors' content, all while misrepresenting to the public that Google's search business is unbiased and never manipulates search results.

Google's Predatory Search Practices

The FTC would not have launched this investigation if it did not believe Google has dominant market power in search advertising, and as such, has special legal obligations to not abuse its market dominance to impede competition -- market obligations that non-dominant firms do not have.

• Gaining or enjoying dominant market power or a monopoly is not illegal, but it is illegal to anti-competitively gain, maintain or extend dominant market or monopoly power.

The fundamental rationale undergirding the FCC's net neutrality regulations in the December Open Internet Order appears to be crumbling before our eyes in both the U.S. and the EU -- enough so to raise the question -- could they be "dead regs walking?"

In the U.S., a new White House Executive Order calls on independent agencies like the FCC to revisit "regulations already on the books to reduce outdated, unjustified regulations that stifle job creation and make our economy less competitive."

In a Washington Post op-ed entitled "A smarter approach to cutting red tape," Cass Sunstein, the White House's Regulatory czar, laid out a laudatory plan for Federal executive agencies "to eliminate burdensome requirements that hinder economic growth and job creation," with a big loophole problem -- the plan does not apply to "independent" agencies like the FCC and its burdensome net neutrality regulations in the Open Internet order.

It makes no sense that the FCC's net neutrality regulations, the veritable poster child of "unjustified burdens and pointless red tape," have escaped:

• The fact that the President directed: "all executive agencies to cut costs, to promote predictability, to streamline paperwork requirements, to choose the least burdensome approach, to listen to those affected by the rules and, through our 'regulatory look-back' process, to eliminate rules that just don't make sense."
  • There was no net neutrality problem to fix before the FCC order, and there is still no net neutrality problem the FCC needs to address now.
  • So the FCC's Open Internet order is the worst of all worlds -- it is basically all cost and no benefit.

More problematic is that independent agencies, like the FCC, supposedly are "creatures of Congress," but this FCC ignored a majority of Congress last year that asked the FCC to defer to Congress on net neutrality.

In another blow to its competition policy credibility and objectivity, the FCC's 308 page, 15th Wireless Competition Report, amazingly reached no conclusion about whether the wireless market was effectively competitive, despite overwhelming evidence of effective competition throughout the report and a dearth of evidence in the report of any discernible anti-competitive issues that would suggest the wireless market was somehow not effectively competitive.

• The stark incongruity between the overwhelming evidence in the report, and the absence of what should have been an easy report conclusion that the wireless market is effectively competitive, is certainly not "data-driven policy making at work.
• It appears to be politics at work to support and provide political cover for the FCC's maverick policy desire to promote de-competition policy and more expansive FCC economic regulation and common carrier-like duties a la net neutrality and data roaming -- in the face of strong opposition from Congress and the Courts that the FCC is over-reaching its statutory authority.

If only the FCC absorbed the significance of the data compiled in their own report, the FCC would conclude that the wireless market was effectively competitive.

Find an FTC-Google Antitrust Primer here that asks and answers the Top Ten Questions about:

• Google's admission it has received a subpoena and is under formal investigation by the Federal Trade Commission for antitrust violations; and
• What the FTC is likely investigating and thinking, given that the FTC cannot comment on an ongoing investigation.

This primer is based on a combination of new analysis and an update of the best of four years of Google antitrust research, which can be found at: www.Googleopoly.net.

The Top Ten Q&A are:

One of the simplest and most important FCC reforms Congress could make would be to modernize and streamline the FCC competition report process to stay current with the Internet competition era.

• Simply, Congress should eliminate and consolidate all legacy analog technology-specific "silo" competition reports (e.g. reports on wireless, video, or satellite competition, etc., including the 706 report) and replace them with one periodic Internet Competition Report that is forward-looking, flexible and dynamic so that the FCC and Congress can adapt and keep pace with the ever-evolving Internet competitive landscape.
  • Since the sector is competitively converging, the FCC's competition reporting process logically needs to converge as well.
  • This common sense best practice of replacing and consolidating outdated and redundant reporting efforts would not only save money in tight fiscal times, but also result in a more accurately informed FCC and Congress.
  • The FCC cannot stay current or help "win the future" by relying on fossilized competition reporting processes based on outdated technology and competitive assumptions.

Problems with FCC Silo Competition Reports

If reports are true that the FCC is planning on claiming in its upcoming wireless competition report that the FCC cannot conclude that the U.S. wireless market is effectively competitive, then the FCC is neither "data-driven" as it claims, nor in touch with market reality.

• Don't miss the latest CTIA assessment of U.S. wireless competition and innovation HERE.
• The facts and evidence are overwhelmingly indicative of vibrant competition.

If the FCC is a wireless competition denier in the upcoming wireless competition report, despite the overwhelming factual evidence to the contrary, the FCC seriously risks its going-forward credibility with Congress, the Courts, industry and the public.

Google's reported purchase of Admeld, described by TechCrunch as "an advertising optimization platform for publishers," appears to be another clever gaming of the antitrust enforcement process by Google to reinforce and extend its core search advertising monopoly.

• Google appears to believe they have figured out their monopolization-extension formula via antitrust enforcement, and are now in "lather, rinse and repeat" mode.

As I explained in formally opposing Google's acquisition of DoubleClick in 2007, which I believed would help quickly tip Google to monopoly (which it did) by allowing Google to buy the roughly third of user, advertiser and publisher relationships that they did not have, antitrust enforcers focused myopically on the market of the acquired company and missed the monopolization-extension significance and effect of the purchase on substantially augmenting the core Google search advertising monopoly.

Google's exceptionally clever gaming of the antitrust enforcement process here, is a relatively simple and powerful maneuver that only Google can do, because only Google has the near perfect market inside information that its search advertising monopoly provides.

The Rural Cellular Association’s opposition to the AT&T/T-Mobile acquisition puts a spotlight on the un-sustainability of the analog rural cellular model that is on the wrong side of broadband change.

• The clear but unspoken subtext of the RCA’s opposition is their recognition that their current subsidized model of rural cellular providers is fundamentally ill-equipped for the competitive broadband era.
• Simply, the RCA is quixotically trying to drag the anchor of an inefficiently and unsustainably subsidized analog business model into the efficient and competitive broadband Internet future – a recipe for losing the future.

Importantly, most of the RCA’s problems exist completely separate from this transaction.

In order to justify broadband price regulation in the Open Internet and Data Roaming orders, the FCC and FreePress must continue to undermine Congress' competition policy by denying the increasingly obvious and incontrovertible facts that users competitively substitute broadband services between various broadband technologies like copper networks/DSL, cable modems, fiber, WiFi/WiMax, wireless broadband, and satellite.