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Innovation

AT&T - T-Mobile in Competitive Perspective

As the DOJ and FCC research and sort through the competitive facts of the AT&T-T-Mobile acquisition for themselves in the months ahead, it will become clear that opponents' current rhetoric and assertions are over-the-top, exaggerated and simply not credible.

  • FreePress and others' claims that this transaction will enable AT&T to "monopolize everything" and reconstitute the "Ma Bell Monopoly," are political demonization arguments devoid of evidence; they are designed to discredit U.S. competition policy, demonize free markets, and justify new FCC interventionist regulation like net neutrality, special access etc.

I.   The Relevant Facts:

Implications of DOJ-Google/ITA Antitrust Settlement

There are many major going-forward implications resulting from the DOJ's latest antitrust enforcement action against Google -- this time to mitigate the anti-competitive effects of the proposed Google-ITA transaction.

 

 

 

Summary of Implications:

  1. Google is clearly the DOJ's main antitrust concern.
  2. DOJ is 4-0 against Google while FTC is 0-2.
  3. DOJ concludes Google is a monopoly -- again.
  4. Remarkably, Google is actively choosing a regulated future for itself.
  5. Google is choosing the trajectory of a regulated antitrust remedy long term over the trajectory of a break-up remedy.
  6. The narrow market definition is good news for those privately suing Google for antitrust violations.
  7. The Google-ITA "firewall" will prove very difficult for the DOJ to police effectively.
  8. The complaint mechanism is important.

 

Google's Deceptive "one click away" Antitrust Defense -- Part VIII Google Antitrust Pinocchio Series

As reports swirl that the FTC and DOJ may be considering a formal antitrust investigation of Google, like the EU already launched in November 2010, Google continues its deceptive, one-dimensional, superficial, antitrust defense mantra that "competition is one click away," and that Google is only focused on users and innovation.

 

  • It is telling that just last week the FTC charged Google with deceptive privacy practices, and Google tacitly admitted its public deceptiveness and misrepresentation in submitting to the FCC's consent order; so I am not alone here in charging that Google is deceptive and misrepresents itself to the public.

 

So how is Google's antitrust defense deceptive?

First, Google's stale four-year antitrust mantra that competition is but a click away and Google puts users first, is deceptive because Google knows full well that competition and antitrust involves much more than just users -- as they claim -- but an entire competitive ecosystem.

 

Key Questions for Google's New CEO Larry Page

When the world's most powerful company gets a new CEO for the first time in a decade, everyone naturally has a lot of questions.

 

  • When new Google CEO Larry Page decides to become accessible to people outside the insular Googleplex, here are some key questions to ask Mr. Page about: priorities, management philosophy, privacy, antitrust, intellectual property, and social responsibility.

 

 

Priorities:

Is Google Android a Counterfeit Operating System?

Three completely different entities, coming from three very different perspectives/motivations, are all making the same charge against Google: that Google forged their work and stole/misused their property in creating its world-leading Android mobile operating system.

Google's 'Algorithmic Hand' Proves an Unstable Market Mechanism

Google's biggest-ever reordering of its search results this past week to reward what Google believes is high quality content and punish low quality content prompted an public epiphany this week that Google has the market power to effectively pick winners and losers in the online content market.

 

 

There are two big takeaways from this public epiphany that "Google is the de facto web content market:"

 

  • First, Google's "algorithmic hand" largely has supplanted Adam Smith's "invisible hand" market mechanism to pick web content winners and losers; and
  • Second, Google has proven to be a highly unstable, unpredictable and capricious economic platform/mechanism for online content entrepreneurs and businesses to try and build a successful and sustainable business on top of.

 

FCC Out-Europes Europe on Net Neutrality -- Why?

"The Net Neutrality Debate in Europe is Over" per an excellent commentary by Ben Rooney in WSJ TechEurope.

  • Mr. Rooney chronicles the evolving public position of EU Digital Commissioner Neelie Kroes from an original pro net neutrality regulation mindset, to now the opposite -- a more pro-competition mindset where "the commissoner's position now [is] that a competitive market should be able to deliver an Internet to which everyone has access."

For those who follow history, it is truly ironic, surprising, and just plain bizarre that Europe is more pro-competition on Internet policy than the U.S. FCC.

How can this be? To understand this wierdness, look at this remarkable development through the lens of industrial policy.

I posit the reason for this European policy outcome is the fact that Europe does not have a Silicon Valley lobby -- with an aggressive corporate welfare agenda seeking government special treatment, regulation of their competitors, and implicit bandwidth subsidies -- like the U.S. does. 

The stark and ironic contrast between the FCC's European-style, interventionist, regulatory approach, and Europe's more American, non-interventionist, competitive approach can only be explained by the presence of the potent lobbying force of U.S. industrial policy national champions (Silicon Valley -- Google, eBay, Amazon, IAC) in the U.S. -- and the absence of European national champions seeking net neutrality in Europe.

Privacy Will Burst Bubble 2.0

Expect privacy concerns to be the eventual catalyst that ultimately bursts the Internet investment Bubble 2.0. It is rare when there is a profound disconnect and suspension of reality between industry behavior/investment expectations and customer wants, needs and expectations, but that is precisely what is at work in Bubble 2.0.

 

  • Almost by definition, investment bubbles are unsustainable; what goes up must come down, it is only a matter of how and when -- not if.
  • Simply what fuels Bubble 2.0  is the patently false core assumption that the current unfettered, widespread, and largely clandestine data mining of individuals private information in order to target specific individuals with personalized online advertising:
    • Is aligned with real user interests;
    • Is a forthright business practice consumers are aware of and have meaningfully consented to;
    • Will not be legally constrained in the future; and
    • Will become the accepted norm -- meaning that the populace and governments will adapt to the wishes and desires of the online-ad- industry and not the other way around.
  • In a word, is online tracking, profiling and data mining a consumer-driven model? -- or a consumer-dragged model?

    This is deja vu for me. I've seen this movie before when I had a front row seat as the original dotcom Bubble 1.0 wiped away $4 trillion in market valuation in a few weeks.

    Preview Google's Apology for Collecting Kids SS#s

    See a preview below of Google's likely official public apology for collecting kids' partial Social Security #s and other private information -- without the permission of their parents.

    Per Google's Official Blog:

    "We are deeply sorry, very very sorry, and even oh-so-sorry for collecting partial social security numbers, date and place of birth on kindergartners and grade schoolers participating in the Doodle-4-Google contest.

    Calling Google's ITA Bluff

    The DOJ should call Google's bluff that it would fight the DOJ in court if the DOJ tries to block Google-ITA,  because Google will fold precisely because Google has so much to lose from going to war with the U.S. Justice Department over a $700m deal.

     

    • If DOJ decides to sue to block Google's acquisition of ITA Software, expect Google to walk away from the deal to maintain the status quo and to choose to not make their antitrust predicament massively worse by their own behavior.

     

    While Google blusters they have a strong case in court on Google-ITA, the last thing Google should want is for all their political and PR antitrust defenses to be subject to vivisection, sandblasting, and ridicule in public court for everyone to see.

     

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    Q&A One Pager Debunking Net Neutrality Myths