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Innovation

FTC-Google-Apple: What's wrong with this picture?

Curious. Very curious. Now reports have it that the FTC is investigating Apple for mobile ads, given what they learned from their ultimate approval of Google-Admob, despite that merger raising "serious antitrust issues." 

What's wrong with this picture?

First, apparently the FTC has concluded that the real risk to competition is not Google-AdMob (that had the #2 player Google buying #1 AdMob for ~75% market share of in-app mobile advertising), but a new entrant, Apple, that had no advertising share at all just a few months ago and bought the weak #3 competitor with less than 10% share.

  • There must be a new FTC antitrust doctrine at work here that I had not heard of -- that the biggest anti-competitive threat sneaks up from innovative new entrants with better products and services! Huh?
  • The FTC also appears to be breaking new antitrust ground in implying that a non-dominant company's individual products, like Apple's iPhone, iPod, and iPad, are all individually separate antitrust markets and all basically essential facilities. Huh?

Second, if the FTC really concluded that competition was sufficient to mitigate the "serious antitrust issues" of Google-AdMob, why not let that supposed mitigating competition from Apple actually compete and mitigate the "serious antitrust issues" with Google-AdMob combining? Does the FTC have faith in their competitive assumptions in Google-AdMob or not?

FCC Understating Systemic Risks of "Third Way" -- Why It's a Disaster Waiting to Happen

The FCC is vastly understating the systemic risk involved in the FCC's radical "third way" regulatory surgery to the Internet, the communications sector and the economy.

  • The FCC's proposed "third way" is an elaborate public relations facade that disguises huge problems and fatal conceptual/practical flaws that will become painfully obvious over time.
  • The FCC's proposal is long on politics and soothing rhetoric, but short on real world practicality or legitimacy; it predictably will ultimately collapse under its own weight, complexity and hubris -- unfortunately leaving exceptional carnage in its wake.
  • Simply, this proposal is too inherently contradictory and mind-numbingly complex, and too big not to fail.
  • This analysis will explain why it is a disaster waiting to happen; it's not a matter of if, but when the "third way" will collapse on itself.

I.  Why this "third way" is a disaster waiting to happen:

The best way to understand what is going on here is to think of the Internet as a brain and the FCC's "third way" proposal as brain surgery to fundamentally rewire how the Internet brain operates at its most basic level.

More Reasonable Hill Thinking on Net Neutrality

At the recent Senate Health IT hearing, it was very good to hear Senator Wyden say that it's "appropriate for Congress... to start thinking... about an HOV lane for e-care for wireless broadband" and questioning why an emergency healthcare service should not be accorded priority transmission over less important/urgent services.

  • This is a much more realistic, reasonable, and nuanced point-of-view than Senator Wyden's original net neutrality stance a few years ago when he said that: "all bits are created equal" on the Internet.  

Senator Wyden's moderating view on net neutrality reflects a better and growing understanding of how essential reasonable network management is. Communications networks have long accorded priority to first responders in a crisis.

The essential needs for prioritization of Internet traffic and reasonable network management are basically two-fold:

Google now tying website speed to search ranking -- Why is that anti-competitive?

Google announced 4-9-10 that "we've decided to take speed into account in our search rankings" in a Google blog post by Amit Singhal and Matt Cutts entitled: "Using site speed in web search ranking." (Thanks to the Register's Cade Metz for flagging this issue.)

Two don't miss op-eds to read today: FCC Commissioner McDowell's & John Kneuer's

I highly recommend two oustanding op-eds that you should be sure to read if you care about the future of the Internet and FCC matters:

  • FCC Commisioner Robert McDowell's outstanding op-ed in the Washington Post today entitled "Hands off the Internet"; and
  • Former NTIA Administrator John Kneuer's different and excellent take in his op-ed for the Daily Caller today entitled "A Hippocratic Oath for the Internet."

     

     

     

     

 

Harms of a Potential New FCC De-Competition Policy -- Reply comments to FCC Open Internet NPRM

The FCC's proposed Open Internet Regulations and/or the oft-rumored potential re-classification of broadband as a Title II telephone service effectively would create a new FCC "de-competition policy." (For the one-page PDF submitted to the FCC click here)

 

A new FCC "de-competition policy" would:

Required viewing for New America's wireless whiners

Don't miss the hilariously poignant comedy video clip (4 min) of comedian Louis C.K. from Conan O'Brien's show on how "everything's amazing and nobody's happy."

  • Louis C.K.'s lampoon of how ridiculous it is to whine when new amazing phone and broadband technology does not work perfectly or immediately, should be required viewing at the New America Foundation's planned whine-fest "panel discussion" entitled "why your cell phone is so terrible," which I previously blogged about yesterday. 

Like the parable of the boy who blurted out the truth that the emperor had no clothes on, after the emperor was duped by tailors claiming to use "special" thread only visible by "smart" people, the folks at the New America Foundation/FreePress are trying to dupe the FCC into mandating new net neutrality regulation by claiming that everyone who is really "smart," like the folks at New America, know that cell phones are "terrible." 

If you did not read my systematic rebuttal of how ridiculous a premise that cell phones are "terrible" is, please see my previous post for the evidence-laden case.        

 

 

 

 

 

Swanson: Innovation doesn't come from Government -- Read his new great op-ed

Entropy Economic's Bret Swanson has another great, clear-thinking op-ed that I recommend you read, this time in RealClearMarkets.com entitled: "Entrepreneurial Innovation and the Internet."

Bret incisively captures the amazing and dynamic nature of innovation in the currently unregulated Internet ecosystem, and cautions against Washington imagining that the Federal Government can do better than free market competition can with top-down innovation micro-management from slow-moving bureaucracies.

His piece also helps spotlight the huge disconnect over where innovation comes from. 

  • FreePress, Public Knowledge and other net neutrality proponents imagine that Government regulations, restrictions and limitations on the freedoms of property owners somehow magically will foster more net innovation by those who don't believe in private property.
  • Google, eBay and Amazon imagine that they can increase overall Internet innovation, if the FCC would only require broadband providers and potential competitors to seek permission from the FCC, (and by proxy -- permission from Google, eBay and Amazon) before they implement any network innovations in the marketplace.      

It is naive to think that FCC regulation can surgically micromanage what innovation is good and allowed and what innovation is "bad" and discriminatory -- before the fact.

Key ACI study shows regulation is anti-innovation

Kudos to Larry Darby of the American Consumer Institute for his outstanding new study on the destructive effect of regulation on innovation. Please read it if you are at all interested in innovation.

The study debunks the views of some that government, regulation and regulators are somehow a font of innovation. 

After reviewing the relevant literature and evidence on the subject, Dr. Darby concluded that:

  • innovation is naturally flourishing without government involvement or micromanagement;
  • burdening broadband providers with new common carrier burdens would severely discourage innovation; and 
  • limiting innovation in one part of the ecosystem would ultimately diminish innovation in the entire Internet ecosystem.

At core, the new notion floated by some that more FCC regulation would encourage innovation is nonsensical and unsupported by any literature or evidence.

The big takeaway here is that new "Mother may I" regulations, which effectively require some market participants to get FCC approval for their innovations, in order to protect or advantage others' innovations, is not innovation policy. It is old-fashioned industrial policy where government picks market winners and losers. This is a policy approach long proven to grossly underperform market-based policies.

 

   

 

 

 

 

 

 

Stress-testing Google's Top Ten Antitrust Defenses -- Part IV of Antitrust Pinocchio series

Google announced it was under preliminary investigation by EU Antitrust authorities due to several antitrust complaints filed against it, and it began to frame its antitrust defense against the charges.

  • How well do Google's top ten antitrust defenses hold up to scrutiny?  

    1.   "This kind of scrutiny goes with the territory when you are a large company." (Julia Holtz, Google's Senior Competition Counsel, Google Policy Blog post

    • No. Over 99% of the Global Fortune 1000 are "large," but are not under antitrust investigation for monopolization.
    • This kind of antitrust scrutiny occurs to a very select few companies -- only companies that serially act anticompetitively. 

    2.   "We've always worked hard to ensure that our success is earned the right way -- through technological innovation and great products, rather than by locking in our users or advertisers, or creating artificial barriers to entry." (Julia Holtz post)

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Q&A One Pager Debunking Net Neutrality Myths