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How much should Google be subsidized?

Pending FCC policy proposals in the National Broadband Plan and the Open Internet regulation proceeding would vastly expand the implicit multi-billion dollar subisidies Google already enjoys, as by far the largest user of Internet bandwidth and the smallest contributor to the Internet's cost relative to its use.

Interestingly, the FCC's largely Google-driven policy proposals effectively would:

  • Promote Google's gold-plated, 1 Gigabit broadband vision for the National Broadband Plan at a time of trillion dollar Federal budget deficits;
  • Recommend a substantial expansion of public subisidies for broadband that would commercially benefit Google most without requiring Google to contribute its fair share to universal broadband service; and
  • Regulate the Internet for the first time in a way that would result in heavily subsidizing Google's out-of-control bandwidth usage. 

I.   Does Google need more subsidies?

Google is one of the most-profitable, fastest-growing, cash-rich companies in the world, with over $10b in annual free cash flow, 17% revenue growth, and ~$25b in cash on hand.

Google to DOJ/Court on Book Settlement: Good Intentions Trump the Law

Google effectively blew off the DOJ's antitrust, copyright and class action objections to the amended Google Book settlement in Google's 77-page brief to the Federal Court adjudicating the settlement. 

In a nutshell, Google argued that its settlement is "remarkably creative" (p 28), and "fair, reasonable and adequate" (p 67). It focused on the settlement's benefit to humanity: "the benefits of approval are bounded only by the limits of human creativity and imagination" (p 2). Google also effectively instructed the Judge to accept its redefinitions of copyright, antitrust, and class action law and to reject the DOJ's interpretation of the law and its "cramped view of the court's jurisdiction" (p 10).    

The core thrust of Google's argument is political. Google essentially asks the court to make a political, not a legal, decision to:

  • Disregard existing antitrust, copyright, and class action law;
  • Ignore the opinion, expertise and standing of the DOJ, the United States' Chief Law Enforcement Officer;   
  • Effectively rewrite copyright law; and
  • Permanently enthrone Google as effectively the derivative use caretaker and gatekeeper of millions of "orphan works" which Google illegally copied.  

I.   Google's argument is fundamentally political.

Google's Privacy "Buzz" Saw -- Privacy vs Publicacy Series Part XIX

Kudos to Nicholas Carlson of Silicon Valley Insider for an outstanding must-read post on Google's new social media additions to gmail it calls Google Buzz: "WARNING: Google Buzz has a huge privacy flaw."

Top Questions for Google's New Broadband Network

Google announced it plans to enter the competitive broadband market and will build out what it calls an "ultra-fast" fiber broadband network that would be available to 50,000 Americans, 500,000 at most.

Given that the purpose of my new watchdog site www.GoogleMonitor.com is making Google more transparent and accountable -- I offer some pertinent questions people may want to ask Google about its new high-profile broadband plans.

Google-AdMob: "It's too new to be dominated" -- Antitrust's Pinocchio Series Part III

Google[-AdMob] has come up with another "we think everyone is stupid" defense of Google's anticompetitive behavior: "It's too new to be dominated."

  • This new Pinocchio antitrust defense nicely complements its previous grand deception that "competition is one click away,"  and its previous insult to everyone's intelligence that scale is not important to search.  

Google Spokesperson Adam Kovacevich [and AdMob's CEO Omar Hamoui set] up a new "straw man" antitrust problem, easily knock it down, and then presto! conclude Google's acquisition of AdMob is not anticompetitive. From James Temple's San Francisco Chronicle piece:

 

  • "Google spokesman Adam Kovacevich stressed that mobile advertising remains highly fragmented, with more than a dozen networks like AdMob. ..."
  • [AdMob CEO Omar Hamoui] "did say that ... antitrust critics misunderstand the online search industry, and that he's confident regulators will approve the deal once they grasp the nuances of the nascent sector.
  • "We do display advertising on mobile, which is not an area that Google (or) anyone has dominated," he said. "It's too new to be dominated."

 

The deception here is three fold:

DOJ Review of Comcast-NBCU Good for the Companies

News reports that the DOJ, and not the FTC, will conduct the antitrust review of the Comcast-NBCU deal is a very good development for the companies. 

First, DOJ's filing to the FCC on the National Broadband Plan just this week showed that the DOJ clearly understands that the cable industry is competitive and that DBS competition has improved innovation, content choice, and customer service in the market, and that telecom competitive entry has provided pricing pressure to the cable market as well. (See pages 15 & 16 of the DOJ filing.) 

Second, that same DOJ filing shows that DOJ rejects the radical thinking of FreePress that competition must be commodity-like to be competition and that pricing should be based on incremental costs. If the DOJ does not agree with FreePress' approach to analyzing competition in the National Broadband Plan they are unlikely to agree with FreePress' approach to analyzing competition in this Comcast-NBCU merger review. Simply, DOJ does not analyze competition and antitrust like FreePress does. DOJ is professional and driven by the facts and the law -- not politics. 

Third, the DOJ merger review process, because it is overseen by a single antitrust enforcer/prosecutor and not a commission with additional consumer protection responsibilities, is a much harder process for FreePress to politically influence/manipulate than the FTC. 

DOJ Rejects Broadband Market Failure Thesis

In a filing to the FCC on the National Broadband Plan, the DOJ Antitrust Division, the U.S Government's leading expert in assessing the state of competition in communications markets, implicitly rejected net neutrality proponents' core thesis of broadband market failure.

  • This DOJ filing, which represents the most recent U.S. Government expert assessment of broadband competition, could make it extremely difficult for the FCC to legitimately conclude in the coming months the factual opposite --  broadband market failure.
  • Without a sound factual finding of broadband market failure, it also could be extremely difficult for the FCC to legally justify preemptively mandating common-carrier like regulations on un-regulated broadband information service providers in the FCC's pending open Internet proceeding.
Let's review the DOJ's core broadband competitive conclusions, which are relevant to the alleged broadband market failure thesis and the FCC's open Internet proceeding.

First, DOJ implicitly rejected the assertion of net neutrality proponents that low adoption rates prove a lack of competition by explaining:

Anti-competition FreePress mocks antitrust, feigning support of video competition

FreePress, which philosophically opposes competition policy, effectively is mocking antitrust law and authorities by cynically feigning to care about antitrust and competition in calling for an antitrust investigation of "TV Everywhere" efforts to enable authenticated paying video customers the additional convenience of accessing their paid-for content on any device at no extra cost. 

  • FreePress is misrepresenting its latest report -- "TV Competition Nowhere" -- as antitrust analysis when it is standard FreePress villain-ization of broadband and media businesses.   

In their own words, FreePress is anti-competition, anti-property, and anti-business. 

Google's Open Double Standard -- Fact-Checking Google's Treatise on "The meaning of open"

Google posted its treatise on "The meaning of open" designed to redefine the word "open" in Google's image. It is an important read because it is a bay window view into the altruistic way that Google yearns for the world to perceive it.

  • Like most all of Google's PR, however, Google's Treatise on "The meaning of open" may be "the truth" as Google sees it, but it is certainly not "the whole truth and nothing but the truth."

I.   Google's  Open Double Standard

Simply, Google is for "open" wherever it does not have a monopoly or dominant market position, however where it does, as in AdWords, AdSense and search advertising syndication, it is closed, to ensure that its dominance remains impregnable to competitors.

In the height of irony, Google has cleverly flipped a concept that was originally designed to be a sword of competition to a closed monopoly, and applied it as a political/PR shield to protect Google's closed monopoly from competition. 

Googleopoly V -- Why the FTC Should Block Google-AdMob

Below is the abstract of my latest white paper in my five-part "Googleopoly" series of antitrust white papers. The full white paper is at this link and at www.googleopoly.net.

 

Googleopoly V* -- Why the FTC Should Block Google-AdMob

The Top Ten Reasons Why Google-AdMob Would “Substantially Lessen Competition”

 

By Scott Cleland,** President, Precursor LLC

December 16, 2009

 

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Q&A One Pager Debunking Net Neutrality Myths