Google is the only major corporation publicly pressuring the FCC to require that all owners of proprietary video programming rights give away their valuable video property for free to Google and other companies online.
It is telling that to date no other major corporation has been willing to risk their brand publicly advocating for FCC-sponsored piracy to forcibly redistribute corporate wealth from Big Content to FCC-BFF-Google.
The evidence in this analysis will show that Google is the only entity in the world that has both the long-stated mission, i.e. “to organize the world’s information and make it universally accessible and useful,” and the global monopoly power and corporate functional capabilities to fully commercially exploit this FCC-sponsored piracy proposal.
Only Google commands: “monopolies over search and search advertising” (per the 2012 FTC staff report); an Android monopoly over the licensed mobile operating system market for smartphone/tablet navigation devices; an Internet video distribution monopoly in YouTube; a meta-data collection monopoly that uniquely collects metadata and personal data (like viewer data) on global Internet usage of all types, functions, systems and devices; and monopsony (one buyer) power as the de facto, lone global “buyer/aggregator” of all the world’s content, products and services in its monopoly search index.
(While some other companies also may be able to profit a little initially from the proposed FCC-sponsored piracy, none of them will have a chance long-term competing with Google’s unprecedented breadth of monopoly and monopsony powers spotlighted just above and documented below.)
Guggenheim Partners analyst Paul Gallant recently spotlighted Google’s content aggregation monopsony power in brilliantly observing in Washington Internet Daily that: “Set-top viewer data is the last tranche of data unavailable to Google.”
Please take note that the FCC’s AllVid navigation device NPRM proposes “to require multichannel video programming distributors (“MVPDs”) to [publicly] offer three flows of information … (1) service discovery (information about what programming is available to the consumer, such as the channel listing and video-on-demand lineup, and what is on those channels), (2) entitlements (information about what a device is allowed to do with content, such as record it), and (3) content delivery (the video programming itself…).” [Bold added for emphasis.]
This telling summary AllVid requirement exposes that the FCC’s AllVid proposal has little to do with “set-top box competition” and everything to do with mandating that video programming companies’ “offer” their proprietary video “flows of information” for free in an easily index-able and copy-able format.
The practical antitrust effect of this AllVid proposal would be highly anti-competitive overall. That’s because it would artificially force the separate antitrust defined markets of offline and online advertising (as determined by the DOJ and FTC) to function going forward as one overall advertising market for video programming -- via an arbitrary and capricious government mandate. (See this one-page chart contrasting the offline and online advertising markets.)
The Case Why Only Google Can Fully Exploit the FCC’s AllVid Proposal
No one can compete with Google’s global search and search advertising monopolies.
Search: Google Search serves >2 billion users globally who collectively conduct >100 billion searches a month. Since October 2015, >50% of Google searches are mobile. StatCounter’s latest global search market share for Google is >90%, ~30 times more market share than its next biggest search competitor, Microsoft’s Bing. Google’s search works in 123 languages, Microsoft’s Bing in 40 languages. Google search offers a uniquely large and comprehensive information set via the world’s largest search index size by far, >100 million gigabytes that’s generated from crawling over 60 trillion unique URLs.
Other than Microsoft, no other potential AllVid video beneficiary has a search engine or a search advertising business. And Microsoft Bing can’t compete with Google on the mobile half of the global search business, because Microsoft effectively ceded its struggling mobile business to Google last year when it shuttered its Nokia business, sold most of its ad business to AOL, and sold some of its mapping business to Uber.
Search Advertising: Emarketer estimates Google has 72% share of U.S. search advertising, and notes that Microsoft is not even in the top eight mobile advertisers, which is telling given that half of all searches are mobile and over half of all Internet traffic is video. Google serves 4 million advertisers, 2 million more than any other digital advertiser. Over 2 million websites are Google display ad partners and 1.2 million websites depend on Google Maps. ~98% of the top 15 million websites globally depend on Google Analytics for their advertising livelihood.
Android: No one can compete with Google’s Android free OS monopoly. Given that Apple’s iOS is not a competitor for antitrust purposes, Gartner stats per Statista show that Google commands ~97% market share of 2015 global smartphone shipments. Android, with a unique >1.5 billion monthly active users, is the only viable licensable mobile operating system globally, uniquely licensed by a critical mass of 400 OEMs, >550 carriers, and ~4,000 distinct devices -- per Google. In addition, Google commands the world’s leading browser-based operating system, Chrome, with >1 billion users and 57% market share globally, which is 3.5 times the share of the next competitor, Microsoft Explorer, per StatCounter. Google plans to consolidate Chrome with Android in 2016 per the WSJ.
Internet Video Distribution: No one can compete with the scale, scope and reach of Google-YouTube’s Internet video distribution monopoly either. YouTube now has roughly two billion monthly users around the world (given that it announced one billion monthly users in March 2013, disclosed that in just one of the three years since, it grew at a 40% annual viewership rate, so if we assume youTube grew viewers at only half that fast in the other two years, say 20%, the 1.0 billion x .1.4 x 1.2 x 1.2 = 2 billion YouTube users.)
Google has no peer in offering localized versions of YouTube in 85 countries in 76 different countries covering 95% of the world’s population. There are~1.1 billion videos on YouTube with ~7.8 trillion all time views, per Tubular Labs.
Per comScore’s February 2016 “U.S. Desktop Online Video Rankings,” Google-YouTube was viewed by 77% of American online video viewers (182m of the total 234m) as compared to Facebook’s 35% (81m), Yahoo’s 25% (58m), and Comcast NBCUniversal 19% (44m).
The most recent comScore data comparing videos viewed and minutes per viewer are from March 2014, had Google outpacing Facebook, 2.4x and 3.7x respectively, AOL 8.4x & 5.9x, Yahoo 19x & 4.6x, and Amazon 67x & 11.7x.
Monopsony Buyer/Aggregator of the World’s Content: Most people do not know that when they conduct a search they are not searching the actual Internet, they are searching the near exact copy of the Internet that resides on Google’s computer, plus all of the proprietary content that Google has bought or taken from others without the permission or payment (that can be found nowhere else), plus all the >190 Google products and services and the associated content, data and metadata that those Google products and services generate.
That’s why then Google CEO Eric Schmidt said in 2002: “We want to make sure the thing you're looking for is on Google 100 percent of the time.” That’s why Google Executive Evgeny Morozov said in 2013 that “Anything that you see in the real world needs to be in our database.” That’s why then Google CEO Eric Schmidt explained in 2006: “Ultimately our goal at Google is to have the strongest advertising network and all the world’s information.” And that’s why Google Exec Santiago de la Mora spotlighted in 2009 the essential utility of search: “Search is critical. If you are not found, the rest cannot follow.” Finally that’s why Google Exec Hunter Walk shared Google’s vision for YouTube in 2012: “There is a real desire for YouTube to be a global classroom and a global town square, not just a global living room.”
Google is unique in commanding control of access to the world’s only global comprehensive repository of digitized information, content, products, services, data and metadata. The U.S. DOJ in opposing the Google proposed Book Settlement as anticompetitive, stated: “The seller of an incomplete database… cannot compete effectively with the seller of a comprehensive product.”
Competitively, this means that when the FCC makes the video information flows publicly available, other competitors won’t be able to compete with Google’s vastly more comprehensive index, product/service offerings, and digital data/meta-data trove.
Conclusion
The FCC’s AllVid proposal is not pro-competitive. Overall it is profoundly anti-competitive and monopolistic, in that it will only extend, enhance and augment Google’s various monopolies and monopsonies.
It also would destroy the current vibrantly competitive and innovative video programming ecosystem with Google’s anticompetitive, monovation dynamic, where there can be only one way, one standard, one outcome, one winner.
Any monopsony buyer, wants to, and can, drive the cost of acquiring, accessing, or monetizing information/content/data towards zero.
It should be no surprise that this FCC rulemaking is being orchestrated and driven predominantly by Google, because it audaciously proposes what only Google would expect or demand, full unfettered, open access to the most valuable video programming library of proprietary content in the world, at zero cost to Google, and at the real cost of literally destroying the economic value this unique proprietary content and the economic incentives to produce valuable quality video programming in the United States in the future.
This FCC AllVid political gambit is on path to be Google’s single most naked, brazen and destructive abuse of its monopoly and political power -- yet.
***
Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an emergent enterprise risk consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.
Precursor AllVid Series
Part 1: FCC’s AllVid Proposal Is Really The Great Google Ad Grab [1-29-16]
Part 2: Questioning Google’s Extraordinary Influence over U.S. Government Decisions [2-11-16]
Part 3: The FCC’s Googleopoly Gatekeeper Navigation Device Set-up [2-17-16]
Part 4: FCC’s Apparent Arbitrary AllVid Proposal [3-18-16]
Relevant Googleopoly Precursor Research to AllVid
Part A: How Google Extends its Search Monopoly to Monopsony over Digital Information [9-15-09]
Part B: Google-YouTube’s Internet Video Distribution Dominance [7-23-13]
Part C: The Public Evidence Google Violated the DOJ Non-Prosecution Agreement [8-8-13]
Part D: Google’s WorldWideWatch Over the WorldWideWeb [Sept. 2014]
