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Google surrogate CCIA lashes back against "Googleopoly" report

It didn't take long for the Empire to Strike back! Shortly after the release of Googleopoly, Ed Black, President and CEO of the Computer and Communications Industry Association, which represents Google, put out a critical press release on my Googleopoly white paper entitled:  "Merger Report Unconvincing." 

  • As I predicted on my blog this morning:"I expect to be attacked personally for my analysis and conclusions here, just like I was attacked by Bernie Ebbers and WorldCom as "the idiot Washington analyst" for having the audacity to be the only analyst in the country willing to predict, and stick to my guns, that the government would block the WorldCom-Sprint merger."

As expected they tried to discredit the messenger because they don't like the message. Standard operating procedure from my debate opponents.

In keeping with our approach of having nothing to hide and being happy to debate whomever on the important Internet issues of the day I am providing an exact copy of Mr. Black's press release below. I have put Mr Black's press release text in italics to differentiate it from my interspersed commentary and rebuttals.

FOR IMMEDIATE RELEASE July 17, 2007
Merger Report Unconvincing, CCIA Says

WASHINGTON --
BACKGROUND: The Precursor Group today released a thinly researched paper that purported to show anticompetitive effects of the proposed Google-DoubleClick merger.

  • Anyone can read the 35-page report and judge for themselves the level of research, fact, detail, evidence and sophisticated analysis involved in "Googleopoly".
  • It appears as if Mr. Black is worried that reporters might read the report and that an "open" debate may occur about whether the Google-DoubleClick merger and is in fact anti-competitive or not.
  • Moreover, if the report was so "unconvincing," why the need to put out an immediate press release to say so? If the "unconvincing" charge was actually true, wouldn't the average reader just ignore my white paper?
  • Mr. Black, please have as much faith in your own assessment as I do in mine and let people decide for themselves.
  • What are you afraid of if there is nothing to hide? 

Precursor President Scott Cleland also heads a coalition that has attempted to demonize Google as part of its strategy to stop net neutrality measures in Congress and the Federal Communications Commission.

  • Noone asked me to do this Googleopoly report and noone contracted me to do it. I run Precursor LLC, a techcom research and consulting firm whose core mission is to do research exactly like this on forward-looking issues that affect capital markets, public policy and techcom change.
  • Fully disclosed is my other role, as Chairman of Netcompetition.org, which is fully and openly disclosed as an eforum ffunded by wireless, cable and telecom broadband companies threatened by net neutrality regulation.
  • The real reason for the ad hominem attack is to try and muzzle me and prevent people from listening to my admitedly provocative analysis and point of view. New ideas and insights are often provocative because they challenge conventional wisdom.
  • I have great faith in the "free and open" discourse that we allow and embrace in this great country; Mr. Black and others can continue to try and effectively censor me and my views, but I will keep standing up for what I believe is right.   

Below is a statement by Computer & Communications Industry Association President & CEO Ed Black responding to Cleland’s “Googleopoly� report:

“CCIA began as and remains an aggressive proponent of open markets, open computing systems and open networks. We were involved with the most important antitrust cases of our time, from U.S. v. IBM to the breakup and divestiture of AT&T and the major antitrust proceedings against Microsoft Corp.

“We know a good antitrust argument when we see it, and today’s failed the test. In fact, the paper is not really about antitrust at all, but Cleland’s position as chairman of a coalition of incumbent telecom and cable companies that want to smear Google and its vigorous support for neutral broadband access, also known as net neutrality. The presence of AT&T – once an abusive monopoly itself – should give any reader pause.

  • So who is smearing whom here?

 

  • What is really interesting here is that Mr. Black accurately claims that his organization was involved in the big antitrust issues of the modern era: IBM, AT&T, and Microsoft and uses that experience to try and insinuate that they understand this issue as well.
    • The flaw in their logic is that IBM, AT&T and Microsoft were not merger review cases like Google-DoubleClick.
    • Merger review cases have a completely different legal process and threshhold than a full blown antitrust case on the merits like IBM, AT&T, and Microsoft.
    • Mr. Black must not have read the full 35 page report or even looked at the table of contents because if he did he would see that this is obviously a merger review antitrust case where I argue why the FTC will not approve the merger, not that they will file a separate antitrust case against Google like IBM, AT&T, and Microsoft.
    • Mr. Black is mixing apples and oranges.

“Most antitrust cases are based on one central proposition: The target has or will have ‘market power,’ that is, the ability to raise prices unilaterally, to restrict output or both. Companies that exercise market power dominate the market so that they can keep others from competing against them.

  • Once again it is painfully obvious that Mr Black did not bother to read beyond the Executive summary before blasting the full contents of the report.
  • If Mr. Black actually read the report he would have counted the words "market power" 19 times in the report  -- in most every section.
  • I agree antitrust is about market power and most all of my report was directly or indirectly about the central issue of "market power."

“None of these factors are remotely present in the case of Google-DoubleClick. If they were, it would be impossible to explain why Microsoft actually paid more for aQuantive than Google had previously paid for DoubleClick.

“Cleland ignores the utter absence of barriers to entry in the market. He gives scant detail as to which companies comprise the market he conjures up. There’s nothing significant in the paper about how business models differ from one another or competitors’ future prospects. Even though their business operations are so dissimilar, Cleland asserts that Google and DoubleClick are in the same market. More fanciful still is his suggestion that Google and DoubleClick can target ads so effectively that they will own the market for years to come.

  • Once again it is painfully obvious that Mr Black did not even read the analysis or look at the table of contents to see that 12 pages of one third of the analysis was devoted to the discussion of "barriers to entry" despite Mr. Black's assertion that I  "ignore the utter absence of barriers to entry." 
  • Please read pages 13-22 in particular Mr. Black, to become better schooled in the very real barriers to entry that Google competitors face.
  • Please also read pages 5-12, Mr. Black to learn why Google and DoubleClick are actually competitors.

“His paper, in short, is little more than assertions and opinion at odds with the commentary we have read from companies and consumers that would presumably be damaged by the merger. Back to the drawing board, Scott.�

  • We will let the reader judge if the analysis is fact and evidence based.
  • I remain confident they will. 
  • Thanks again for the advice and encouragement to dig even deeper
     into the anti-competitive aspects of this merger. It would not have occured to me to do so otherwise.

About CCIA CCIA is an international, nonprofit association of computer and communications industry firms, representing a broad cross section of the industry. CCIA is dedicated to preserving full, fair and open competition throughout our industry. Our members employ more than 600,000 workers and generate annual revenues in excess of $200 billion.

  • And a prominent member of CCIA is Google.  
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