Congress

June 14, 2016, Contact:  Scott Cleland 703-217-2407

Judge Williams Dissent in USTelecom v. FCC Lays Bare the Competition Problems With Both the Appeals Court Decision and the FCC’s Open Internet Order

WASHINGTON D.C. – The following may be attributed to Scott Cleland, Chairman of NetCompetition:

“There are big competition policy problems with the DC Court of Appeals 2-1 decision upholding the FCC’s 3-2 Open Internet Order that appear destined for the Supreme Court and Congress to ultimately resolve.”

“The court’s decision appears to effectively grant an FCC majority of three unelected commissioners with largely unfettered power to arbitrarily pick winners and losers in the competitive communications and Internet marketplaces without much administrative due process, explanation, justification, evidence or reasoned analysis.”  

The evidence increasingly proves that Google, Apple, Facebook, and Amazon, companies collectively known as “GAFA,” are the dominant consumer-technology, “edge” platforms/incumbents in their respective communication sector markets of: information, smartphones, social media, and ecommerce.

The evidence below shows Google, Apple, Facebook, and Amazon to clearly be the emerging dominant communications incumbents of the 21^st century communications sector ecosystem and that an apparent FCC assumption that “edge” companies cannot be a competition problem is both naïve and erroneous.   

Despite the FCC’s “competition, competition, competition” policy mantra, this GAFA dominance reality has not kept the FCC from slavishly favoring the dominant GAFA incumbents, as “insurgent” upstarts deserving of special FCC treatment and protection, in all of the FCC’s current major communications policy revamps it is making without Congress: i.e. its Title II Open Internet Order; its Title II ISP-only privacy rules; its AllVid set-top box rules; and its implicit wireless policy of favoring spectrum sharing and unlicensed spectrum over spectrum auctions and licensing. 

Given that Google bought Motorola for its patents to protect itself from patent litigation, many assume Alphabet-Google to be a likely bidder and buyer of Yahoo’s reported sale of its portfolio of ~3,000 1990s search, advertising and ecommerce patents.

Au contraire, big antitrust vulnerabilities and a decade of Googlian hostility to the intellectual property rights of competitors effectively rule them out of this Yahoo auction.

Google’s lawyers have to appreciate that Google bidding on Yahoo’s patents would self-shine antitrust spotlights exactly where Google does not want them shined, and would attract attention to Google’s ignominious pattern of disrespect for the property of competitors and the bloody trail of intellectual property infringement lawsuits Google has uniquely provoked over the last fourteen years.

Why Google can’t buy Yahoo’s search, advertising & ecommerce patents.

Every company and industry competitor currently serving and targeting the digital home marketplace doesn’t know they are largely surrounded, but they are.

If one organizes and pieces together the many related things Google intimated at its I/O developer conference last month, especially about Google’s big advantage in conversational AI voice, with what we already know about what Google has already achieved and is doing, what kind of Google digital home strategy becomes clear?

The assembled pieces showcase a discernible big picture of an exceptionally comprehensive Google-Android strategy to try and monopolize the integrated connectivity of home automation (i.e. digital information, products and services) over time via: its strong advantage in conversational AI voice interface, Android dominance, and its proliferating OS tentacles -- very much like Google did with mobile search and search-related information, products, and services in increasingly dominating consumer digital services over the last decade.

[Note: this blog was submitted to the FCC as a reply comment in the AllVid Set Top Box NPRM.]

As more evidence comes to light exposing Google’s much increased search and Android dominance in the U.S. since the FTC closed its search and Android antitrust probes in January 2013, it only becomes clearer that the FCC’s AllVid proposed rulemaking to “Unlock the [set-top] Box” is obviously anticompetitive overall, not pro-competitive as the FCC naively claims.

(A brief context refresh is needed here. In a nutshell, Google is the primary impetus behind the FCC’s controversial AllVid set top box proposal that would force U.S. pay-TV providers to effectively open-source  cable set-top boxes and the $200b worth of proprietary video programming/information that flows through them, so that Google and other edge platforms could monetize that proprietary video programming without a license -- for free.

Why does the company that by far collects the most private information that the FCC claims it wants to protect, and that also has the worst consumer privacy protection record with the FTC, (Google), get 99% exempted from the telecom and cable privacy protections expected of telephone, broadband, cable and satellite providers?  

Is it the same reason, that the edge platforms with much more gatekeeper power and private data collection opportunity than ISPs somehow warrant no FCC privacy regulation? (See info-graphic here; explanation here.)

The epic flaw in the FCC’s Title II privacy NPRM is that it purports to best protect consumers’ private information by only regulating broadband providers’ use of that private information, while emphatically protecting dominant edge platforms from FCC privacy regulation when they use that same FCC-regulated private information indiscriminately without consumers’ meaningful knowledge or consent.

Yes you read that right.

Apparently the FCC thinks it is more important to protect dominant edge platforms from FCC privacy regulation, than it is to protect consumers’ private information.

The issue of privacy lays bare the FCC’s contorted and arbitrary logic of both its Title II cleave that only ISPs can be gatekeepers, and that the goal of net neutrality, protecting dominant edge platforms from ISP interference, is logical and appropriate to apply to privacy. If it was, that would perversely mean that the purpose of the FCC’s privacy rules should be to protect edge providers’ businesses, not consumers’ privacy.  

If you want to see a visual representation of this problem, please see the attached one-page graphic here.

The Intercept’s exposé “The Android Administration: Google’s Remarkably Close Relationship With the Obama White House, in Two Charts” is an eye-opening, must-read for anyone interested in Google’s outsized power and political influence, or in the integrity of the U.S. Government’s public accountability and impartiality in administering justice and the federal policymaking process -- free of commercial and financial conflicts of interest.  

FCC’s AllVid NPRM Is Anticompetitive, Anticompetitive, Anticompetitive

WASHINGTON D.C. – The following quotes are based on NetCompetition’s submitted comments on the FCC’s AllVid NPRM and may be attributed to Scott Cleland, Chairman of NetCompetition:

“Think for a moment. Would anyone think it “pro-competitive” if a government agency mandated an “Unlock the Big Box Stores” ruling so that WalMart, Target, or Best Buy could no longer install effective doors, locks, security guards or anti-theft devices on their store perimeters to protect the value of their inventory, all so that Google, Amazon, or eBay could take it for free and then profit from selling it online?”

“The companies that comprise the ~$200b pay TV industry are the video programming functional equivalent of Big Box stores, and the FCC’s AllVid NPRM is the functional equivalent of a looters pardon.”

“Consider how the FCC’s “Unlock the Box” looters’ mantra is profoundly anticompetitive and destructive.

For the last year, Google was above state law in the U.S.; fortunately, it no longer is.

The U.S. Fifth Circuit Court of Appeals just ordered dismissal of the Machiavellian preliminary injunction Google won in Federal Court over a year ago that squashed a 2014 Mississippi State Attorney General subpoena and state law enforcement investigation of Google’s alleged facilitation of “dangerous and illegal activities through its online platforms.”

Forty State AGs backed MS AG Jim Hood in Court because the Federal injunction that Google won effectively neutered all State AGs from investigating or prosecuting Google for most any alleged Google violation of most any State consumer protection law.

Simply, the Appeals Court ruled that Google faced no “irreparable injury” in having to comply with the MS State AG’s broad subpoena, and that “[T]he normal course of state criminal prosecutions cannot be disrupted or blocked on the basis of charges which in the last analysis amount to nothing more than speculation about the future.”