Competition

Yet another state legislature has rejected passing a law mandating net neutrality -- this time in Maine, the home state of Senator Olympia Snowe, one of net neutrality's primary sponsors and highest profile proponents in the US Senate.

• Moveon.org/SaveTheInternet are now 0-3 in their hand-picked states where they thought they had the best chance of passing a version of the Senate Snowe-Dorgan bill or the House Markey bill from last year -- and where they focused their efforts.  
• Previously, Moveon.org?SaveTheInternet failed to pass net neutrality legislation in Michigan, and Maryland.

To let the net neutrality proponents save face, the Maine Senate passed a resolution, not legislation, that asks for a study on net neutrality to be completed next year.

• This is the same outcome as has occurred at the Federal level as both the FTC and FCC are studying net neutrality and seeking comments.
• Both the FTC and the FCC have said that they do not see a current problem in the marketplace concerning the alleged problem of net discrimination.
• Moreover, the Maine resolution also recognizes that net neutrality is a federal issue and that Maine does not have jurisdiction over the net neutrality issue.

I fully expect that Moveon.org and SaveTheInterent will continue to waste valuable state legislative time and resources on a problem they cannot even define or prove exists.  

• They don't seem to "get" or care that the Internet is Federal jurisdiction and Federal policymakers at every official level have rejected calls for net neutrality legislation.

An  Associated Press article, "Google Chairman dismisses privacy issue" could turn out to be like waving a red cape in front of a bull.

• Relevant parts of the AP story:
•   "Google Chairman Eric Schmidt said Wednesday that U.S. regulatory approval of his company's proposed acquisition of DoubleClick will not be hindered by concerns over privacy."

• "Schmidt said that Google, when considering the acquisition, "looked very carefully" at privacy and other issues that would come under legal review "because we knew competitors would raise those issues, as indeed they have."

For anyone watching Google closely, they are cleverly locking up all the leading segments of the Internet which control the monetization access points to Internet content.

• Per MediaWeek, June 1st Google bought Feedburner, the largest feed and blog advertising network, which also happens to have the best quality and quantity of major content providers who subscribe to blog feeds.
• It's a shrewd and brilliant move, if the antitrust authorities allow it.
• This comes on the heels of its April proposed merger with DoubleClick, the largest adserving company on the Internet, which is estimated to serve 80-85% of Internet users with display ads per EPIC.
• That came on the heels of the closing of Google's YouTube acquisition, which makes Google the owner of the largest user-created video content network and one of the most popular destinations on the web.

Anyone else see a pattern here?

Reed Hundt is up to his old "managed-competition" tricks again. 

• The former Clinton-Gore FCC Chairman is now Vice Chairman of Frontline Wireless, which wants the FCC to auction spectrum to them requiring net neutrality/open access -- so effectively no company will be able/or want to pay much for the 700 MHz spectrum -- and so Frontline Wireless could capture this most valuable spectrum available at the market-managed price of -- pennies on the dollar. 
• It is highly relevant that Frontline is financially backed by big Google investor/Board members; their involvement was probably orchestrated by Google Senior advisor Al Gore, Hundt's political benefactor in the Clinton-Gore Administration.  
• A big part of Google's strategy for value creation and 90% gross margins is to take intellectual property without permission or compensation and to secure use of bandwidth and spectum below market cost. 
• True to form in this new venture, Mr. Hundt has never met a marketplace that he didn't think he could personally "manage" better than the free market can.

The FCC should be very very careful in following this policy charmer's latest government intervention advice on the 700 MHz auction, because he has been personally responsible for most all of the largest wild goose chases that the FCC has been involved in over the last few decades.

Bloomberg reports that Democratic Presidential candidate John Edwards "backs Google's push for wholesale leasing of airwaves."

Let's cut to the chase here.

Google has proposed a self-serving idea for real-time auctions of spectrum that might be able work in five to ten years time, but is not at all relevant to, or practical for, the auction scheduled for next winter.

• Google's idea is really a clever diversion and stalking horse for wireless net neutrality -- a sweet-sounding name for government-subsidized free spectrum or "corporate welfare for dotcom billionaires."  
• More importantly, Google's proposal would effectively undermine the FCC's ability to raise the maximum amount in the upcoming 700 MHz auction for American taxpayers.
• Presidential candidate Edwards appears more interested in pandering to powerful Democratic special interests and fundraisers that can contribute to his lagging campaign, than being a good steward of taxpayer money.  
• And who might those special interests be that Mr. Edwards is pandering to?
• Google, whose employees in the last election cycle contributed 98% to Democratic candidates;
• Al Gore, Google's senior Advisor, (who is now seriously rich, but quietly so, from his Google options) and who is ringleader of "Google's Poodles" Google's very own astroturf group the "Open Internet Coalition."  and
• Former Clinton-Gore FCC Chairman, Reed Hundt, Chairman of Frontline spectrum company, funded in part by Google-related money, which is seeking to rig the upcoming FCC spectrum auction for their own commercial benefit under the guise of an "open Internet."

Don't be fooled by the clever diversions surrounding the FCC's upcoming 700 MHz auction.

Ad Age reports that the two largest Advertising Associations have asked antitrust officials to look into the spate of major advertising acquisitions; Google-DoubleClick, Microsoft aQuantive, Yahoo-Right Media, and WPP-24/7 Real Media.

• The thrust of the letter:
• "During the past month, there have been several major acquisition announcements in the online advertising marketplace... These mergers, if approved, certainly would change the online advertising marketplace. As such, those proposed combinations deserve careful scrutiny. It is essential to ensure that none of these combinations restrict competition in the Internet advertising marketplace."

Why is this significant?

• First, the advertising community does not like to make waves or speak ill of any potential client -- in any way in public -- it goes against their normal business practice.  
• The fact that they did speak up and that they did ask the Government to give all these mergers close scrutiny -- was their indirect/politic way of getting their point across without stepping on any one company's proverbial toes.  
• Second, I think they are genuine in their shock and bewilderment that their entire industry has been transformed before their eyes in a matter of weeks.
• The online technology players have swooped in and made it clear that  technology and measurement tools are advertising's future.
• The tail will now wag the dog.
• Advertisers and advertising agencies must adapt or be left in the dust.
• WPP, for one, has quickly adapted with its purchase of 24/7 Real Media.

It is my view that there is a whole lot more going on here than meets the eye.

Google's dominance of the search industry continues....

• Can you say:
• "search" and "antitrust" in the same sentence?
• Can you say:
• "Googleopoly?"

The San Diego Union-Tribune "gets it" -- in  its editorial on Google:

•  "The Google Threat, Needed: a guaranteed private search engine."  

A couple of my favorite parts of this dead on editorial:

• "Google's emergence as one of the scariest companies on the planet continues with a story in the Financial Times describing the Silicon Valley firm's goal of maximizing and cataloging personal information gleaned from every user's use of its vastly popular search engine."
•  "... but should mortify Google's users – because the company has never come close to adequately acknowledging the vast privacy concerns raised by its already massive database."
• "... The potential for government snooping, harassment, financial manipulation, blackmail and all sorts of online crime is stunning."

Add to the list of scary things Google is working on is a "truth meter" where Google CEO Eric Schmidt posited in FT just before the last US congressional election, that in the future Google could help voters gauge in real time whether a politician was telling the "truth" or not.

Both the New York Times and the Wall Street Journal are reporting that the Federal Trade Commission (FTC) will substantively investigate the proposed Google-DoubleClick merger.

• This comes on the heels of an AP report that "an Independent European Union panel has launched an investigation into whether Google Inc.'s Internet search engine abides by European Union privacy rules." Google's search share in Europe is reportedly 75% and 90% in Germany, so we should all expect the EU to also play a formal and significant role in the review of Google-Doubleclick.

Why is the FTC review development significant?

Senate Democrats are attempting to sneak through the back door what they cannot get through the front door of the "free and open"  policy process.

The Inouye "Broadband Data Improvement Act" is really a long term trojan horse for net neutrality and heavy regulation of broadband.

• The bill requires that the FCC "establish a new definition of second generation broadband to reflect a data rate that is not less than the data rate required  to reliably transmit full-motion, high definition video." 
• "Reliable" "high-definition" broadband is certainly not DSL or existing cable modems.

The clever ruse in this innocuous-sounding language is to redefine broadband competition as a total abject failure, and to declare broadband market failure, so the pro-regulatory types can regulate broadband becuase it is not competitive, or is at best a future duopoly.