November 2010

What do the mid-term election results mean for the FCC?

First, FreePress' version of net neutrality was completely repudiated in the election.

• Every single one of the 95 House and Senate candidates that FreePress/PCCC got to publicly pledge support for net neutrality -- lost their election in the mid-terms. Yes, that is indeed a 0-for-95 record here.
• The FCC should take note that the main "political" driver behind trying to make net neutrality into a national grass roots issue, FreePress/PCCC/Moveon.org, could not get the issue to register on the election radar screen, and where ever they did attract a candidate endorsement of their position, they failed 100% the time in having that candidate get elected.

Second, most of the FCC's business is not political or partisan -- and it need not be. (The 1996 Telecom Act was almost unanimous. And the overwhelming majority of FCC decisions are 5-0.)

Press reports of AOL's interest in buying or partnering with Yahoo appear to have missed another potential serious deal complication -- antitrust scrutiny.

• Let me be clear, I am not suggesting an AOL-Yahoo combination on its own would raise direct traditional antitrust issues, but its hard to see how it would not attract substantial antitrust/collusion scrutiny given all the indirect antitrust red flags an AOL-Yahoo tie-up would raise -- i.e. Google vs Yahoo-Microsoft, Google-ITA Software, Google's tying of search and Google Maps for Google Places/Android, etc.

First, AOL is financially-dependent on Google; Google is Yahoo's biggest and most stable long-term client feeding AOL with about a fifth of its revenues -- via a recently signed 5-year agreement for Google to continue to be AOL's search monetization engine. This deal was negotiated by AOL's CEO, a former longtime senior executive at Google. Simply in antitrust terms, AOL can be viewed as a satellite of Google, because AOL has hitched its financial/business/growth wagon to Google Search, Google Mobile/Android and potentially Google Places.

Google's latest privacy controls are a bad joke, certainly not sufficient to warrant the FTC completely absolving serial privacy violator Google from all responsibility in the Google WiSpy Affair, especially given that other law enforcement bodies have found misrepresentation of facts and violation of users' privacy.

• Hopefully, the FCC's investigation of Google WiSpy will not look the other way like the FTC apparently did, when a Fortune 200 company with the industry's longest privacy violation rap sheet, was caught red-handed violating millions of Americans' privacy and found to have misrepresented facts and misled investigators, got off without any FTC sanction, oversight or accountability whatsoever.

Why are Google's latest privacy controls insufficient?

First, Google's leadership is clearly not publicly supportive of more privacy controls, but openly skeptical and defiant that Google does not need to alter its approach to innovation to better protect privacy and security.

The EU, in declining to impose net neutrality regulations, adds to the growing mountain of evidence that whatever political support may have existed in the past for net neutrality regulation -- has rapidly evaporated.

• The EU's lead Digital official, Neelie Kroes, said: "We have to avoid regulation which might deter investment and efficient use of the available resources."

This important official International development comes on the heels of:

• The mid-term election results showing net neutrality did not garner any measurable political support;
• House Chairman Waxman's endorsement of short-term enforcement-only authority in proposed legislation;
• ~300 members of this Congress writing the FCC in opposition to Title II telephone regulation of the Internet; and
• No evidence of any actionable net neutrality problems to address in the sector.

Simply, all of the official developments and evidence that matter since the FCC proposed to regulate the Internet as a telephone network last spring, have been in opposition to it.