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Google's Googlomerate Valuation Mess - Is Motorola an Albatross?

In anticipation of Google formally closing its "transformative" Motorola acquisition, investors soon will have to figure out the appropriate new valuation model/multiple for GOOG-MMI. Arguably, few major companies have undermined or confused their valuation model/multiple more for investors than Google, which acquired a major company that is it's investment, financial, operational, and cultural opposite.

 

Google's Top 35 Privacy Scandals

Since Privacy International ranked Google worst in the world for Privacy in its 2007 privacy survey for its unique “comprehensive consumer surveillance & entrenched hostility to privacy,” Google has had at least 24 more public scandals/controversies over privacy/security.

Google's Latest Privacy Scandal Spin – A Satire

(Note: The text in quotations are verbatim quotes from Google via a Politico post. The italics in [ ] is a satirical translation of what Google really is saying.)

“Google’s Rachel Whetstone, senior vice president for Communications and Public Policy issued the following statement to POLITICO regarding a WSJ report that the company has been bypassing the privacy settings of Apple's Web browser on iPhones and computers:”

“The Journal mischaracterizes what happened and why.”

  • [Translation: What we really did is we hacked Apple. In an open Internet Apple has no right to use a walled garden to protect Apple users’ privacy from Google's omnipresent tracking. We hacked Apple to liberate private data that users and Apple were withholding from the world.]

“We used known Safari functionality to provide features that signed-in Google users had enabled.”

Poll: Americans Not With Internet Lobby on SOPA/PIPA

A recent poll from JZ Analytics on how Americans view the problem of online piracy and online counterfeit goods – the problem that anti-piracy legislation (SOPA/PIPA) attempted to address -- indicates that Americans’ views overall are different than the several million subset of Americans that signed Google’s and other’s online petitions opposing the anti-piracy legislation as “censorship” that would “break the Internet.” The poll also indicates Americans have concerns with Google’s record and stance on piracy.

The JZ Analytics online survey of 1,001 Americans was conducted December 27-28, 2011 and has a margin of error of +/-3.2%.

I. Summary of Poll Results:

A. General Questions

Where's the Market for Online Privacy?

Why are market forces so weak in protecting users’ online privacy?

The main reason is that the online marketplace is economically structured around users being a commodity, data, to be aggregated and mined, not customers to be served and protected in a competitive marketplace. That’s because the overriding economic force that created the free and open commercial Internet – the predominant Silicon Valley venture capital/IPO value creation model – was and remains largely antithetical to protecting online privacy.

The Silicon Valley venture capital/IPO driven model is laser-focused on achieving Internet audience/user scale fastest in order to gain first-mover advantage and then rapid dominance of a new product or service segment. This predominant Internet economic model is predicated on a precious few investments achieving such rapid user scale that it: warrants a buy-out at an enormous premium multiple; enables fast and exceptionally-profitable liquidity (via the new secondary derivative market for private venture shares or employee options); or broad liquidity via a public IPO.

What is the essential critical element of achieving audience/user scale fastest? Free. No direct cost to the user fuels fastest, frictionless, viral adoption. This free economic model presupposes online advertising as an eventual monetization mechanism and shuns products and services directly paid for by the user because their inherent time-to-market is too slow and their upfront sunk cost of sales and customer service is too high for this predominant value creation model.

The Evidence Google’s Systematic Theft is Anti-Competitive

Systematic theft may be the most anti-competitive and monopolistic practice in which a company can engage.

The evidence indicates Google owes much of its success and rapidly spreading market dominance to the ill-gotten unbeatable competitive advantage of systematic theft of others property (trademarks, copyrights, patents, trade secrets, contact lists, & private information) via at least eight distinct patterns of theft perpetrated over several years time -- that collectively indicate that Google’s anti-competitive behavior is systematic, willful and strategic.

For the evidence, see my Forbes Tech Capitalist post: The Evidence Google's Systematic Theft is Anti_Competitive.

Google-Firefox Search Deal is Antitrust Red Meat

Google’s recent ~$1b 3-year deal with Mozilla for Google to be the default search provider for hundreds of millions of Firefox browser users, which comprise over a quarter of the global browser/search market, has much broader and more serious antitrust implications for Google’s already very tenuous antitrust situation than most everyone appreciates.

 

Does FCC Want to Become The Federal Video Programming Commission?

This week an FCC Administrative Law Judge (ALJ) ordered Comcast to carry The Tennis Channel in the same tier and channel neighborhood as The Golf Channel and Versus, another sports channel.  

  • Given the deep flaws in the ALJ's highly-intrusive, and micro-managing decision, there are several good reasons the FCC should overturn the ALJ's decision upon appeal.

1.  Implements Obsolete Law: The section of law at issue here, Section 616 of the 1992 Cable Act, is predicated on early 1990s market conditions of cable being a monopoly video distributor with large ownership interests in cable channels. Two decades later, that market assessment predicate is obsolete as cable now has only 60% of the video distribution market and dramatically less ownership interests in cable channels. At core the FCC has to decide if it is fair, sound or legitimate competition policy to completely ignore current competition facts.

Implications of Senators' Call for Google Antitrust Probe

The bipartisan Senate letter to the FTC calling for a "thorough investigation" of Google's alleged antitrust violations has broader implications than many appreciate.

Please see my Forbes Tech Capitalist post here.

SOPA Fixes Isolate Opponents, Especially Google

The House Manager’s Amendment to the pending House Stop Online Piracy Act (SOPA) fixed the major legitimate problems with the original bill, effectively isolating the small but extremely vociferous minority of SOPA opponents, especially Google.

See my Forbes Tech Capitalist post here for a political outlook of the SOPA/PIPA anti-piracy legislation, which is likely to become law in 2012.

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Q&A One Pager Debunking Net Neutrality Myths