SEC

Given my recent 10-page white paper which analyzes the antitrust and competitive implications of the Google-DoubleClick merger, I thought it would be helpful public service to pose some questions that reporters/analysts consider asking Google's CEO Mr. Schmidt on Google's earnings call.

1. Does Google have a 50% "antitrust dominant" share of the search market?
2. Is search the new Internet browser?
3. Is search the largest Internet access gatekeeper?
4. Is Google the new Microsoft of the Internet?
5. Would the DoubleClick acquisition foreclose competition in the Internet advertising market?

Google made news recently by adopting new privacy measures, which puts a spotlight on a real big public policy disconnect.

What I find most interesting about Google and the subject of privacy, is the glaring incongruity of these facts:

1. Google, as the dominant search engine with ~50% of the market, arguably has more and deeper private and intimate information on American consumers than any other company in America;
2. Google has among the weakest privacy policies of any major corporation in America;
3. Google is not subject to any specific privacy regulations or regulator like other similarly situated major corporations that have lots of sensitive consumer information -- like financial services firms and communications companies.

Let me put that more simply:

Google has no sense of when to keep their mouth shut, because their corporate arrogance and cluelessness appears boundless. 

I could only shake my head at the headline in Comm Daily today prompted by a Google official speaking at a Washington conference.

• "Internet, Google will Sway 2008 Elections: Company Executive" (p.4 Communications Daily 3-16-07)
• "Google sees itself as a force in a political race that could hinge on making the best of Web and other tools, Google Vp-Global Communications Elliot Schrage said Thurs. at the Politics Online conference in Washington."
• "Candidates are starting to see the Web's power, Schrage said: "Already candidates and campaigns are spending tens of thousands on adwords campaigns alone." The company invited declared Presidential candidates to its offices to "talk technology and policy" and will post videos of the talks if candidates permit it, he said. Google is trying to "make services easier to use" through a "special sales and political team dedicated to helping political camps, he said."" 

Generally company's are more responsible and circumspect about bragging about their own company's ability to influence or "sway" and election. The U.S. Government takes Federal Election laws seriously and is attuned to ensuring the electoral process is not manipulated in any way.

In my recent blog post, "Why Microsoft's new Internet 7 explorer browser discriminates against small business" I mistakenly used the incorrect first name in my transcription of a Wall Street Journal quote. The quote should have been attributed to "Greg" Waldron (not "Gerry"), of the Waldron company http://thewaldroncompany.com/index.html.  Greg Waldron is founder of a company which is an online provider of water fountains. Precursorbog regrets the error.

Google, Yahoo, and IAC, big pushers of net neutrality corporate welfare, have expanded their effort to eat at the public trough again. See the Wall Street Journal article of today "SEC reviewing Its Data Fee Ruling". 

The super profitable online giants actually have the gall of claiming that paying fees for real-time stock exchange quotes is "beyond the economic reach of an advertising medium like the Internet." Unbelievable! Google is basically printing money with the advertising medium on the Internet! Shouldn't we all throw some coins in Google's platinum "tin cup" to show our concern?

They continue their poor man charade by whining that: "many millions of public investors who access their web sites daily will be injured by the unreasonable fees permitted by the staff's approval of the rule change." Please. These dotcom billionaires can afford to pay normal cost of doinh interstate commerce without passing on the cost to consumers. If they had more competition they wouldn't even consider trying to claim they can pass this on to consumers. But like net neutrality, anytime there is a chance of the online giants costs going up and reducing the online giants huge profits, they run to Washington and ask for corporate welfare. Doesn't everyone understand, its Google's inalienable right for the government to protect Google's extraordinary profitability!

In due time, people will see through the online giants self-serving Washington behavior and have no sympathy for this outrageous behavior. What's really funny is that these people are so clueless to be lobbying for this corporate welfare just when the Democrats are taking over the House and making lobbying reform and ethics a top agenda priority. Doesn't anyone else see the irony?

The New York Times obviously felt compelled to write a counter editorial to the Wall Street Journal’s three recent blistering editorials against net neutrality.

The NYT apparently just dusted off their simplistic editorial of last year and updated it with a phone call to a person or two.

They are still rehashing the ignorant claim that broadband companies are trying to create a “two tiered Internet.� If the NYT had any awareness of this issue at all, they would know that argument is factually wrong and that informed NN proponents no longer try to make that silly and ignorant argument. The facts are that the Internet has long been multi-tiered. There is dial up Internet access tier and multiple speed/price tiers of broadband Internet access. The Internet backbone since its commercial inception has had three different tiers based on the reach of the peering network.

The editorial also trots out the nonsense that without net neutrality innovation would be threatened and small companies could not afford the fees and “the next eBay or Google might never be born.� Hello? Is it the new policy of the NYT that the government should subsidize “garage� entrepreneurs Internet access bills? Does the NYT think really think any entrepreneur worth their salt can’t afford or can’t raise funding to pay $15-40 a month for broadband access?

The FCC conditions imposed on the AT&T-Bell-South merger are among the most regulatory government micro-management that I have observed in my fifteen years covering the industry.  The FCC minority leveraged a procedural and political anomolous circumstance to extort merger concessions that never would have survived an open democratic process. This was the functional equivalent of a back alley shake-down, where the companies had to give into unconscionable extortion in order to secure their commercial freedom.    

That being said, it is clear that AT&T had to give up a lot of regulatory concessions in the areas of special access and divestiture of 2.5 MHz spectrum in order to fend off the worst of the net neutrality extortion.

• AT&T agreed to continue to abide by the FCC's net neutrality principles for another couple of years which simply extends the agreement they had already made on the SBC-AT&T merger last year for roughly a year longer.
• They also agreed to not degrade or prioritize traffic, like they had already publicly agreed not to do, with exceptions for their IPTV business, enterprise business and their wireless business.
• Bottom-line on net neutrality -- No big change here from what AT&T was already doing and pledging to do. AT&T appropriately resisted the worst of the net neutrality concessions.

I fully expect that net neutrality will remain the biggest regulatory issue going forward. The online giants will continue to manipulate the political process for competitive advantage, seeking to prevent non-neutral behavior from their biggest potential competitors when they are not neutral themselves and when they have more gatekeeper influence over the Internet than any broadband company. 

Microsoft is not neutral. Microsoft's new anti-phishing feature of its Internet Explorer 7 web browser blatantly discriminates against the 20.6 million sole proprietorships in the U.S.A in favor of their net neutrality allies: Google, Amazon, eBay and Yahoo and IAC.

• Microsoft's new Explorer browser will be one of the most blatant non-neutral forms of Internet discrimination in the history of the Web, because when Microsoft rolls out this new browser with its Vista upgrade in 2007, the overwhelming majority of Americans will be using this new discriminatory Microsoft browser to supposedly gain "free and open" access the Internet.

The 12-19-06 Wall Street Journal article "Software to spot "Phishers" irks small concerns" is a must read to understand this problem. Kudos to the reporter, Riva

I remain disturbed at the hypocrisy and blatant double standard of net neutrality proponents. It is classic case of "do what I say, not what I do." Their "ends-justify-the-means" MO is glaringly obvious to anyone with an ethical compass or an appreciation of the "democratic process" in our country.

Hiding behind the words and sanctimony of "ethics" and "democracy" net neutrality proponents appear to have no ethical qualms about perverting the democratic and ethical process that they claim to support in order to extort net neutrality conditions on the AT&T-Bell South merger that they know they could not get in an open, democratic or ethical process.

Now that net neutrality proponents have won a tactical victory in successfully intimidating FCC Commissioner McDowell from not participating in the AT&T-Bell South merger (by threatening to hound him to the ends of the earth on trumped-up ethics allegations if he did not stay out of the merger) lets see if they hold themselves to the same ethical high standard.

Lets see if they really care about true ethics, which are about respect for process, the rule of law, and basic fairness. How is it ethical and fair to extort rule changes in the happenstance situation of a merger process rather than the normal open and fair deliberative rulemaking process which fairly applies to all parties? How is extortion due process? How is it ethical to say the ends justify the means? If ethics were truly important to net neutrality proponents they would seek to use the process in only an ethical and open way, not as a way to extort concessions that the normal policymaking process could not generate.

Net neutrality is the ultimate unprincipled double standard. It is clear that ethics and fairness are expected of others but not of themselves. Net neutrality proponents should think long and hard about justifying the "means" of unethical extortion in order to achieve the "ends" of net neutrality. Do they really want to win dirty? To soil our public process with win-at-all-costs, take-no-prisoners, ethically-challenged tactics? How will they expect others to respect process, rule of law and ethical standards if they do not abide by them themselves?

Ethics are about doing something the right way for the right reasons. Extorting out-of-process concessions in the AT&T-Bell South merger is not doing it the right way for the right reasons.

Now that net neutrality proponents have claimed to stand for high ethical standards, lets hold them to their word.