House Democrats have proposed a resolution to Net Neutrality that strongly signals to the FCC majority to not pursue its considered Title II reclassification of broadband as a 1934 regulated telephone service. The House Democrats’ draft is here. The implications of this House draft are broad, important and constructive.

First, this House Democrat draft signals to the FCC Democrat majority loud and clear that House Democrats do not support the radical FreePress-driven proposal to regulate broadband Internet networks as 1934 common carrier telephone networks.

Second, it proves that the FreePress-driven proposal to takeover the Internet and regulate it as a public utility is extreme, way out of the political mainstream, and a non-starter.

Third, this legislation proposes a sensible resolution and workable alternative to this destructive polarizing issue that is serving no one who seeks an open Internet that works, grows and innovates without anti-competitive concerns, but only the revolutionary interests of FreePress and its allies that claim they want net neutrality, but really seek a utopian “information commons revolution.”

Fourth, this proposed legislation would provide the FCC Chairman with all the basic elements that he has claimed are necessary to preserve an open Internet: FCC enforcement authority to address “unjust and unreasonable discrimination;” codifying the net neutrality enforcement principles into law; and adding non-discrimination and transparency obligations.

Fifth, it shows there could be solid consensus around a reasonable approach of preventing potential bad acts with narrow targeted enforcement authority, but clearly limits the FCC from regulating the Internet in any way to address unproven problems.

Sixth and interestingly, it appears to more broadly redefine the term “broadband provider” in a technology-neutral way which would ensure that any provider, whether it be a traditional telecom, cable or wireless broadband provider, or future broadband providers like Google, Skype, and others which may use white spaces or other means — must also abide by net neutrality principles.

In sum, this House Democrat draft legislation represents a tectonic shift in the net neutrality debate.

  • The reality of a listless economy that is not producing jobs and the reality of mid-term elections that bring accountability to the Washington process, both have dramatically shifted this FreePress-driven polarized net neutrality issue back into the boundaries of reasonableness and constructiveness.

 

Ever wonder why the net neutrality issue can’t be resolved, despite all the many earnest efforts, negotiations, and compromises to resolve it over the last four years?

  • The simple reason is that FreePress — the head net neutrality activist — does not want to resolve net neutrality; every time there is a real effort to resolve the issue, FreePress does everything in their power to blow up any prospect for resolution.
  • The one constant in the Net neutrality debate over the last four years has been FreePress’ fierce opposition to any real resolution, because FreePress wants the opposite — revolution.

Before I recount FreePress’ ignominious longstanding record of opposing resolution of net neutrality, it is important to understand why FreePress is such a singularly destructive, and not a constructive, force in the net neutrality debate.

  • First, FreePress is not a genuine “stakeholder” here because FreePress has no “stake” in “preserving” or “saving” the status quo; FreePress’ real mission is to destroy the status quo of free enterprise, property rights, individualism, and capitalism.
    • Including FreePress in “stakeholder negotiations” is like inviting a pyromaniac to fight a fire.
  • Moreover, FreePress’ founder Robert McChesney is an unabashed Marxist.
    • In a 2008 op-ed on the Financial Crisis, McChesney wrote: “there is no real answer, but to remove brick by brick the capitalist system itself, rebuilding the entire society on socialist principles.
    • In another 2008 op-ed, McChesney declared that “any serious effort to reform the media system would have to necessarily be part of a revolutionary program to overthrow the capitalist system itself.”
  • Second, FreePress does not seek to “resolve” net neutrality, because to them net neutrality is not an end, but a means to a hidden end — a socialist “information commons” where all information and bandwidth is essentially free to everyone and no one has to ask for permission to do anything online.
    • If you want to learn more about FreePress’ revolutionary ideology, click here.
    • If you want to learn more about how FreePress and other extreme left activists essentially connived to frame net neutrality as a political-revolutionary issue, click here.

Now back to my main point here. Every single time there’s a real effort and opportunity to resolve the net neutrality issue, FreePress goes bonkers and threatens people in all sorts of despicable ways to not negotiate or compromise to come up with a workable resolution of the net neutrality issue.

  • In the summer of 2006, FreePress and its SaveTheInternet mob-on-command, vehemently opposed House legislation that codified the FCC’s broadband principles and gave the FCC authority to fine violators; and opposed Senate legislation that would have created the consumer Internet Bill of Rights that FreePress had previously clamored for.
  • When FreePress petitioned the FCC to investigate Comcast’s alleged violations of net neutrality vis-a-vis BitTorrent, FreePress vehemently opposed any industry negotiations to devise protocols that would accommodate Comcast’s legitimate quality-of-service and network management concerns while also balancing the legitimate need for protocol agnostic network management – as a sellout, unacceptable discrimination, and a violation of free speech.
  • FreePress opposed proceeding with the FCC’s National Broadband Plan if it did not include mandated net neutrality or a recommendation to reclassify Broadband as a Title II 1934 regulated telephone service.
  • FreePress rallied the extreme left and very personally berated FCC Chairman Genachowski and the White House when the Washington Post reported last spring that the FCC Chairman was leaning toward not requiring Title II telephone regulation of broadband in his Open Internet “Third Way” proposal.
  • This summer when the FCC and Congress hosted and encouraged stakeholders to negotiate and come up with a workable compromise, FreePress was relentlessly attacking any attempt at negotiation or compromise as not open, undemocratic, and inherently nefarious – because FreePress was not interested in resolution, but revolution.
  • When Google and Verizon had the courage to propose a potential compromise that many major stakeholders could live with, and that included everything the FCC Chairman said he wanted from an open Internet proceeding (authority to enforce net neutrality principles, prevent discrimination, and promote transparency), FreePress viciously turned on its longstanding and strongest corporate ally, Google, with all the venom and rage it collectively could muster, calling Google evil, picketing their headquarters, and savaging Google mercilessly in the press and the blogosphere – all because Google had the temerity to try and be constructive and resolve this endless tech-policy-holy-war that is serving no one’s interests but FreePress’.

In sum at some point, FreePress’ destructive MO will wear out its welcome with the FCC, the Administration and the Congress.

  • More and more, those involved in the political and regulatory process are learning that what FreePress, really wants – revolution – tearing down the current capitalistic Internet system to replace it with their socialized Internet system — is not what they want – at all.
  • The vast majority of people involved in resolving the net neutrality issue are true stakeholders – who want and need the Internet to work reliably and safely, the economy to function, grow and create new jobs, and property to be protected to encourage innovation and investment in the future.
  • The “open” question is when will the FCC comprehend what the majority of Congress already clearly comprehends, that net neutrality must be resolved constructively and not destructively.

Simply, FreePress seeks to destroy what most everyone else wants to preserve, grow and improve.

  • The net neutrality issue is practically un-resolvable as long as those in Government continue to listen to, and toy with, the highly destructive agenda of FreePress, which seeks to fundamentally destroy what most everyone else wants to preserve, grow and enhance.

In another Google fit of no-self-awareness, Google has launched a new web tool that they call the “transparency report” in order to promote transparency as “a deterrent to censorship,” per a Google spokeswoman in the NYT’s Bits Blog.

While I applaud the tool and Google’s effort to promote transparency as a deterrent to censorship, the effort appears disingenuous because of Google’s double standard that others must submit to transparency, but not Google.

Google’s tool will have “a map that shows every time a government has asked Google to take down or hand over information, and what percentage of the time Google has complied,” per the NYT.”

If transparency is good:

  • Why doesn’t Google also have a map of every time Google’s human raters change the “quality score’ of a website that has the effect of burying that site’s rank so effectively no one will find them via Google search — a de facto form of anti-competitive “censorship?”
  • Why doesn’t Google list all the times Google denies keywords to those who request them based on Google’s self-censored advertising categories?
  • Why doesn’t Google list all bids for keywords that bid the highest price for the keyword, but effectively get censored because a bigger website offers Google more clicks than the highest bidder did?
  • Why doesn’t Google support transparency about how Google’s entire password system was hacked last December, so that the hundreds of millions of endangered Google users could take measures to safeguard their privacy and security?
  • Why isn’t Google transparent about how it uses other’s private, proprietary and confidential information — without their permission?
  • Why does Google support mandatory transparency of how competitive broadband providers manage their networks, but opposes comparable transparency for its monopoly search fiber network that carries more traffic than all but maybe a couple of the world’s networks?

In sum, if what Google says is true, that:

  • Transparency is a core value at Google. As a company we feel it is our responsibility to ensure that we maximize transparency around the flow of information related to our tools and services. We believe that more information means more choice, more freedom and ultimately more power for the individual…”
  • …why is Google Inc. — the only entity in the world that collects, stores and analyzes all the world’s information, and the self-described “biggest kingmaker on this earth” — not more transparent about how Google Inc. censors information, advertising and competitors?

 

In a comical defense of Google, David Balto of the Center for American Progress pleaded for the Government to not regulate Google in his HuffPo Op-ed: “Regulating Google: Searching for a solution without a problem.” Let me count the ironies here.

First, Mr. Balto is attempting to shield Google behind the successful defense of the broadband industry against mandated net neutrality regulation that “net neutrality is a solution in search of a problem.”

That defense works because it is true. The industry has only one official net neutrality violation that has withstood scrutiny and due process — Madison River in 2005. Since then, the roughly 2,000 broadband networks in the U.S. have abided by the FCC’s 2005 Broadband Principles and remain committed to work constructively to ensure that consumers can neutrally access and use the legal content, applications, and devices of their choice.

  • Google on the other hand, has multiple serious infractions of not acting neutrally; see the most prominent; TradeComet, My Triggers, Foundem, Ciao, eJustice.FR, Navx, MyStudioBriefing.net, TOTL, Skyhook, Expedia — and these are only the ones that have gone public with their formal charges.
  • And Google routinely self-deals in non-neutrally ranking Google-owned content over competitors content. How can any content compete with a monopoly search engine that advantages its own content over competitors? They can’t. But hey… isn’t that supposed rationale behind the need for net neutrality…?

Second, no major company has called for more heavy-handed Government regulation of its potential competitors than Google has: i.e. 1934 Title II telephone regulation for broadband companies; mandated net neutrality regulation of broadband companies; antitrust enforcement against Microsoft’s browser; antitrust enforcement against Apple to force it to open up its iphone market to Google-AdMob’s monopoly advertising platform; (recent calls for Facebook to open its network): mandated and subsidized smart grid; mandated and subsidized personal health records; etc.

  • Mr. Balto’s mimicking of all the defenses that the companies employ to argue against the heavy handed regulation that Google routinely calls for for its competitors, seems just a tad hypocritical, disingenuous, two-faced, insincere, duplicitous, phony, devious, underhanded, misleading, and goobristic to name just a few of the adjectives that would come to many’s mind.
  • It is particularly interesting that many in the blogosphere and media have not called Google out for this extraordinarily obvious self-serving double standard of Google’s — that the Government should heavily regulate all of Google’s competitors, but never Google, even if Google commits the same offenses repeatedly that Google claims the Government must intervene to stop.

Third, contrary to Mr. Balto’s assertion that Google is not a problem, Google itself has waffled badly in its own defense, weakening its longstanding assertions that Google has always been unbiased and neutral in its search algorithm.

  • Now Google is flip flopping and arguing publicly in an FT op-ed why search should not be neutral.
  • Moreover, Google CEO Schmidt is digging Google even deeper in a hole in recently saying this about Google’s search algorithm: “there is not deliberate favoritism from a business perspective. There is favoritism from what end users prefer, and we have ways to measure that.” This is in stark contrast to Google’s past assertions that it does rank its own Google content over its competitors’ content.

In sum, Google and its allies would be wise to think through their public defense of their actions to be sure that they fit the facts, that they comport with the longstanding representations that Google used to build a critical mass of user trust, and that are not in direct contradiction with their previous defenses.

  • I can imagine Mr. Balto’s next conversation with Google about all this — “Google, we have a problem.”

 

The link is here to: “Googleopoly VI — How Google is Monopolizing Consumer Internet Media and Threatening a Price Deflationary Spiral and Major Job Losses in a Trillion Dollar Sector” — It is a 41 page PowerPoint presentation with 18 pages of pictorial analysis.

Below is the Executive Summary: (The PDF link is here.)

Executive Summary

Googleopoly VI – Seeing the Big Picture: How Google is Monopolizing Consumer Internet Media

And Threatening a Price Deflationary Spiral & Major Job Losses in a $Trillion Sector

By Scott Cleland* President of Precursor LLC, September 13, 2010

 

Recommendation: The facts and stakes warrant the U.S. DOJ filing a Sherman Section 2 Antitrust Case and the EU Filing a Section 102 Statement of Objections – against Google Inc. for monopolizing consumer Internet media services.

  • Since Google increasingly is the Internet for info access and distribution, and also is increasingly monopolizing the consumer Internet media ecosystem with a systematic monopolization strategy, a broad antitrust case is warranted, because event-specific investigations/actions are a losing antitrust game of ‘whack-a-mole.’

 

High-Level Conclusions:

  1. Lax antitrust enforcement tipped Google to monopoly and facilitates monopolization of consumer Internet media.
  2. Google’s monopoly platform increasingly is supplanting and dominating the consumer Internet media ecosystem.
  3. There is more at stake than competition from a global information access bottleneck; Googleopoly threatens economic growth, jobs, privacy, intel. property, a free press, fair elections, cyber-security, & sovereignty.
  4. Only Google has a billion user audience, ~all information/advertisers/publishers, & a free-info business model that can sustain pervasive predatory free info/products/services long term. There’s no net-economic-growth or net-job-creation in a “free” Internet sector model — only: a deflationary price spiral; net negative growth, property devaluation, job losses, and monopolization. Over 20 industries, 200+ US/EU companies, and hundreds of thousands of jobs are at risk from Googleopoly’s anti-competitive price deflationary spiral.
  5. The consumer does not win long-term from monopoly-control over “free” information access & distribution.

 

Additional Conclusions:

  1. Google is a vastly more serious antitrust threat to consumers and the economy than Microsoft, because the DOJ blocked Microsoft from extending its monopoly vertically into the broader economy, while antitrust authorities have unwittingly aided and abetted Google’s vertical monopolization of vast parts of the broader economy.
  2. Lax antitrust enforcement allowed dominant Google search to acquire: YouTube’s dominant video-streaming, DoubleClick’s dominant display ad-serving/analytics, and AdMob’s dominant mobile advertising — to create a dominant Google TV global “monocaster” platform for all types of IP devices with 80% of the video streaming audience and dominance of IP video views/minutes viewed. Only Google TV has no media concentration limits.
  3. The Internet’s greatest strength is also its greatest weakness, in that the Internet’s universality naturally leads to extreme centralization, concentration and market power. Thus Google increasingly is the Internet for most.
  4. Google has systematically assembled all the building blocks in the “stack” of necessary capabilities to become the dominant platform of the consumer Internet media ecosystem: a winner-take-all dynamic; omniscient mission and omni-directional ambition; omnivorous info collection; Internet omnipresence; Internet-scalable infrastructure; omnifarious products, services & info types; Internet behavior omniscience; and omnivorous ecosystem share.
  5. Google has unique “Total Information Awareness Power” where it collects, records, stores, and analyzes most all Internet activity: all the world’s information and all market information of usage, traffic, supply and demand; and permission-less profiles of users’: personal identifications, locations, intentions, and associations.
  6. Google’s monopoly power is lasting because of re-enforcing spheres of monopoly influence — a monopoly platform surrounded by: 75+ acquisitions; many satellite companies financially dependent on Google for search monetization; thousands of publisher revenue-share “partners;” and a phalanx of free info, products and services.
  7. Google’s secret weapon is its “deep tracking inspection” of everything that passes through Google’s cloud, where “innovation without permission” means that Google has to ask no one for permission to use the derivative tracking metadata from anyone: publisher partners, advertiser clients, competitors, proprietary owners or users.
  8. Google is not an honest broker in search; it hides multiple serious conflicts-of-interest.

 

Google’s Monopolization Strategy Exploits Systemic Enforcement Weaknesses 

 

Misrepresent conflicts-of-interest to build trust as an honest broker.

  • Google built an ill-gotten critical mass of user trust through systematic misrepresentation of Google’s real broker interests and by not publicly disclosing multiple serious conflicts-of-interest that would be considered fraudulent and deceptive if done in the off-line marketplace.

 

Systematically foreclose competition. 

  • Google uses unique market-wide metadata information power to find and buy the most strategic first movers cheap before: a business model can form effectively; revenue hits the “hockey stick” growth inflection point; a market can be defined for antitrust enforcement purposes; and others learn what Google knew from analyzing everyone else’s proprietary metadata without permission.
  • Google co-opts and subordinates actual and potential competitors by providing outsourced search, tracking/analytics, and advertising monetization through opaque and supra-competitive revenue-sharing arrangements that create business dependency on Google.
  • Google forces the wholesale price for information access towards zero by copying all information without permission/compensation to make it accessible for free, then forcing an ad-monetization model so that information itself is not valuable, but only access to information & adding functionality to information.
  • Google predatorily dumps monopoly-subsidized omnifarious products/services to eliminate competition.

 

Structure opaque derivative markets so Google can be player, referee, scorekeeper & paymaster all at once.

  • Google’s “auctions” are not auctions between buyers and sellers where the highest price prevails; Google’s auctions are a derivative algorithm that discriminates against bidders to award the ad, not to who bids the most, but to who Google estimates has the best probability of generating the most derivative ad clicks and hence revenue for Google. Google also unilaterally sets minimum bid prices.

 

Exclude competitors from information critical to competition.

  • Google owns and controls uniquely vast and critical datasets (YouTube, Books, Earth/Maps/StreetView, etc.) and makes them publicly accessible and useful to users, but excludes competitive crawling or indexing so competitors cannot offer competitive search results.
  • Google harvests and controls all the derivative “metadata” (data on the data) that the dominant Google Internet media platform produces, i.e. the how, what, where, when, why and how much of most Internet traffic, clicks and behavior, that Google uniquely records to allow Google to create unique derivative metadata profiles of individual users, groups, demographic slices, and the market overall.

 

Discriminate predatorily against competitors and self-deal in favor of Google info, products and services.

  • Google detects and impedes emerging search competitors from becoming more competitive by predatory monopoly discrimination using “human raters” to lower their search ranking and increase their price per click, so they have to pay more for less and can’t compete; and
  • Google self-deals by using Google’s unique knowledge of partners, competitors, and users’ proprietary and private information to identify, own and then rank critical building block content first, above partners and competitors, so that competitors cannot succeed.

 

Front-run partners and competitors by using their own confidential/proprietary information against them. 

  • Google tracks, records and analyzes most all behavior on the Internet, Google’s “Total Information Awareness Power,” so Google can effectively reverse-engineer the most valuable trade secrets and confidential information from partners and competitors, i.e. their confidential client lists (users, advertisers), their actual measured strengths and weaknesses, plans, strategies, and tactics.

 

*The views expressed in this presentation are solely the author’s and not the views of any Precursor LLC clients.  


 

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