Inside the U.S. Antitrust Probe of Google(wsj.com)
wsj.com
Inside the U.S. Antitrust Probe of Google
http://www.wsj.com/articles/inside-the-u-s-antitrust-probe-of-google-1426793274
59 comments
Where's the Antritrust Probe of Comcast, Time Warner Cable, and all of those other shit-eating ISPs? At least Google gives me some fantastic services at little cost to me.
Cable and fiber ISPs as they exist now, with the same company owning the wires and providing the service, are inevitably going to be natural monopolies, because of the massive start-up costs of entering the market combined with the trivial (near-zero) costs to the incumbent ISPs to add one more customer.
In that case, new companies have to lay new cables and provision new data centers and hire new people, whereas TWC only has to ship out a cable modem and allow access to pre-existing capacity.
One way around this would be to force TWC and Comcast and so on to divest themselves of the physical infrastructure up to their in-plant demarcation points, spin off new natural monopolies to only own the cables, and force those new companies to lease to all comers at the same low rate, with a managed X% profit spelled out in regulations. That way, an upstart would only have to provision new data centers and hire new people; that's still more than Comcast has to do, but it's a lot less than the current state of affairs.
This is related to Net Neutrality, in that the neutrality rules are more urgently needed as long as ISPs have unshakeable monopolies on a regional basis, but even if competition were more robust it would still make sense to ensure no ISP could become that predatory.
In that case, new companies have to lay new cables and provision new data centers and hire new people, whereas TWC only has to ship out a cable modem and allow access to pre-existing capacity.
One way around this would be to force TWC and Comcast and so on to divest themselves of the physical infrastructure up to their in-plant demarcation points, spin off new natural monopolies to only own the cables, and force those new companies to lease to all comers at the same low rate, with a managed X% profit spelled out in regulations. That way, an upstart would only have to provision new data centers and hire new people; that's still more than Comcast has to do, but it's a lot less than the current state of affairs.
This is related to Net Neutrality, in that the neutrality rules are more urgently needed as long as ISPs have unshakeable monopolies on a regional basis, but even if competition were more robust it would still make sense to ensure no ISP could become that predatory.
But it's not a natural monopoly. I know because I have three high speed ISP options at home: cable, fiber and (decent) DSL.
Three providers would be unthinkable for a true natural monopoly, like roads or water.
Three providers would be unthinkable for a true natural monopoly, like roads or water.
> it's not a natural monopoly. I know because...
You're lucky. I only have Cable and (crappy) DSL. My cable is good, but the DSL is so awful that if my cable provider decided to triple their rates I would have no choice but to acquiesce and pay up. I think that's the very definition of a natural monopoly.
A very large number of Americans have no, or only one high speed internet provider - and that was by the 2010 standard of "high speed": http://broadbandnow.com/report/2013-underserved/
( Relevant YC discussion here: https://news.ycombinator.com/item?id=9044719 )
You're lucky. I only have Cable and (crappy) DSL. My cable is good, but the DSL is so awful that if my cable provider decided to triple their rates I would have no choice but to acquiesce and pay up. I think that's the very definition of a natural monopoly.
A very large number of Americans have no, or only one high speed internet provider - and that was by the 2010 standard of "high speed": http://broadbandnow.com/report/2013-underserved/
( Relevant YC discussion here: https://news.ycombinator.com/item?id=9044719 )
There is nothing that physically prevents you from building three separate water networks, it's just a stupid idea because it costs three times as much for the same result. And so it is with internet.
I know because I have three high speed ISP options at home: cable, fiber and (decent) DSL.
Where I live there is either cable (which exists because of cable TV) and terrible DSL (which exists because of phone lines). There has never been any attempt to wire the area only to provide internet service. And as far as I know, there is only one set of wires for cable TV. So, it sure appears to be a natural monopoly to me.
Where I live there is either cable (which exists because of cable TV) and terrible DSL (which exists because of phone lines). There has never been any attempt to wire the area only to provide internet service. And as far as I know, there is only one set of wires for cable TV. So, it sure appears to be a natural monopoly to me.
Nice job there, trying to derail the discussion. Let's go back to talking about google and how it was blackmailing websites in order to take their unique content and display it directly in search results.
Any opinions on that?
Any opinions on that?
Apple? If Microsoft got into all these problems why not apple who actively prevents 3rd party app stores and cripples web-views in apps.
The US Government already controls Comcast and Time Warner Cable through the regulations in the telecom industry, the FCC, and so on. The Feds, for example, can easily interrupt their merger at any time they see fit. These companies are government regulated monopolies (or at the least near-monopolies), much like AT&T and Verizon.
The problem with Google, as far as the US Government is concerned, is that it is not a government regulated monopoly. They fear anything with such vast scope and influence / power, that they don't have a certain level of direct control over.
The purpose of pursuing Google on anti-trust is to bring them under supervision of the US Government. The same reason the Feds were interested in Microsoft. It surprisingly takes very little to cause anti-trust problems for a major company, as little as one powerful senator dedicated to the issue. Google will be brought under a consent decree in the next few years most likely, and by the time the Feds get around to doing that, the market will have likely already made Google's dominance in search a lot less important.
The problem with Google, as far as the US Government is concerned, is that it is not a government regulated monopoly. They fear anything with such vast scope and influence / power, that they don't have a certain level of direct control over.
The purpose of pursuing Google on anti-trust is to bring them under supervision of the US Government. The same reason the Feds were interested in Microsoft. It surprisingly takes very little to cause anti-trust problems for a major company, as little as one powerful senator dedicated to the issue. Google will be brought under a consent decree in the next few years most likely, and by the time the Feds get around to doing that, the market will have likely already made Google's dominance in search a lot less important.
There’s no “they” here, the “US Government” isn’t “concerned” about anything, and the Comcast/TWC merger is at the mercy of an enormously complex political process/system, not some singularly acting Feds who can “see fit” to do one thing or another. Anthropomorphizing an institution as big as the US Federal Government is dangerous, because it easily leads to reasoning about institutions as if they were individual people, but such entities behave in entirely different ways than individuals.
Anyway, with that digression out of the way, if you want to understand the relationship between government regulators and telecommunications companies, I highly recommend Tim Wu’s book The Master Switch. Government regulation of telecommunications industries has often been contingent, contradictory, and somewhat chaotic (in the sense that small nudges lead to dramatic unpredictable changes).
Anyway, with that digression out of the way, if you want to understand the relationship between government regulators and telecommunications companies, I highly recommend Tim Wu’s book The Master Switch. Government regulation of telecommunications industries has often been contingent, contradictory, and somewhat chaotic (in the sense that small nudges lead to dramatic unpredictable changes).
| ...by the time the Feds get around to doing that, the market will have likely already made Google's dominance is search a lot less important.
Can you elaborate on how that might happen, operationally?
Can you elaborate on how that might happen, operationally?
As internet shifts to mobile phones & apps become the dominant way to use the internet, it will automatically diminish the importance of Google Search, & the market will (is already) pricing this in.
I think Peter Thiel alluded to this in an interview recently. From what I recollect, he suggested that by the time Feds act, the monopoly has already been disrupted elsewhere.
45 minute mark of this interview http://thisweekinstartups.com/peter-thiel-launch-festival/
I think Peter Thiel alluded to this in an interview recently. From what I recollect, he suggested that by the time Feds act, the monopoly has already been disrupted elsewhere.
45 minute mark of this interview http://thisweekinstartups.com/peter-thiel-launch-festival/
Apps are a temporary state of affairs (but isn't everything these days?). In a few generations, your phone will be little more than a terminal that connects to your personal virtual machine hosted on Apple/AWS/Google servers. This VM will run the respective company's OS as well as its native apps. These apps will be unrecognizably more powerful than the ones currently on your phone, and your phone itself will be significantly lighter and more efficient (and, yes, probably wearable).
Google will continue to make money from ads delivered into this virtual space and it will also have more leverage to regulate 3rd party apps, giving it access to the space within the apps as well. Oh, and also all these virtual spaces will have private and public modes.
The biggest problem really is screen area. The only reason Google can't exploit Android to its fullest potential is that phone screens just aren't large enough to dedicate a sufficient screen area to advertisement (it's a funny paradox: the phone as a real-life implement is limited to a form factor that precludes advertising space, which by its nature is always limited to 'sub-prime real-estate'). Perhaps OLED will be the solution to this, though I am more partial to drone-phones that hover beside their owners and use lasers to project the "screen" onto special eye contacts.
Google will continue to make money from ads delivered into this virtual space and it will also have more leverage to regulate 3rd party apps, giving it access to the space within the apps as well. Oh, and also all these virtual spaces will have private and public modes.
The biggest problem really is screen area. The only reason Google can't exploit Android to its fullest potential is that phone screens just aren't large enough to dedicate a sufficient screen area to advertisement (it's a funny paradox: the phone as a real-life implement is limited to a form factor that precludes advertising space, which by its nature is always limited to 'sub-prime real-estate'). Perhaps OLED will be the solution to this, though I am more partial to drone-phones that hover beside their owners and use lasers to project the "screen" onto special eye contacts.
mobile phones and apps, > 50% of which run an operating system, browser, and app store made by Google?
It's a funny position to hate regulation on the one hand, and say it's useless on the other... Imma chalk this one up to Thiel saying things more in service of his ideology than relating to reality as she may exist.
> They fear anything with such vast scope and influence / power, that they don't have a certain level of direct control over.
Their cozy relationships with the big banks could've fooled me.
Their cozy relationships with the big banks could've fooled me.
The FTC report exposes the bullying of content providers, such as Trip Advisor, Yelp and Amazon, who were told that if they didn't want their content scraped they would be blocked from search results.[1]
And Jason Calacanis is all upset because the report says that Google tweaked their algorithm to hurt competitors, which he claims killed his human-powered search engine, Mahalo [2]
[1]http://www.theverge.com/2015/3/19/8260073/google-ftc-leaked-...
[2]https://twitter.com/Jason/status/578731213554233346/photo/1
And Jason Calacanis is all upset because the report says that Google tweaked their algorithm to hurt competitors, which he claims killed his human-powered search engine, Mahalo [2]
[1]http://www.theverge.com/2015/3/19/8260073/google-ftc-leaked-...
[2]https://twitter.com/Jason/status/578731213554233346/photo/1
How can Google index content it can't scrape?
It doesn't seem anticompetitive to me - it seems like common sense.
It doesn't seem anticompetitive to me - it seems like common sense.
If they just scraped and indexed content, it'd be fine.
>According to the report, for one example, Google took content from companies like Yelp, TripAdvisor, and Amazon. In the latter case, Google lifted product rankings and placed them in their own search results for those products. When the companies complained to Google about the process, Google threatened to remove them entirely from results.
That sounds pretty bad, if accurate.
>According to the report, for one example, Google took content from companies like Yelp, TripAdvisor, and Amazon. In the latter case, Google lifted product rankings and placed them in their own search results for those products. When the companies complained to Google about the process, Google threatened to remove them entirely from results.
That sounds pretty bad, if accurate.
Scraping page titles and snippets to create a list of websites is one thing, but scraping unique content from the pages that keeps people on Google instead of going to the source site is a problem. Say a bunch of restaurants are given star ratings by Yelp. If Google adds those ratings to its search listings then users don't need to go to Yelp. Google gets a double benefit: Yelp's content enhances the Google brand, and it stops them going to external sites. Yelp suffers a double loss: It loses unique content and loses traffic.
Google's Knowledge Graph is where Google scrapes facts that other sites have compiled, most notably from Wikipedia, and presents it as its own data. This devalues all the sites that have compiled the facts, but greatly enhances Google.
When Google acts as a content site in its own right it inevitably comes into competition with the sites it ranks on the search engine, hence the (inevitable) anti-competitive behavior seen in the report.
Google's Knowledge Graph is where Google scrapes facts that other sites have compiled, most notably from Wikipedia, and presents it as its own data. This devalues all the sites that have compiled the facts, but greatly enhances Google.
When Google acts as a content site in its own right it inevitably comes into competition with the sites it ranks on the search engine, hence the (inevitable) anti-competitive behavior seen in the report.
I kind of agree about presenting Yelp ratings and only giving them the option of that or not being indexed, but you go too far in the other direction.
Snippets in search have long been held to be fair use and, quite honestly, I see the Wikipedia thing as an SEO crank red flag: even beyond the fair use argument, Wikipedia is explicitly licensed to enable that sort of transformative use. Remix culture and all that.
Snippets in search have long been held to be fair use and, quite honestly, I see the Wikipedia thing as an SEO crank red flag: even beyond the fair use argument, Wikipedia is explicitly licensed to enable that sort of transformative use. Remix culture and all that.
Conduct that's legal from a copyright point of view can still create an antitrust problem.
That's true, but I would love to hear a specific theory on how using data from Wikipedia would create an antitrust problem :)
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To me it sounds like Google wanted to scrape the content and re-present it in search results (i.e. "Zappy's Pizza Place ★★★") meaning people didn't have to click through to the sites.
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Antitrust laws are couched in vague undefinable terms and do not define what is "monopolistic" in advance. Any and all business can be considered monopolistic under antitrust law. Rulings are ex post facto. No business can know whether they have committed a crime or not, and will never know, until government decides to bring a case.
It is vain, however, to call simply for clearer statutory definitions of monopolistic practice. For the vagueness of the law results from the impossibility of laying down a cogent definition of monopoly on the market. Hence the chaotic shift of the government from one unjustifiable criterion of monopoly to another: size of firm, "closeness" of substitutes, charging a price "too high" or "too low" or the same as a competitor, merging that "substantially lessens competition," etc.
It is vain, however, to call simply for clearer statutory definitions of monopolistic practice. For the vagueness of the law results from the impossibility of laying down a cogent definition of monopoly on the market. Hence the chaotic shift of the government from one unjustifiable criterion of monopoly to another: size of firm, "closeness" of substitutes, charging a price "too high" or "too low" or the same as a competitor, merging that "substantially lessens competition," etc.
> Any and all business can be considered monopolistic under antitrust law.
That's not even remotely true.
> No business can know whether they have committed a crime or not
That's not even remotely true. There are plenty of factors that characterize 100% of businesses not investigated (much less, penalized) for their alleged anti-competitive practices. It is very possible to determine whether a business carries any risk of investigation.
> For the vagueness of the law results from the impossibility of laying down a cogent definition of monopoly on the market.
Again, you just aren't paying any attention. Regulatory capture has indeed made it far more challenging to bring an effective action, as well as de-fanging of antitrust regulation that served our parents' generation pretty well. But it's not actually difficult to use existing law to differentiate Google (natural monopoly) from cartel monopoly maintenance behaviors.
That's not even remotely true.
> No business can know whether they have committed a crime or not
That's not even remotely true. There are plenty of factors that characterize 100% of businesses not investigated (much less, penalized) for their alleged anti-competitive practices. It is very possible to determine whether a business carries any risk of investigation.
> For the vagueness of the law results from the impossibility of laying down a cogent definition of monopoly on the market.
Again, you just aren't paying any attention. Regulatory capture has indeed made it far more challenging to bring an effective action, as well as de-fanging of antitrust regulation that served our parents' generation pretty well. But it's not actually difficult to use existing law to differentiate Google (natural monopoly) from cartel monopoly maintenance behaviors.
Thanks.
Danny Sullivan has much better coverage and explanation: http://marketingland.com/ftc-report-google-purposely-demoted...
The article (and the articles it links to) multiple times points fingers at other services doing things Google was accused of. But the "others did it too" excuse isn't as straightforward to apply when you have a monopoly. Same reason why Apple gets a free pass for stuff that Microsoft would be and was crucified for.
What we really need is a fully distributed search system which can deliver results as good as Google in the same time frame. Such a system, which would essentially be just a protocol, would level the playing field. Add to that a distributed DNS and we would have a truely censorship free Internet.
You forgot the pony.
It comes with a pony.
Every perfect plan that omits a pony is missing something.
That something is clearly a pony.
That something is clearly a pony.
There are already projects doing open scrapping and indexing. Please donate money or time to any of those. I don't want to link to avoid looking like spam.
So a bunch of senators are shaking down Google for a campaign contribution, eh.
The EU antitrust probe is going to put a hurt on Google, and it won't stop with just search. Android is going to be investigated as well.
Also related to this story is the massive amount of lobbying Google did to avoid charges being filed.
http://www.washingtonpost.com/politics/how-google-is-transfo...
Also related to this story is the massive amount of lobbying Google did to avoid charges being filed.
http://www.washingtonpost.com/politics/how-google-is-transfo...
Microsoft has repeatedly shown to have lobbyists working to cause these newsworthy investigations, but they have almost entirely fizzled, because they are little but paid-for press events for Microsoft.
Google was born into Microsoft's monopoly era. They have executed their monopoly in a profoundly different way. They don't have to commit anti-competitive acts to maintain their monopoly.
This is exactly the kind of monopoly we should want.
Google was born into Microsoft's monopoly era. They have executed their monopoly in a profoundly different way. They don't have to commit anti-competitive acts to maintain their monopoly.
This is exactly the kind of monopoly we should want.
Except if you read the articles and others linked on this thread, their alleged actions (if true) are clearly anti-competitive. "Give us your content, else we'll demote you in our rankings, which by the way is the biggest source of your traffic"? Really?
While they are usually more subtle about it, I am not very surprised. I personally am aware of at least one deal where they used their size to squeeze a smaller company. Only they called it a "level playing field" (https://www.mattcutts.com/blog/level-playing-field/). Sounds so much nicer! Except what it means is, "Our users want to take their data from our service to yours, but it's not 'level', so hey, give us something in return". And of course, who can forget the whole YouTube thing with Zoe Keating.
This has been a trend for a while now, only their PR has been pretty good at covering it up. Like calling it a "level playing field".
While they are usually more subtle about it, I am not very surprised. I personally am aware of at least one deal where they used their size to squeeze a smaller company. Only they called it a "level playing field" (https://www.mattcutts.com/blog/level-playing-field/). Sounds so much nicer! Except what it means is, "Our users want to take their data from our service to yours, but it's not 'level', so hey, give us something in return". And of course, who can forget the whole YouTube thing with Zoe Keating.
This has been a trend for a while now, only their PR has been pretty good at covering it up. Like calling it a "level playing field".
> alleged actions (if true) are clearly anti-competitive
I think you may be confusing monopolistic practices with anti-competitive practices. The former does not imply the latter. If Google were also illegally protecting a monopoly (e.g. leveraging monopoly in another market, let's pretend they have an office software monopoly, to protect their monopoly in web search) then we would have a problem, but that hasn't been shown.
> I personally am aware of at least one deal where they used their size to squeeze a smaller company.
Again, the facts would have to show anti-competitive practice and not just being bigger. Are they doing anything unfair like taking a loss in their victim's market, or threatening their vendors?
I think you may be confusing monopolistic practices with anti-competitive practices. The former does not imply the latter. If Google were also illegally protecting a monopoly (e.g. leveraging monopoly in another market, let's pretend they have an office software monopoly, to protect their monopoly in web search) then we would have a problem, but that hasn't been shown.
> I personally am aware of at least one deal where they used their size to squeeze a smaller company.
Again, the facts would have to show anti-competitive practice and not just being bigger. Are they doing anything unfair like taking a loss in their victim's market, or threatening their vendors?
It seems clear to me that these practices leverage a monopoly in one market, search, to compete unfairly in another market, that is ratings and local reviews.
The actual laws are more involved, including legal theories like "tying" that I can't claim to understand (and I suspect most here can't either) but this looks no different than what Microsoft was accused of doing, which was portrayed as leveraging a desktop OS monopoly to compete in the browser market (as silly as that sounds today).
The actual laws are more involved, including legal theories like "tying" that I can't claim to understand (and I suspect most here can't either) but this looks no different than what Microsoft was accused of doing, which was portrayed as leveraging a desktop OS monopoly to compete in the browser market (as silly as that sounds today).
> a monopoly in one market, search, to compete unfairly in another market, that is ratings and local reviews.
I understand how similar it looks. However, I also note that regulators who are expert in the relevant legal topics have investigated and found no cause for action. Microsoft was not shy about providing all the detail they could to help the investigations in Europe, either.
My best guess is ratings and local reviews are also search, or 'search' isn't a market on paper the way it seems to us as consumers.
I understand how similar it looks. However, I also note that regulators who are expert in the relevant legal topics have investigated and found no cause for action. Microsoft was not shy about providing all the detail they could to help the investigations in Europe, either.
My best guess is ratings and local reviews are also search, or 'search' isn't a market on paper the way it seems to us as consumers.
Actually, investigators in the US "settled" with Google making some minor changes to their services as concession.(And as TFA implies, these "experts" may have been influenced by Google :-) You'll note that investigations in Europe are not going nearly as well for Google.
...is going to put a hurt on the EU and its citizens.
Fixed it
Fixed it
I am surprised they didn't mention how they handle services and platforms. Then again, those are just conveniences to individuals, not something that can affect a business or livelihood like search and ads.
paywall?
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Do no evil indeed...
Downvotes because it's obvious? No google bashin'? We like monopolies?
Primarily because it contributes nothing to the discussion but also, yes, because it's an obvious comment to make.
If you have strong feelings about the issue, use that emotional fuel to write something substantive, or take it to Reddit.
If you have strong feelings about the issue, use that emotional fuel to write something substantive, or take it to Reddit.
Wait, I thought this was the new Reddit... but I kid. Point taken. I think I've got a good feel for the culture around here, lately. I must have had a small lapse into snide sophomoric snipery.