@scleland: Did Google and Facebook Pass on Twitter to avoid Antitrust Investigation?

What No Bids for Twitter Tell Us about Google Facebook & Online Advertising by Scott Cleland

What does it tell us that no company ultimately bid to buy Twitter over the last month despite several reported brand-name interested buyers?

Twitter is the eighth-most-visited Internet site in the world; the best site in the world for real-time content; and is one of the few public companies in the marketplace that is growing revenue at a 20% annual rate – and no one even submitted a low-ball bid for Twitter? What is going on here?

Apparently, it tells us that there are only two companies in the world that could grow, leverage and monetize Twitter to make it worth roughly $20b under current circumstances – Alphabet-Google and Facebook — and they both practically can’t buy Twitter for antitrust reasons.

Let’s analyze why.

Read the post on the Precursor Blog.

@scleland: Why Did Google & Facebook Stop Competing With Each Other?

Good thing Renata Hesse is on the case!

The evidence shows that Google & Facebook — by far the world’s most dominant Internet gatekeepers – are not an Internet advertising “duopoly,” but worse, two separate Internet advertising monopoly platforms, one in search advertising and another in social media advertising.

That’s because search and social media advertising are not competitive substitutes for each other, but are proving to be synergistic advertising complements to each other in company marketing campaigns, because generally search advertising excels at lead generation and local business visibility while social media advertising generally excels at building brand awareness and interactivity with consumers.

Tellingly, after beginning to directly compete in social in 2011 and in search in 2013, Google and Facebook both abruptly, coincidentally, and effectively stopped competing directly with each other in both the search and social media markets in 2014.

Apparently, they either jointly agreed in 2014 to divide up the marketplace and no longer directly compete with each other to maximize their exceptional mobile growth and profitability; or they concluded independently — from their initial directly competitive forays into the other’s core markets — that the other commanded unbeatable monopoly network effects, so not directly competing with each other would maximize their exceptional mobile growth and profitability.

This profound lack of competition among the world’s two most dominant Internet edge platforms is highly relevant to: the EU antitrust charges against Google in search, mobile, and advertising, and the EU’s privacy investigations into Google and Facebook; antitrust authorities’ antitrust investigations of Google and these markets in the U.S. and around the world; and also the FCC’s core competitive assumptions underlying its Open Internet Order, and its proposed Title II ISP privacy rules and Set-Top Box unbundling rules.

Read the post on the Precursor Blog

@scleland: EU-Google Antitrust Cases vs. Google’s Net Neutrality Leadership

Google: do as we say, not as we do.

As the longtime leader, corporatesponsor, and advocate for the net neutrality movement, Google has made net neutrality, a key part of its values and brand.

Google’s Take Action page explains net neutrality: “The Internet should be competitive and open. … It’s a level playing field, where new entrants and established players can reach users on an equal footing. If Internet access providers can block some services and cut special deals that prioritize some companies’ content over others that would threaten the innovation that makes the Internet awesome.”

Does Google walk its net neutrality talk?

As a result of five years of investigation and evidence collection, the EU has formally charged Google with abuses of its >90% dominance in four separate markets in three separate antitrust cases — search/shopping, Android mobile, and advertising.

Essentially these collective antitrust charges describe a Google that creates an “unlevel playing field where new entrants and established players” cannot “reach users on an equal footing,” so that Google can block some services and cut special deals” for itself, “that prioritize” Google’s “content over others” content.

Listen to how EU antitrust authorities describe their evidence that shows how Google has engaged in systematic, non-neutral, gatekeeper-like behaviors, ecosystem-wide — against users, competitors, advertisers, publishers, adtech providers, device manufacturers, mobile operators, app developers and content providers.

Google’s non-neutral gatekeeper treatment of competitors’ search traffic

The EU charges Google diverts users’ “traffic” from competitors’ content to Google’s.

Google has sought to maximise traffic to its own websites…” The EU’s “preliminary conclusion [is] that Google has abused its dominant position by systematically favouring its own comparison shopping service in its general search results. The additional evidence relates, amongst other things, to the way Google favours its own comparison shopping service over those of competitors, the impact of a website’s prominence of display in Google’s search results on its traffic, and the evolution of traffic to Google’s comparison shopping service compared to its competitors. The Commission is concerned that users do not necessarily see the most relevant results in response to queries – this is to the detriment of consumers, and stifles innovation.” [Bold added]

Read the post on the Precursor Blog.

@scleland: What EU-Google Advertising Antitrust Charges Mean for the Obama Federal Trade Commission

Like their colleagues at the Department of Justice, the Federal Trade Commission has spectacularly ignored Google’s violations of law demonstrating Google’s whole-of-government capture.

Of the three EU antitrust cases against Google (search bias in shoppingAndroid tying, and soon search-advertising-tying), the expected new search-advertising case — which focuses on how Google has long contractually required websites to use Google’s search advertising if they use Google search — could be the hardest EU-Google antitrust case for the FTC to ignore, for the reasons below.

Summary of Why It’s Hard for FTC to Ignore the EU Search-Advertising Antitrust Case:

1. The FTC has been following the EU’s antitrust lead.

2. The FTC’s Google 2012 staff report agrees with the EU’s conclusion on search advertising.

3. The DOJ threatened a 2008 monopolization case over Google’s search advertising syndication.

4. The FTC approved two Google advertising acquisitions that substantially lessened competition.

5. The FTC fined Google a record amount in 2012 for a serious deceptive advertising offense.

6. This EU advertising case is based on strong contractual evidence. 

Read the post on The Precursor Blog.

@scleland: The Trust Ramifications of an EU-Google Search Bias Conviction

The Sunday Telegraph reports that the EU is poised to fine Google an EU record ~€3b for “web search monopoly abuse” and that “Google will be banned from continuing to manipulate search results to favour itself and harm rivals.

Assuming this occurs in the reported June-July timeframe, and just like the EU’s 2015 Statement of Objections charged, the long-term ramifications for Google will be much broader and more serious than most appreciate.

That’s because Google has been so masterful in managing public, media and investor expectations that this day would never arrive, (because Google had done nothing wrong and Google was on the right side of competition in offering free, high-quality, and innovative services that benefited consumers); and that it was really EU regulators who were in the wrong because they were protectionists who were also “wrong as a matter of fact, law and economics.”

Why is the pending outcome here so problematic for Google?

First, Google has long maintained it is not a monopoly and has done nothing wrong, critical premises undergirding the public’s trust in Google, its algorithms, the objectivity of its search results, and its brands.

The EU’s pending decision per the Statement of Objections, will rule that Google “has abused its dominant position in the markets for general internet search services in the European Economic Area (EEA) by systematically favouring its own comparison shopping product in its general search results pages…” and that “Google has a dominant position in providing general online search services throughout the EEA, with market shares above 90% in most EEA countries.”

Simply, the EU will be ruling as a matter of law that Google is in fact a monopoly that has done wrong.

Second, what’s different here is this will be the first official search antitrust conviction of Google in the world, and it will be for abusing its search dominance to the detriment of consumers, competition and innovation.

Read it on the Precursor Blog