It is Data Privacy Day, a day organized by privacy advocates to call attention to the risks to us all from the use of personal information. The advocates don’t lack for outlets for their fears: whether it is a company developing new features based on social network data or scientists identifying anonymous individuals based on genomic data, privacy issues continue to make headlines. And accompanying these news stories are grumblings and misgivings from privacy advocates lamenting technological progress and the inevitable demise of our culture and commerce should we continue down this path unabated.
The recent settlement by the Federal Trade Commission with Google leaves privacy advocates shocked and dismayed but smartphone manufacturers will be jubilant.
Following an investigation of Google’s business practices, the FTC’s settlement has been deemed feeble by most and even outrageous by some corporations, like Microsoft. Microsoft has contended that Google have been stifling the competition and feels that the company has been let off the hook. It is true that Google has been looking to lock consumers into its suite of services through Google+ and its acquisition of Motorola Mobility worried many smartphone developers that it would squeeze the competition. The merger saw Google acquire invaluable telecommunications patents so that it could have even more control over the development of smartphones and tablet devices, thereby relying less on third party manufacturers and become a more aggressive competitor to Apple.
A century ago, President Theodore Roosevelt launched an era of activist government, checking the excesses of the Industrial Age with new antitrust, labor and social safety net rules. Yet the “Trust-buster” was no anti-capitalist; he also inveighed against the political left who argued that private enterprise was irredeemably corrupt.
“We demand that big business give the people a square deal,” Roosevelt said. “In return we must insist that when anyone engaged in big business honestly endeavors to do right, he shall himself be given a square deal.”
Roosevelt’s point was that the free market was the engine of unprecedented opportunity and prosperity. But, like anything else, it has flaws and breakdowns; we need the gird of government to make markets work more efficiently and fairly.
This balance is the kind of sensible compromise that most voters — and most economists — seem to endorse today. The breakdown of the auto, banking and health care industries were all met with activist intervention by the federal government. The jury seems to be in, at least on the auto and banking industries.
After investigating Google’s search practices for almost two years, the Federal Trade Commission and its staff undoubtedly wanted more than the few voluntary modifications to which Google has agreed. But the Commission demonstrated its professionalism by concluding that the evidence did not support bringing an antitrust case and that no additional remedy was likely to benefit consumers.
The principal complaint against Google — primarily by its competitors, including specialized search and shopping services — was that its searches were “biased.” For example, Google now tries to directly answer users’ queries rather than simply referring users to other sites. When users search for travel information, Google gives them a list of the best flights to their destination in addition to links to other travel sites. Google’s primary competitor, Bing, provides similar information in its search results.
Internet Service Providers (ISPs) regularly insist that data caps are a legitimate tool to ease congestion on their networks and an effective way to signal value to consumers. But, as we have argued, data caps do not resolve congestion, are confusing to consumers, and lend themselves to unfair and anticompetitive behavior. In light of this disagreement, it is a promising sign that a recent study published by the National Cable & Telecommunications Association (NCTA) and co-authored by Steven S. Wildman, the new Chief Economist of the FCC, moves beyond some of the previous rhetoric and takes a significant step towards focusing the debate on real areas of conflict. Unfortunately, it stops short of recognizing a critical distinction in understanding the heart of the disagreement. Let’s take a look:
On January 1, Time Warner Cable (TWC) rung in the New Year by dropping our network, Ovation, from its channel lineup. Other independent networks may face the same fate. These are not isolated incidents but the disturbing result of years of consolidation in the pay TV industry with a small number of dominant carriers offering the networks of a small number of media conglomerates. The result is the homogenization of cable TV and the betrayal of cable’s promise to deliver diversity. Policymakers, concerned citizens and industry leaders need to understand and seek to arrest this trend before it is too late.
We all remember the movie “Reversal of Fortune” that retells the real life story of Claus von Bulow, accused of attempting to kill his super-wealthy wife. When the movie begins life looks extremely bleak for Claus – he has been convicted of murder, the factual evidence seems compelling and he seems like a wholly unsavory character. Yet Alan Dershowitz arrives on the scene, and although he believes Claus is guilty, he finds new legal avenues, undermines the key evidence, and reverses the conviction.
Google’s opponents probably feel like Claus with the news that the decision in the ongoing Federal Trade Commission antitrust investigation has been delayed. The FTC seemed poised to close the investigation into search, perhaps with some enforceable voluntary commitments by Google. Then the announcement was delayed beyond the end of 2012, and we still remain in limbo awaiting the Commission’s decision.
It may not be the end of the world as the Mayan’s foretold, but it’s certainly the end of an eventful year for American innovation. If future civilizations look back on the information age, they could chart its progress largely by the innovation driven here in Silicon Valley. First came the Internet, then the mobile Internet and now the transformations occurring at the nexus of mobile, the Internet and social media.
Think back to popular culture moments: The Olympics, the re-election of the president, the suddenly ubiquitous Gangnam Style. What the three disparate events have in common is that we flocked to the social, mobile web to learn, to debate and to share with one another.
Why isn't the Federal Trade Commission (FTC) holding Google to the same "honest broker" standard to which it holds every other company in the U.S. economy?
After an eighteen-month investigation of the most extensive alleged "deceptive and unfair business practices" in FTC history, FTC investigators recommended the FTC prosecute Google for deceptive search bias in a 100-page memo. That recommendation built upon the evidence collected by a bipartisan Senate Antitrust Subcommittee investigation of Google search bias last year. In addition last May, the European Commission concluded Google's search bias is illegal.
One of the critical obstacles to our innovation economy are patent trolls or Patent Assertion Entities (“PAE”) which acquire patents simply to bring patent litigation and effectively tax innovation. PAEs exploit numerous problems in our legal system including the expense and uncertainty of patent litigation, the excessive granting of patents in the high-tech space, the ambiguity of abstraction surrounding the claims of many high-tech patents, and the anticompetitive pricing power that comes from aggregating patents in an industry where market definition is especially difficult. PAEs are costing the economy over $29 billion annually and creating barriers to the innovation that is critical to the growth of the economy.