An overlooked court case in Seattle has helped restore the reputation of the late computer pioneer Gary Kildall.

Last week, a Judge dismissed a defamation law suit brought by Tim Paterson, who sold a computer operating system to Microsoft in 1980, against journalist and author Sir Harold Evans and his publisher Little Brown. The software became the basis of Microsoft’s MS-DOS monopoly, and the basis of its dominance of the PC industry.

But history has overlooked the contribution of Kildall, who Evans justifiably described as “the true founder of the personal computer revolution and the father of PC software” in a book published three years ago.
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In Pynchon’s novel Gravity’s Rainbow, set in WW2 London, a character called Slothrop begins to realize that everywhere he has sex, a V2 rocket subsequently lands on the same spot, obliterating the area. If you dig a little, you may notice something spookily similar with the idea of a Music Tax in the media.

Back in March, talk of a Music Tax suddenly exploded at the SxSW music conference in Austin. WiReD’s blog ran a story by Frank Rose, entitled Music Industry Proposes a Piracy Surcharge on ISPs.

“[The] idea is to collect a fee from internet service providers – something like $5 per user per month – and put it into a pool that would be used to compensate songwriters, performers, publishers and music labels.” Apparently this was the brainwave of Jim Griffin, a collective licensing advocate hired by Warners to think the unthinkable. Here’s an interview with him from 2004, where he dismisses the idea that collective license should be compulsory, should penalise non-participants, or be imposed by the government. “Government has an after the fact role, as it does with Antitrust legislation. The arguments should be voluntary,” he said then, and sources indicated he hadn’t changed his mind.

A pool, yes, but not a tax.

Coincidentally, the International Music Managers’ Forum happened to be meeting in Austin, and its former head (and now Emeritus President) Peter Jenner was quoted in the article.

Last week, another screaming came across the sky, and another Tax Bomb fell to earth, this time in London.
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Rejoice! “Three strikes and you’re out” is dead in the UK. Music file sharers will no longer face the threat of seeing the household broadband connection severed. The plague that is currently endemic in France won’t be jumping the English Channel.

Strangely, some people want to keep it alive. Stranger still – this includes the “digital rights” lobby.
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Who says there’s no honesty in tech marketing? We beg to differ, and present Nokia product manager Janne Jalkanen as proof to the contrary.

Speaking at a marketing website called Nokia “Conversations” (“Stories from around the neighborhood” – it says), Jalkanen gives a very frank overview of the grassroots enthusiasm for Nokia’s S60 platform.

“Pretty much the only community around S60 is the community we pay to be there,” says Jalkanen, “a few lone, strong, awesome warriors notwithstanding”.

He’s speaking in a personal capacity, but is actually saying much the same as Symbian’s John Forsyth said here, only without the wishful thinking. But what a great metaphor for the Finns’ oh-so-earnest attempts to manufacture grassroots enthusiasm.

Nokia didn’t invent the idea of astroturfing, but more than any company in the Noughties, it’s taken it to heart.

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Bureaucrats at the American Physical Society (APS) have issued a curious warning to their members about an article in one of their own publications. Don’t read this, they say – we don’t agree with it. But what is it about the piece that is so terrible, that like Medusa, it could make men go blind?

It’s an article that examines the calculation central to climate models. As the editor of the APS’s newsletter American Physics Jeffrey Marque explains, the global warming debate must be re-opened:

“There is a considerable presence within the scientific community of people who do not agree with the IPCC conclusion that anthropogenic CO2 emissions are very probably likely to be primarily responsible for the global warming that has occurred since the Industrial Revolution. Since the correctness or fallacy of that conclusion has immense implications for public policy and for the future of the biosphere, we thought it appropriate to present a debate within the pages of P&S concerning that conclusion.”

American Physics invited both believers and sceptics to submit articles, and has published a submission by Viscount Monckton questioning the core calculation of the greenhouse gas theory: climate sensitivity. The believers are represented by two physicists from Cal Poly San Luis Obispo, who state that:

“Basic atmospheric models clearly predict that additional greenhouse gasses will raise the temperature of Earth. To argue otherwise, one must prove a physical mechanism that gives a reasonable alternative cause of warming. This has not been done. Sunspot and temperature correlations do not prove causality.”

But within a few days, Monckton’s piece carried a health warning: in bright red ink:

The following article has not undergone any scientific peer review. Its conclusions are in disagreement with the overwhelming opinion of the world scientific community. The Council of the American Physical Society disagrees with this article’s conclusions.

Not so much Medusa, then, as Nanny telling the children what not to think.

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The US Senate today embarks on what could become years of antitrust investigations into Google by the IT, telecoms and media industries.

The hearing today is just that – a piece of political showboating ordered by antitrust subcommittee chairman Herb Kohl. It’s not a formal investigation, let alone a lawsuit. Yet with the destiny of much more than today’s precious “Web 2.0 economy” now in one company’s hands – 90 per cent of paid search advertising goes through Google – it’s surely just the start.

Whether regulation will be able to put but a dimple in Google’s ascendance remains to be seen. Google’s vast data centres and its own private networks promise to give it de facto control over the delivery of content. A parallel business strategy is to squeeze the life out of access networks, the one area where it shrewdly doesn’t want to play. Google is content to leave “last-mile” and wireless operators as unprofitable, commodity conveyors of bits. If the strategy is successful, it will ensure that no one will be able to make money from the internet except Google itself – leaving the public internet effectively in one company’s hands. (Forget about the TV, newspaper, movie and music industries. By the time they wake up to the Google threat, they will by then be smoking ruins…)

So Google has been readying itself for regulatory intervention for several years. It lobbies extensively, and thanks to its reach-out program to politicians and wonks, now owns a fair chunk of mindshare among the political elites. With its private “Zeitgeist” conference – an annual orgy of self-glorification – it reaches over the heads of representatives and and hacks to the political leaders and media owners themselves. In the UK, there’s a revolving door between the two major parties and Google.

Politicians can sprinkle a little of the future on themselves just by rubbing up against the web giant.

As Microsoft discovered, fortuitously, this is money well-spent. A sympathetic Bush administration dissolved the DoJ’s will to impose tough penalties against Microsoft more effectively than any lawyer or economist.

And as Microsoft demonstrated, too, regulatory scrutiny is no obstacle to the real business at hand of winning large state IT contracts. Microsoft remained a favoured supplier, despite the years of antitrust litigation in the US and Europe. Google is well-placed to bid for giant IT projects such as health and data integration.

Google also pays careful attention to academia and think-tanks. A $2m donation to Lawrence Lessig’s Stanford University law centre saw him swing into battle for the internet giant in its litigation against copyright holders, with snidey bloggers dubbing him “Professor Google”. (Google’s cost of business falls when the awkward business of paying creators goes away). And Lessig’s cohort, Berkman co-founder Jonathan Zittrain recently offered a very romantic view of network innovation, with the threats to this blissfully happy landscape coming from consumer electronics and telecoms companies. Google’s threat wasn’t mentioned once. But perhaps this isn’t surprising when you look at who sponsors Zittrain’s Berkman Center. In each case, the puppetmaster calls the tune.

Google is able to achieve such mastery over politicians, the media and hackademics not only because they don’t know what they’re doing (that’s a given, these days) but because Google offers to uniquely “know” something that they don’t – a new form of “knowledge”. Google offers to tell them what the cow (at the top of this post) is thinking (The picture is a slide from a Google analyst presentation from 2006).

So what’s the beef?

Well, there are a limited number of ways you can make money on the web. You can take a cut of transactional revenue, as eBay and Amazon do. Or you can opt for advertising. There’s big buck brand advertising – for which you need to hire a sales team and woo large advertising agencies, which means you need scale, and large investment. Or there’s classifieds – and it’s this segment that has powered the growth of Google, Yahoo! and smaller web start-ups in the past five years. And this is what’s under scrutiny.

Regulators should thank Yahoo! co-founder Jerry Yang, for accelerating a process that otherwise might have taken years to come about. Quite incredibly, Yang handed Google dominant market power in paid search advertising a few weeks ago, when he announced Yahoo! would trial Google’s Adsense. It was just a trial, Yahoo! said, but by giving its prime advertising competitor access to its own properties, it couldn’t be making a clearer statement. This destroyed any illusion that paid search advertising was a highly competitive three way market – and almost nobody noticed.

It’s ironic because Yahoo! “owns” the technology responsible for Google’s dominance today, thanks to Yahoo!’s acquisition of Overture five years ago.

Embarrassingly, Google had to license the patents from Yahoo! just before its IPO to avoid a damaging court decision. How Yahoo! owned the future, then threw it away, deserves a story to itself. But all we need to take away here is that Google won fair and square, by executing the same idea better. Yahoo! targeted SMEs and set barriers to entry for its ad program. Google realized that scale was important, and so opened the doors to all. If you merely had a one page website on Chihuahuas, for example, then you could join the market, and potentially get a share of advertising revenue related to Chihuahua products. Google made it a simple self-service model for both advertiser and hoster. Yahoo also failed to leverage its scale, and ran into execution difficulties with Project Panama, its second generation ad program.

Now for the crunch: what harm does it do? Leave aside for a moment that Google’s opponents here – including Microsoft and the telecoms companies – have less-than-fragrant reputations in the marketplace themselves.

And leave aside too the red herring of “Search”. Yes, you can change a search engine with a mouse click. But this isn’t about search engines at all.

Setting the bar

It’s about the cost of doing business on the internet, and if a monopoly exercises its power, then that cost rises. Long-time Google advertisers have already seen prices go up with no explanation. Remember that Google is a “black box” – and Google alone sets the price of advertising through its programs. It does so based on demand – and a magic fudge factor, which critics say represents how much it needs to meet its quarterly numbers.

As Scott Cleland, who represents telecoms clients pointed out this weekend – “there is no competitive substitute for search advertising”. And he’s right.

This is also a market that’s a lot less “dynamic” than many suppose, because of something we heard a lot about in the 1990s, the “network effect”. IBM and Apple offered superior PC products to Microsoft’s Windows – but application developers went for volume, and people went where the applications were, creating a circle that was hard for any competitor to break into. Similarly, advertisers go where the market is. If Yahoo! and Microsoft with their respective scale can’t crack paid search advertising, then who on earth can?

Much like Microsoft, Google’s company ethos leaves no room for competition. Its network strategy is to own the middle tier of the internet, where its large data centers will dominate, while squeezing the profits out of the access networks.

Google’s singular triumph has been one of misdirection. Thanks to “Net Neutrality”, Richard Bennett pointed out in a recent San Francisco Chronicle op-ed, Google’s subtle war on P2P is designed to usher content “consumers” into its datacenters, and away from exchanging material person to person.

Where it differs is that while Microsoft dreamed of dominance, Google succeeds. Microsoft never had the power to change the meaning of words, as Google does today. No media company ever has.

But for now, antitrust regulators need to demonstrate that there’s actual harm. Is the cost of business really increasing? That’s the immediate challenge for the DoJ and State Attorneys. The greater challenge is to wean our political, media and academic elites off their Google addiction.

A good question the regulators may want to ask is – if “Web 2.0″ is everything the politicians, wonks and newspapers hype it up to be – the future of business – then why should only one company be permitted to control it?

WiReD magazine is coming back to the UK. I set Reg readers the task of Photoshopping some covers here. You can see the results in a gallery here.

Wonderful stuff.

Tags: antitrust, google
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