Posts Tagged ‘antitrust’

Google's vanity OS is Microsoft's dream

Wednesday, July 8th, 2009

No one will be happier than Microsoft about Google’s vanity venture to market computers with a Google-brand OS. It gives us the illusion of competition without seriously troubling either business, although both will obligingly huff and puff about how serious they are about this new, phoney OS war. Since both of these giants are permanently in trouble with antitrust regulators – they’re at different stages of IBM-style thirty years legal epics – that’s just the ticket for them both.

Google’s failure to dent the Microsoft monopoly will simply notch up another failure for Linux (whose fans are quite happy to work for The Man, as long as it’s not the Man from Redmond) – and it’ll do nothing for consumers. How so? Because the computing problems we’ll have tomorrow will still be the same ones we have today.

…Read more at The Register

MySpace Music hears the antitrust song

Thursday, September 18th, 2008

News Corporation and the major record labels are facing antitrust questions about the blockbuster MySpace Music venture – even before the site has launched.

MySpace Music is billed as the biggest music retail launch of the year. It’s a one-stop shop backed by the cross-media muscle of Rupert Murdoch’s media empire, with the three biggest record labels. The site promises to offer everything from downloads to ringtones to concert tickets, backed by the “street” cred of the MySpace brand, and a blockbuster launch is expected this week. Astronomical valuations – $2bn – have already been placed on the service, which MySpace insiders want to become the ‘internet’s MTV’.

The problem? Not everyone can play. Independents say they’re being frozen out of the new venture. No independent music company has inked a deal with the News Corp, and independent labels report that they’ve been blocked from uploading their music. And since MySpace Music is a joint equity venture between News Corp and the three biggest labels, which control 70 per cent of the US recorded music business, the trouble might only be starting.
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Google and the Mother of All Antitrust Battles

Tuesday, July 15th, 2008

Google dazzles the political class

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?

Google – cult or corporation?

Thursday, July 10th, 2008

Anti-trust looms over major labels legal blitz

Wednesday, April 9th, 2008

Serial entrepreneur Michael Robertson is embroiled in a legal fight against the recording business – and not for the first time. His MP3Tunes locker service has raised the ire of EMI in a case that continues this week. But isn’t it weird, he asks, how the Big Four divvy up the litigation against music start-ups between them so neatly?
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Major labels 'face DoJ antitrust probe'

Thursday, February 7th, 2008

Two major labels have been served notice of a fresh antitrust investigation, a music business newsletter reports today. MusicAlly’s daily Bulletin suggests that the as-yet-unlaunched TotalMusic service, currently backed by Universal and Somy BMG, has prompted notices from the US Department of Justice. The report suggests all four major labels have been contacted.
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An interview with Martin Mills

Thursday, January 31st, 2008

It’s the conventional wisdom amongst some Reg readers that “the evil record labels” are dying, and deservedly so. But such a simplified view of the world overlooks the contribution of the independent sector – which operates very differently to the Big Four.

Independents have a different business model, and have embraced digital networks as an opportunity, not a threat.

In the past few years the indies have organised, and successfully fought mega-mergers in the European Courts; they licensed the original Napster, and shunned DRM en masse. More recently, the indies have pioneered a one-stop stop for global digital licensing, Merlin, something beyond the organisational abilities of the RIAA.

So after hearing from IFPI chairman John Kennedy here this week, you’d expect a very different view of the music business from Martin Mills, chairman of British indie the Beggars Group – and you’d be right.

[full interview at The Register…]

How Web 2.0 concentrates power, and makes Microsoft stronger

Thursday, November 29th, 2007

One IT Manager, bemoaning his lot to me, recently compared the rise of Web 2.0 enthusiasts to the problem the Police has with Freemasons. The blog and wiki evangelists within are not as secretive, of course, but they’re equally cult-like: speaking their own language, and using the populist rhetoric of “empowerment” for relentless self-advancement.

He couldn’t care less that employees were “wasting” time on Facebook – that was a “problem” for their line managers to deal with, and not an IT issue. (Why should IT be blamed if staff played with Rubik’s Cubes all day?) He had always encouraged people to try new software, so long as it remained within the firewall. The real problem, he thought, was that the Web 2.0 cult is loyal to what’s perceived to be good for the greater “Hive Mind”, not the organisation.

This resulted in staff with conflicting agendas.

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Why 'Microsoft vs Mankind' still matters

Friday, September 21st, 2007

For all but three of the past 17 years, Microsoft has been involved in antitrust litigation with government agencies. That’s enough to wear anyone down. But as Europe’s highest appeals court delivered its judgement on Monday, I did notice some ennui – not from dogged old hacks, but from a new generation of pundits.

Take this example from former teenage dot.commer Benjamin Cohen – who was six when FTC first trained its lawyers on Redmond. After taking a pop at the at “anti-Microsoft lobby”, he declared on the Channel 4 News website:

The judgement is based on an old case and in many ways an old world – where Microsoft really was the dominant player in information technology

Stop kicking the kindly old man in the Windows outfit, he said.

It’s hard for it to have too much relevance today.

You’d think from this brilliant piece of insight, that there is hardly anyone left who uses Microsoft Windows or Office. Maybe, like the Acorn Archimedes, it’s a hobbyist system lovingly kept alive by a few, devoted enthusiasts! Benji even sounded slightly resentful at being torn away from Facebook (or Sadville) for a few minutes, to write about this piece of computer history.

But the question of “how we deal with Microsoft” is more relevant than ever for two very important and reasons: the second follows from the first.
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Yes, we have no incompatibilties

Tuesday, January 23rd, 2007

Savour this irony.

Last week, we learned that incompatibilities Microsoft hadn’t written into its operating system posed a grave threat to users. Last week, we also learned that genuine incompatibilities Microsoft had deliberately written into its operating system posed no threat at all.
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