United States v. Google? The DOJ would be going after the wrong perp

United States v. Google? The DOJ would be going after the wrong perp

Summary: Not that today is pick on Nicholas Carr day or anything (see my last blog post). But, while clearing out my RSS reader which I haven't looked at in days (thanks to being at Gartner Symposium/ITxpo), I couldn't help but catch Carr's headline United States vs.

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TOPICS: Google
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Not that today is pick on Nicholas Carr day or anything (see my last blog post). But, while clearing out my RSS reader which I haven't looked at in days (thanks to being at Gartner Symposium/ITxpo), I couldn't help but catch Carr's headline United States vs. Google. Eeeek! Antitrust law in the information technology industry is one of my areas of specialty. For a minute, I thought missed the news. But there was no news to miss. Carr has written a post about about how every era of computing has its defining antitrust case and makes a case for why the Google logo could end up as the next tech bullseye at the center of the US Attorney General's dartboard (artwork anyone? I'll post it).

Wrote Carr:

With Google this week taking over YouTube, it seems like an opportune time to look forward to the prospect - entirely speculative, of course - of what could be the defining antitrust case of the Internet era: United States vs. Google.....

....According to recent ComScore figures, it already holds a dominant 44 percent share of the web search market, more than its next two competitors, Yahoo and Microsoft, combined, and its share rises to 50% if you include AOL searches, which are subcontracted to Google. An RBC Capital Markets analyst recently predicted that Google's share will reach 70 percent. "The question, really," he wrote, "comes down to, 'How long could it take?'"

Google's AdSense ad-serving system, tightly integrated with the search engine, is even more dominant. It accounts for 62 percent of the market for search-based ads...

...With the YouTube buy, Google seizes a commanding 43 percent share of the web’s crowded and burgeoning video market....

.....Should Google's dominance and power continue to grow, it would inevitably have a chilling effect on innovation and hence competition, and the public would suffer. At that point, the big unasked question would start being asked: should companies be able to compete in both the search/ad business and the content/services business, or should competition in those businesses be kept separate? If there is ultimately a defining antitrust case in the internet era, it is that question that will likely be at its core.

Given how some attendees to Gartner Symposium/ITxpo responded to Carr's insinuations that IT doesn't matter, I'm certainly open to debating that question. But, on the issue of whether Google has or will have a monopoly, Nick, you've got the wrong man.

For starters, market dominance requires the definition of a market and the DOJ can take just about any company it wants in the tech industry, conveniently define a market that it dominates, and then go for the antitrust jugular. While I always agreed that Microsoft had a monopoly worth clamping down (particularly given the leverage that Microsoft applied on system makers and developers), I was also mildly amused by the ultimate definition of the market the DOJ said the software giant dominated: that of Intel-compatible PC operating systems. Not PC operating systems (that would have incuded the Mac). Not Intel compatible operating systems (that would have included server OSes like the then extremely dominant NetWare). But, to be on the safe side, "Intel-compatible PC operating systems."

So, to be honest, it would be a piece of cake for the DOJ to define a market that Google monopolizes in an effort to bring an antitrust suit against the company. In fact, I'd argue that the word "market" doesn't work on the Internet, thus making it even more difficult to bring suit against Google. On the Internet, markets are replaced by communities and properties like Google are like nightclubs. Everyone wants to be where the action is. Got something to auction off or looking to get a good deal by way of auction? Would you even waste your time anywhere else but eBay? Buyers and sellers (a community) both know that that's the hottest nightclub in town -- the best place to score if auctions are your thing.

Likewise, the nightclub owners know how, once a community has formed at your drinking hole, you have to work pretty hard to keep them. Search communities, as Alta Vista learned from Netscape and as Netscape learned from Yahoo and as Yahoo learned from Google are a fickle bunch and any antitrust question should come down to how the alleged monopolist is applying leverage in a way that deprives any communities it serves of choice (otherwise known in antitrust terms as the crime of "maintaining a monopoly"). For example, are Ad Sense participants forbidden from using anything but Google Checkout? It's a fine line, but there's a difference between incenting customers through your network effect and forcefully locking out certain competitors.

If you're looking for the bad guy -- the one whose monopoly is like a cancer on everything it touches (including entire other industries) and the one that's building a private stovepipe on the Internet with a full metal jacket that's unpenetrable by competitors -- then that bad guy is Apple. So powerful is Apple, that it now gets to make the rules up for other industries. So brazen is Apple, that it's CEO Steve Jobs publicly brags about how the iTunes Music Store controls 88 percent of downloadable music sales (a number that dwarfs even the 70 percent number that Google might reach in one of the communities it serves). 

While on my Symposium/ITxpo trip, I met a reporter in the press room that just recently realized how she is stuck with Apple's iPods for as long as she doesn't want to throw away the 400 songs and the $396 (at 99 cents each) she paid for them at Apples iTunes Music Store. She'd buy one of Microsoft's new Zunes in a heartbeat if should could (she thinks they look cool -- confirmation that portable multimedia is as much about fashion as it is anything else). But, right now, she can't bear the thought of throwing away all that hard-earned music. 

On the flight on my way back to Boston, Pluto was sitting next to me. OK, it wasn't Pluto. It was a girl who works at DisneyWorld mostly in another role but sometimes as Pluto. She had an iPod with a hundred iTunes-purchased songs in it. Relatively speaking, that's not too many (there's enough time to get out without losing too much face). But it's a start. And to the many people here on ZDNet who respond to my Apple rants that these users first know what they're getting into when they first get an iPod and start buying from the iTunes Music Store, she clearly didn't understand the long term consequences of Apple's proprietary digital rights management scheme. Today, she's very happy with it. Tomorrow, perhaps some 300 songs later, she'll be like the reporter I met in the Symposium press room. Oh, and if you're getting the idea that I stop everyone I see with an iPod to lecture them, you're right.

And, as if locking customers in and telling record labels where to shove it isn't bad enough, Apple's powerplay is dangerously close to taking down the home entertainment electronics space too. Most if not all of the home entertainment equipment makers (particularly the ones that serve audiophiles like me) are standing on the sidelines as Apple begins its march right past them and into our living rooms with products like iTV; products that essentially connect the iTunes Music Store directly to your big screen TV and speakers (disintermediating everyone else -- equipment makers, cable TV systems, etc. -- that's used to having an equal shot at your entertainment center). As I've written before, I've got about $20,000 worth of whole home entertainment wiring and gear that is useless to me if I want to purchase songs at 99 cents a pop from the iTunes Music Store. 

So, Nick, you'll have to forgive me for shrugging at the idea of a Googlopoly. Compared to the damage Apple has already done and continues to do unchecked, Google is a choir boy. 

Topic: Google

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7 comments
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  • Rest assured, Apple's day is coming.

    And my bet is it won't be far off.
    No_Ax_to_Grind
    • Jealous much?

      Remember, we still have a bet, one year after the Zune is released, if its sales don't surpass those of the iPod, you owe me one paycheck.

      By the way, did you know that in order to meet Apple's price point, MS is going to lose money on every single Zune sold?
      http://www.macnn.com/articles/06/09/29/zune.pricing.ms.partners/
      tic swayback
  • "convert" your apple songs to mp3s

    If you have purchased the content legally through iTunes, and you belive in open standards, I don't see any moral or ethical problem with downloading the mp3 versions from soulseek or other P2P client? In my view, this is a form of conversion, not theft, if you already own the content (by content, I mean the song, not Apple's straightjacket format).

    I worry about Google, but more because it's efforts to monetize all information is turning the internet into a consumer dominated space rather than the commons it could have been. I only hope the locally targeted adverts movement will break the stranglehold of large conglomerates and funnel business to locally owned and operated mom and pop businesses in the neighborhood.
    brenttoronto
  • Oh please

    The one thing you left out in your rant about Google is that you have to prove consumer harm and stifling of innovation. Neither of which seems to be happening. Remember that MS seems to have escaped a lot of the integrating charges leveled against them because consumer harm couldn't be proved.

    As for Apple, how far must the government go to protect citizens from being idiots? If some sort of action is taken for the reasons you suggest, then most other industries are going to be in big, big trouble. Next will come the antitrust lawsuits against Microsoft for the Xbox and Sony for the PS3. Sadly, if you buy hundreds of dollars of Xbox games, you're locked into the Xbox. Ditto the Playstation. Then we'll sue Sony over Blu-Ray. People who buy hundreds of dollars worth of Blu-Ray dvds are locked into Sony's technology, and can't buy HD-DVD players instead. When does a consumer have to be responsible for the purchasing choices they've made? Do you want to live in a nanny-state where the government gives you a pacifier and changes your diaper as well?

    And if your friend really likes the way the Zune looks, I'd suggest you take her to an eye doctor. The turd brown iPod wannabe is hideous.

    As an aside, if you haven't checked out eMusic, it is a superb service that solves all of the problems you mention in your article. Why not support someone doing things in an open manner, selling music without DRM, rather than just endlessly attacking Apple? Why not put your money where your mouth is, stop whining, and try to drum up some support for a better system that doesn't screw people over through DRM? Here's a link for you--you get 100 free downloads from eMusic at no obligation (you must enter a credit card # but can cancel at any time). I was skeptical about it too, but quickly got sucked in and am now a loyal subscriber:
    http://www.emusic.com/iskin

    As Harry Bardal often opines in blog entries about Windows, stop whining. If it's really a problem, get up off your tail and switch. Don't buy from the company who upsets you. Support someone else and help make that someone else a viable business.
    tic swayback
    • Re: Oh please

      Exactly what I was thinking! It is an iPod wannabe and it is brown and hideous; so no one should like it. Maybe they dont deserve eyesight!

      I also agree that this Apple attack should end; I, like you, dont care for criticism of Apple - it is only a mean spirited attack in the name of criticism.
      tick tock
      • Criticism is fine

        I think criticism is fine, and is often helpful. A company can learn a lot, and tailor their product to improve it.

        But here, we've kind of hit a wall. Apple can't sell songs from the RIAA or movies from the MPAA without DRM. Apple would be stupid to give up the huge business advantage that FairPlay confers upon them. So neither is going to change. David's only possible hope for help these days is to beg the government to come in and squash this industry, to regulate it like in Soviet Russia. I don't think this is a smart thing to do in a nascent market. Back in the first few years of the PC market, Apple was dominant too. Should the Justice Department have stepped in then as well?

        Why not, instead of just wishing for a "deus ex machina" solution (and a destructive one at that), try to come up with a positive solution. There are places out there that sell DRM free music. Shouldn't we be encouraging them? Shouldn't we be encouraging artists to participate in them? Take a look at eMusic's roster. I was shocked, nearly all of the music I've bought in the past year was already available on their site. Sure, there's no Britney, but all the real interesting up and coming musicians are there, not to mention long time favorites as well.

        You can whine about iTunes, you can beg for government intervention, or you can help build an alternative. The choice is yours.
        tic swayback
  • Converting Fairplay to MP3 - Tunebite

    I have friends that use the Tunbite software to convert their legally purchased iTunes downloads to MP3 (using the LAME encoder) and it sounds pretty good. Is this a legal conversion? The Tunebite web site says it is, but in this grey area of DCMA circumvention, can it be construed as bypassing DRM, even if just accomplised in the analog realm?
    jpc1958_989