How Silicon Valley’s Leap Ahead Was Preceded by Visible Government Footsteps

The recent passing of Intel co-founder Gordon E. Moore at age 94 has brought back well-deserved stories about how this tech legend played a leading role in developing silicon microprocessors, which served as the foundation for the exponential growth of our modern computer age. But this Big Bang in Silicon Valley was preceded by a series of events that created the environment that allowed Moore and his brilliant colleagues – notably Intel co-founder Robert Noyce – to achieve the technological breakthroughs that have changed the world.

Silicon Valley is a noted center of technological advancement and entrepreneurship, achieving innovations that have left lasting and unmatched imprints on society, here and abroad. Its centrality to such developments as the personal computer, social networks, and cloud computing has made the region so successful, with continual fueling by venture capital. Few are aware, however, that the staggering growth of the area had its roots in Washington, D.C., during the regulation-intensive climate of the late 1940s through the late 1950s.

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Why Russia Should Be in the Rearview Mirror for Telecom Companies

Since Russia’s brutal invasion of Ukraine in February, companies with a history of operating in complex and challenging markets have been weighing the difficult realities of their responsibilities to the people they serve. Those that supply essential goods and services, such as internet connectivity, pharmaceuticals, food, and consumer products have confronted difficult choices. The war has highlighted which companies must choose between providing essential services and managing the reputational and regulatory risks of operating as usual in Russia.

The risks that telecom companies operate in are evident. This month, telecommunications company VEON – the owner of Ukraine’s largest mobile company, Kyivstar, and Russia’s third-largest mobile company, Beeline – announced it would start selling its operations in Russia. This is a significant announcement because Beeline is a company providing essential internet connectivity service to the Russian population and because it represents a noticeable turning point.

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The Challenge of Harnessing Change in a Global Economy

As the news media know better than anyone, the great story of our times is change – dramatic, accelerating, and often disruptive change.

The key question is whether our economy, our educational institutions, and our system of democratic self-government can harness this change for everyone’s benefit – or whether the tidal wave of change will overrun us.

To meet the challenges of change, we must think big and act boldly.  Our growing divisions, however – our self-selecting news bubbles, the tribalization of our politics, the noxious contempt each side has for the other – are making it harder to solve big problems.  The environment is certainly not conducive to serious dialogue or to constructive problem solving.

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Don’t Let Huawei Control 5G

President Trump has taken a firm stand against Huawei, the Chinese telecom behemoth – and for good reason.  Huawei is not your garden-variety Chinese company in the same vein as Tencent, Alibaba, or Baidu.  By many credible accounts, Huawei is a corporate extension of the Chinese government, replete with Beijing back channels and generous government support. 

In a report released by the U.S. Permanent Select Committee on Intelligence back in 2012, Huawei and ZTE Corp., another Chinese company, were described as potential threats to U.S. security interests precisely because of Chinese government involvement.  Last month, the U.S. Navy reported it was under intense “cyber-siege” by Chinese hackers.  These follow a litany of allegations that have Huawei engaged in spying, commercial espionage, and intellectual property theft over many years.

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Conflict and Compromise Await New Congress in Telecom, Media, Tech

A new era of American history begins when the 116th Congress convenes in January 2019 with one of the most partisan classes in modern history. Depending on which side of the aisle they sit, the members’ mission will be either to balance the ship of state or continue full steam ahead.

Conventional wisdom suggests there will be conflict. Optimists hope there will be compromise. The reality will be somewhere in between as the new Congress will have the opportunity to forge a unified path on things that matter to all Americans. With so many pressing policy issues facing the republic – immigration, healthcare, homeland security, and more – it is a stretch to think telecom, media, and technology (TMT) issues will top the agenda or lead the day.

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TV Owners Need New Rules To Keep Pace

We are living in the platinum age of television. Consumers are enjoying an abundance of movies, news, sports, and entertainment, available anytime and anyplace, in-home or out.  Every communications medium from wireless phones to the worldwide web is in the business of broadcasting content over its platform. Although we now call it “video,” at the core, it is television nonetheless, and the world cannot get enough of it. For legacy broadcasters, this is both a blessing and a bane.

Before the end of the year, the Federal Communications Commission (FCC) will finalize its mandatory review of the national ownership rules – set of regulations governing television and radio station ownership in the U.S. The FCC is expected to expand, and perhaps eliminate, the national ownership cap. If it does, broadcasters will be dealt an unprecedented, but fortuitous, break that will change the media landscape for the foreseeable future. It would be a follow-on to the FCC’s 2017 decision to reinstate the UHF discount, an arrangement that allows broadcasters to count UHF stations as only 50 percent toward the national ownership cap.

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Repealing Media Ownership Regulations: It’s About Time

FCC Chairman Ajit Pai has proposed the most reasonable of actions: repealing or revising 40-year-old media ownership rules that long ago outlived any marginal usefulness they might’ve once had.

This should be a no-brainer. But, Washington being what it is, entrenched interests and politicians bent on maintaining the status quo for their own purposes have pilloried Pai for trying to do something that should’ve been done decades ago.

First, the facts. On Oct. 26, Chairman Pai released an Order on Reconsideration and Notice of Proposed Rulemaking. This proceeding seeks to accomplish the following:

  • Eliminate the Newspaper/Broadcast Cross-Ownership Rule;
  • Eliminate the Radio/Television Cross-Ownership Rule; and
  • Revise the Local Television Rule to eliminate the Eight-Voices Test and to incorporate a case-by-case review provision in the Top Four Prohibition.

The proceeding would also seek to eliminate the attribution rule for television Joint Sales Agreements; retain the disclosure requirement for commercial television Shared Services Agreements; keep the Local Radio Ownership Rule; and create an incubator program to encourage new and diverse voices in the broadcast industry.

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Progressives’ Anti-Merger Mania

The proposed merger between the cable systems of Charter Communications, Time Warner Cable, and Bright House Networks has brought out the usual poseurs in opposition.  I speak, of course, of such as Common Cause, Consumers Union, and Public Knowledge (all of which are wrong in their usual and tiresome way, but not certifiable), and their more extreme kin, Media Alliance and Free Press.

As it happens, there exists a bridge between these armies of progressivism in the person of former FCC commissioner Michael Copps.  Since leaving the FCC, Copps has flocked to the aid of those organizations he favored when he was a commissioner.  So it is that the gentleman is now on the board of Free Press and a “special adviser” to Common Cause.

Which, of course, is why it’s important to know the kinds of things he’s saying about the merger.  Writing in Common Dreams (“Breaking News and Views for the Progressive Community”), Copps relieves himself of opinions like these:

This merger would create a new Comcast – a national cable giant with the ability and the incentive to thwart competition, diversity, and consumer choice….  >> Read More

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.  The full version of this article appeared in The Hill on Feb. 9, 2016.

Google’s Impact on Journalism

The products and services offered by Google are well known and highly regarded.  Every day, millions of consumers around the globe visit the company’s search engine or sites like Google News or YouTube.  And for this, the company’s employees and (especially) its founders have been well compensated.

But there’s another side to Google that consumers know very little about.  That is Google the corporation, and the effect its business practices are having on competitors, and most dramatically on the professional media, news and entertainment alike.

In important measure, people know little about Google the corporation because news stories and commentary about the company’s business practices are mostly confined to industry trade publications, or technology and economic journals.

Even the public policy issues that the company addresses are complex, and hard to write about in a way that wouldn’t cause most readers’ eyes to glaze over.  How, for instance, would one popularize such issues as the district and appellate court rulings in Viacom v. YouTube, or the FCC’s “network neutrality” proceedings, or the FTC’s recently concluded investigation of Google’s search and advertising policies?

So it’s easy to understand why the public at large doesn’t know much about Google’s role in these matters, but book and newspaper publishers do.  So too do movie studios and Google’s competitors in the online travel business, to name just a few.

And what all of these other companies know is that Google’s scale, business tactics, and aggressive lobbying amount to a distinct threat to their very existence.  A single datum provides a startling view of the challenge: Through the first half of 2012, Google by itself took in more ad dollars than the entire U.S. print media, magazines and newspapers, excluding only the ads on newspaper websites, which even today generate only about 25 percent as many ad dollars as print advertising.

The ways in which Google uses its dominance in search to monetize, by corralling and aggregating (without permission) the content of others, is a story that is long in telling.  But a common feature, as stated in a White Paper submitted to the FTC in 2011 by The Media Institute, is that Google’s “main search page biases Google News results over results of news organizations and other publishers.”

Nor is this the perception and complaint just of American publishers.  On June 25, a coalition of hundreds of Europe’s leading publishers urged the European Commission, which is the EU’s antitrust authority, to  reject outright some remedies that Google offered to end an investigation by the Commission of the same kind of practices the company is accused of by publishers on this side of the Atlantic.

As summarized by GigaOm, “Google is accused of surreptitiously favoring its own services in its search results, locking advertisers onto its platform and scraping content from rival, subject-specific search engines.”

In elaboration of the European publishers’ rejection of Google’s proposals, the president of AEDE, a Spanish association of daily newspapers, put it this way: “In short, Google’s proposed remedies do not address the overarching problems and fundamental harms that Google’s conduct causes in search-related markets and none of them aims at restoring effective competition….  In some ways, they might actually make matters worse by entrenching dominance and misleading consumers.”

Here, as in Europe, the principal venues of appeal for those being harmed by Google’s business practices are the antitrust authorities, which is to say quasi-political bodies.  And that’s a problem. In this country, the FTC has already dismissed an opportunity to do a full antitrust review of Google, in part, we can speculate, because there is no great public support for the news media generally.

Indeed, a Pew poll, released on July 11, found that only 28 percent of respondents believe that journalists “contribute a lot,” down from 38 percent four years ago.  And a Gallup poll, published on June 17, revealed that only 23 percent of the public have “overall confidence” in newspaper and TV news.

Given this lowly rating by their own customers, one might be tempted to dismiss the news media’s cannibalization by Google as something they had coming to them, and there’s an element of truth in that, as with the special contempt for them that the media have inculcated in conservatives and Republicans.

But there’s a much larger issue involved in Google’s anti-competitive behavior, and that is whether this (or any) country will in future have a robust and profitable news media industry, marked not by opinion but by objective news, investigative, and feature reporting.  Surely people of all political persuasions can agree that blogs and content aggregators are not going to fill that role.

At a time when the Internet is obliging mainstream news outlets to publish online, it is not yet clear whether a way can be found to make up, in that process, for the necessary advertising revenue that once came their way – a problem not confined just to the legacy media but to prospective newer entrants in the news reporting business as well.

And it is at this crossroad where Google, the company whose fraying motto is “Don’t be evil,” may prove decisive.

                                               

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.  This piece was first published in USA Today on July 19, 2013, under the headline "Beware of Google’s Power."

Media Institute Response to ‘The Truth About Google, Search, and the Media Industry’

GUEST BLOG

[EDITORS’ NOTE:  Kurt Wimmer is a partner in the Washington, D.C., office of Covington & Burling LLP.  He is chairman of The Media Institute’s First Amendment Advisory Council, and is the principal author of the Institute’s white paper to the Federal Trade Commission about Google’s practices.  The article below is in response to the rebuttal of Oct. 6 by Adam Kovacevich of Google, which can be found on this site.]  

By Kurt Wimmer, Esq.

When Google wrote the Media Institute about the white paper we submitted to the FTC (“How Google is Dominating the Media Economy”), Patrick Maines invited Google to respond on this blog.  Frankly, we were pleased that we’d prompted a frank conversation about Google and the future of media.  We expected and were ready to welcome energetic disagreement with our position; after all, one of the Media Institute’s underlying missions is promoting a diversity of voices on major public policy issues.

But instead of deepening the debate, Google dusted off talking points that it’s been using for years, most of which our paper readily acknowledges. 

We don’t question, for example, that Google News drives some traffic to some publications’ websites.  Most viewers of Google News do not click through to any of the media sites from which Google scrapes content – about half of all users go no further than Google News and thus do not generate a dime for the content producers.  But we know that some traffic does flow from Google News to publishers’ sites.  We do have serious doubts about the “value” of this traffic, and we worry that, as it has in other areas, Google increasingly uses its News page to cannibalize whatever value there is.  Whether these websites can “opt out” of News is unhelpful because of the predicament News puts publishers in – opt-in, and feed the Google monster; opt-out and starve alone.  Our concerns do not relate to publishing only; as our paper pointed out, Google Places is following the Google News model in using its search dominance to scrape and scuttle local review websites.  Google’s response breezily ignores these points.

We have the same objections to Google’s treatment of Books and YouTube in its response, which again relies on broad statements rather than engaging in any serious debate.  Google simply bypasses our basic premise, which is that it has used its scale to coerce content makers into accepting the Google business model.  Google claims legal victory in the dispute between YouTube and Viacom, but the Second Circuit won’t hold oral argument to settle the matter until later this month.  Given the brazen evidence that YouTube was founded and grew on a business model of copyright infringement, we believe that Viacom is likely to take the upper hand – but we won’t claim victory until the Second Circuit rules, and suggest that Google should do the same.

And Judge Chin’s concerns about the Google Books Settlement have left that agreement hanging by a thread.  Though we disagree with Google’s legal arguments in both cases, we wouldn’t have criticized Google for offering an outspoken defense of those positions.  But Google, rather than addressing the colossal quantities of content it stockpiles at the expense of creators and competitors, offers only the same hollow defense: We bring books and video to a wider audience.  This is no help, in our view, given the costs that Google’s response sidesteps.  Infringement always brings works to a “wider audience” – an audience that the creators of the works did not agree to serve for free, and one that does not fund the creative spark that created the works.  In fact, both Google Books and YouTube exist not to bring works to a wider audience, but to create dominant platforms for works that deny creators the benefit of a competitive marketplace.

The rise of Google’s dominance in media deserves a candid discussion, both here and at the FTC.  We wish Google had contributed something new to the discussion, rather than just reiterating its weary talking points.  We would welcome any additional comments that Google would like to make in defense of its position or in rebuttal to our white paper.

                                   

The opinions expressed above are those of the writer and not necessarily of The Media Institute’s Board, contributors, or advisory councils.