Media and Communications Policy : Media Policy & First Amendment Foundation : The Media Institute : Free Speech, Media Regulation, Content Controls

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Though it was surely not its intention, the Federal Trade Commission’s conclusion last week of its investigation of Google invites the question: What useful function does the FTC serve?

Not content, after two years of investigation on the taxpayers’ dime, to largely look past the mountain of evidence of marketplace harm caused by Google’s search and advertising practices, the Commission compounded that error by declining to issue a formal consent order, leaving it in the hands of Google itself, without the prospect of penalty, to change some of its business practices.

As even Commissioner J. Thomas Rosch said in his statement of concurrence and dissent, the FTC’s “settlement” with Google “creates very bad precedent and may lead to the impression that well-heeled firms such as Google will receive special treatment at the Commission.”

In elaboration of his dissent from the settlement procedure, Comm. Rosch added this:

Instead of following standard Commission procedure and entering into a binding consent agreement to resolve the majority’s concerns, Google has instead made non-binding commitments with respect to its search practices….

Our settlement with Google is not in the form of a binding consent order and, as a result, the Commission cannot enforce it by initiating contempt proceedings.  The inability to enforce Google’s commitments through contempt proceedings is particularly problematic given that the Commission has charged Google with violating a prior consent agreement.

What Comm. Rosch delicately calls “special treatment,” the more cynical of us would recognize as political influence peddling, a practice that Google has become quite adept at employing.  First it bankrolled the codification, at the Federal Communications Commission, of “net neutrality” regulations, thereby providing a solution to a nonexistent problem; then it led the successful opposition to the PIPA and SOPA copyright bills, the better to protect its investment in YouTube; now it has neutered the FTC, with the consequence being that it can continue to game its search results in ways that favor companies it controls.

So how has Google managed such political feats?  Well, would you believe that money has played a role?  In the FTC investigation alone Google reportedly spent some $25 million lobbying the matter.  To give an idea of the magnitude of this kind of spending, it equals 10 percent of the FTC’s total annual budget of $250 million.

But in addition to its FTC-specific lobbying, it’s well known that Google has cast its lot, through munificent campaign contributions and public policy support, with the current administration. Though it failed to come to pass, there was undoubtedly substance to the rumor that Google’s Eric Schmidt was being considered for a cabinet post in the Obama Administration.

Even so, there is evidence that the FTC commissioners know what they have done.  Their concluding statement about Google’s search practices, for instance, displays an almost comical defensiveness as they contend that, even if Google’s search practices favor its own companies, that is arguably okay:

In sum, we find that the evidence presented at this time does not support the allegation that Google’s display of its own vertical content at or near the top of its search results page was a product design change undertaken without a legitimate business justification.  Rather, we conclude that Google’s display of its own content could plausibly (emphases added) be viewed as an improvement in the overall quality of Google’s search product….  Although at points in time various vertical websites have experienced demotions, we find that this was a consequence of algorithm changes that also could plausibly be viewed as an improvement in the overall quality of Google’s search results….

Although our careful review of the evidence in this matter supports our decision to close this investigation, we will remain vigilant and continue to monitor Google for conduct that may harm competition and consumers.

Such limp-wristed rhetoric aside, there is a chance that Google will be brought to heel, just not by American authorities.  As it happens, the European Commission has also been investigating Google’s misdeeds, and the odds are good that, lacking the kind of political clout in Europe that it has in the USA, the company may actually receive from the Europeans something more than just a slap on the wrist.  On Dec. 18 the Commission gave the company 30 days to provide it with proposals to settle its complaints, something that could cost Google billions if it fails to do so.

Whatever the Europeans do, however, there remains the FTC’s foozled play, well put in a Bloomberg News editorial:

The FTC missed an opportunity to explore publicly one of the paramount issues of our day: Is Google abusing its role as gatekeeper to the digital economy?  Lawmakers, economists, other regulators, and consumers should all be in on this important debate over whether Google is leveraging its overwhelming dominance of search into unassailable market power in other areas. 

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

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By guest blogger KURT WIMMER, ESQ., partner at Covington & Burling LLP in Washington, D.C., and chairman of The Media Institute’s First Amendment Advisory Council.

I just had the privilege of participating in a panel discussion at an American Antitrust Institute conference.  My panel included such luminaries as Eli Noam of Columbia, Gene Kimmelman of the Antitrust Division of the Department of Justice, and Susan DeSanti of the Federal Trade Commission.  Unlike many of my colleagues on the panel, I’m far from being an antitrust expert.  My topic was a more familiar one – whether enforcement of antitrust law against a search and advertising provider would violate the First Amendment. 

The question arises because of a novel proposition being advanced by Google.  The Federal Trade Commission is investigating claims that Google has violated antitrust law by manipulating search results to favor its own services and bury the services offered by vertical search engines that might compete with Google.  Google has argued that it is absolutely immune from antitrust liability because its search results constitute speech protected by the First Amendment – in fact, it asserts that the First Amendment actually “blocks” the application of antitrust law to it.  Google analogizes its work to that of a newspaper editor selecting information for publication, and seeks the same “absolute” protection that a newspaper editor would receive under the First Amendment.

But wait – newspaper editors don’t receive absolute protection under the First Amendment.  If editors’ work is absolutely protected, why did I spend last night discussing a story with an editor to mitigate defamation risk?  Why did I defend a deposition last week of a reporter attempting to keep his source confidential?  Why have reporters gone to prison in the United States to protect sources?  Why are some in Congress talking about doubling down on legal restrictions to stop leaks to the press?

The First Amendment is not absolute, and never has been, for anyone, whether they run a newspaper, a blog, or a search-and-advertising business. False and deceptive speech, as Google’s manipulated search results are alleged to be, falls outside the protection of the First Amendment.  Jon Leibowitz, chairman of the FTC, made precisely this point in an All Things Digital interview just this month, and he’s precisely right as a matter of constitutional law.  Otherwise, the FTC would have no jurisdiction to enforce privacy laws or laws against false advertising and deceptive trade practices.

Of course, non-deceptive speech also may be regulated in many circumstances.  The antitrust laws, which regulate commercial behavior to promote competition, are an example of laws that may permissibly restrict certain kinds of speech.  The plain fact is that “the First Amendment does not provide blanket protection to restraints of trade effectuated through speech,” in the words of the Department of Justice.  This principle has been applied consistently since the Supreme Court affirmed an antitrust judgment against the Associated Press in 1945, and remains the law today.

Google’s arguments that it is uniquely immune from antitrust liability, regardless of how it has abused its massive market share, remind me of the quaint musings of early Internet pioneers that law cannot apply in “cyberspace.”  But the same law that applies offline generally applies online (in the absence of online-specific legislation such as Section 230), and damage to competition that may occur on the Internet can destroy real businesses in the real world.  No one is above the law – not even Google.  Whether any of the allegations against Google can be proved, of course, remains to be seen.  But to assert at the very outset that the First Amendment actually “blocks” liability, regardless of what the FTC or a court might find, ignores the law.

If you’d like to read more, the Media Institute has graciously agreed to host my paper (available here) that addresses these issues in more depth.

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

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Though the final chapter in the legislative history of the copyright bills hasn’t yet been written, a couple things are obvious even now: The tech industry has demonstrated great political clout through the mobilization of its users and fan base; and the industry lobby, led by Google, will say and do pretty much anything to advance its commercial interests.

This provides the background for what happened within just a few days last week, as Congress was flooded with calls and mail, and petitions were signed by millions, in opposition to bills whose intent was to provide an effective way to combat content infringement on rogue websites abroad.

Didn’t matter that most fans of social media, file-sharing, blogs, and the like know next to nothing about communications policymaking, or even the details of the laws they were moved to oppose.  They know what they like, and dislike, and when manipulated into seeing the copyright bills as a threat they responded in great numbers.

None of which, of course, is to wonder why people feel more of a kinship with things like the social media than they do with the mainstream media.  The one-way and “one-to-the-many” aspects of the old media don’t empower people, or allow for their personal expression, in the manner of blogs or social media like Facebook and YouTube.

But the reason so many people were disposed to dislike the copyright bills, and their knowledge of what was actually in them, are two different things.  What moved them to act on their dislike was yet another.  For these parts of the story we have to look to the tech industry lobby, and Google most importantly.  It was Google that floated the canard that passage of the bills would forever change “the Internet as we’ve known it.”

The irony in Google’s claim was apparently lost on most of the media, tech and mainstream, which may explain why so few reporters pointed out that this alleged threat is word-for-word what the company said, 13 years ago, in opposition to another copyright bill (the Digital Millennium Copyright Act), passage of which has since proven to be a positive boon to Internet companies.

It may also explain why so few reporters pointed out that Google’s claims about the copyright bills – as precursors to the regulation of the Internet – are not just over the top but hypocritical.  It was, after all, Google that successfully lobbied, with the active help of a majority of FCC Commissioners, for so-called “network neutrality” regulations, the precedent of which provides not for just speculative but “here and now” regulation of the Internet.

Still, if crass exaggeration and hypocrisy were all that Google displayed in this regard, one might be inclined just to dismiss it as boys being boys.  But it didn’t stop there.  Google, and other groups that should know better, also gave expression and currency to the bunkum that the copyright bills amounted to an assault on the First Amendment.

That this argument was utterly demolished by the country’s leading First Amendment expert, Floyd Abrams, didn’t give them a moment’s pause, with the upshot being that this nonsense was parroted by all sorts of people as a reason for rejection of the bills.

In August of last year, The Media Institute filed a white paper with the Federal Trade Commission titled “Google and the Media: How Google is Leveraging its Position in Search to Dominate the Media Economy.”  Among other things, the paper demonstrated the ways in which Google profits from copyright infringement; that indeed the use of other people’s content without their permission has been at the heart of the company’s business plan.

Though the paper didn’t recommend any particular remedy, it asked the FTC to intervene in a way that would prevent the media economy from being dominated by a single entity.  Google’s conduct regarding the copyright legislation shows that, far from pulling back, its interest in this kind of domination is growing apace.

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 the Dallas Morning News on Jan. 25, 2012.

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The technology crowd’s objections to the copyright protection bills, now moving their way through Congress, put one in mind of H.L. Mencken’s crack that criticism is prejudice made plausible.  This, because that industry’s leaders, scribes, and think tanks uniformly oppose every legislative initiative aimed at protecting copyrighted content, even as they frequently give lip service to the concept .

From the Digital Millennium Copyright Act (DMCA) in the late ’90s – which they fought tooth and nail, but cling to in today’s debates as though it were an uncle come to jail with money for the bail bondsman – to today’s Protect IP and Stop Online Piracy acts (good summaries of which are here and here), the techies profess all sorts of high-minded concerns, but never at the expense, you understand, of their business plans.

Take, for instance, Google, the 800-pound gorilla, inside and outside the Beltway, regarding all things digital.  The company’s executive chairman, Eric Schmidt, claims that attempts to crack down on rogue sites profiting from copyright infringement could set a “disastrous precedent” for freedom of speech, and also that they would encourage more restrictive Internet policies in countries like China.

This is serious stuff, and would be more serious still if (a) it were true, and (b) it issued from a company with any public policy credibility in this regard.  Alas, neither is the case.  Let’s start with the credibility problem first.

The best example of a U.S. policy that really would have (or might still) set a bad precedent regarding repressive regimes abroad is the FCC’s recently concluded Network Neutrality proceeding.  Indeed, in March of last year the U.S. Coordinator for International Communications & Information Policy at the State Department, Philip Verveer, had this to say about the subject at a Media Institute luncheon in Washington: “The net neutrality proceeding is one that could be employed by regimes that don’t agree with our perspectives of essentially avoiding regulation of the Internet … it could be employed as a pretext or as an excuse for undertaking public policy activity that we would disagree with pretty profoundly.”

Though there are those, of whom I’m one, who think the FCC’s subsequently enacted Internet rules, though greatly watered down, still went too far, the more interesting thing to note in this regard is that Google was the leading figure among those lobbying in support of net neutrality.

In the summer of 2006, for instance, Eric Schmidt himself penned a note on Google’s Public Policy Blog that read in part:

The Internet as we know it is facing a serious threat.  There’s a debate heating up in Washington, D.C. on something called “net neutrality” – and it’s a debate that’s so important Google is asking you to get involved.  We’re asking you to take action to protect Internet freedom….

Creativity, innovation, and a free and open marketplace are all at stake in this fight. Please call your representative and let your voice be heard.  

And then there’s the argument, made by Google and lesser apologists of unfettered infringement, that the Protect IP and Stop Online Piracy acts undermine the speech guarantees of the First Amendment.  Whether it’s because they like the sound of the accusation, or because, not knowing any better, they actually believe it, there’s a lot of this nonsense going around the technocracy.

They might be more cautious about making such claims if they read the First Amendment analysis of the Protect IP Act written by the most distinguished First Amendment scholar of our age, Floyd Abrams.  In a 12-page letter sent on May 24 to Senate Judiciary Committee members Leahy, Hatch, and Grassley, Abrams lays out a compelling argument that the Act is consistent with the First Amendment, and concludes with these observations:

Among a range of objections, two core critiques stand out.  First, there is a recurring argument that the United States would be less credible in its criticisms of nations that egregiously violate the civil liberties of their citizens if Congress cracks down on rogue websites.  Second, there is the vaguer notion that stealing is somehow less offensive when carried out online….

I disagree.  Copyright violations are not protected by the First Amendment.  Entities “dedicated to infringing activities” are not engaging in speech that any civilized, let alone freedom-oriented nation protects.  That these infringing activities occur on the Internet makes them not less, but more harmful.  The notion that by combating such acts through legislation, the United States would compromise its role as the world leader in advancing a free and universal Internet seems to me insupportable.  As a matter of both constitutional law and public policy, the United States must remain committed to defending both the right to speak and the ability to protect one’s intellectual creations.  This legislation does not impair or overcome the constitutional right to engage in speech; it protects creators of speech, as Congress has since this Nation was founded, by combating its theft.

Abrams’ last point is especially noteworthy.  Not only is the current concern with copyright protection  nothing new, it is in fact as old as the country itself.  Reading the overwrought diatribes of the tech community one might get a different impression, but in fact it’s all there in black and white, among the “enumerated powers” in Article 1, Section 8 of the U.S. Constitution.

For those who have forgotten, or never knew, this so-called copyright clause empowers Congress “To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive right to their respective Writings and Discoveries.”

Language and wisdom, that is to say, that is not the contemporary creation of the heads of the motion picture studios, but of the Founding Fathers more than 200 years ago.

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

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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.

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GUEST BLOG

[EDITORS' NOTE: In this space we offer Google an opportunity to take issue with the White Paper that The Media Institute filed with the FTC in August.  Google's response is printed below exactly as we received it.]

By Adam Kovacevich, Head of Competition, Public Policy and Public Affairs, Google (Washington, D.C., office)

In August 2011, The Media Institute submitted a white paper to the Federal Trade Commission claiming that Google practices could “foreclose competition” in the media industry. The white paper largely restates past criticisms of Google on copyright and intellectual property issues. We appreciate the opportunity to post a rebuttal. Some of these criticisms are obsolete or have already been litigated; others we believe are just wrong. Here are the facts:

Google Has a Record of Helping the News Industry

Google News drives valuable traffic to news organizations’ websites for free. Each click from Google News to a publisher’s site is a business opportunity, offering newspapers and other publishers the chance to show ads, register users and earn loyal readers. Google News follows international copyright law by only showing users a headline and a short snippet for each news story.

Google sends news publishers more than 4 billion clicks each month. Google News provides about 1 billion of these clicks, and an additional 3 billion come from other Google services like web search. This means that Google sends approximately 100,000 business opportunities to publishers every minute.

Google News works with publishers by offering them useful tools. For example, Editors’ Picks is a feature that enables editors in newsrooms to identify the stories they believe should receive attention. Additionally, the new “standout” tag on Google News gives publishers the ability to self-designate unique and noteworthy content from their own or other publications. Articles tagged as “standout” may appear with a “Featured” label on the Google News homepage and News Search results. [Google News Blog, Aug. 4, 2011, Sept. 24, 2011]

News Organizations Can Easily Opt-Out of Google News

News publishers have control over their inclusion in Google News. If at any point a web publisher wants Google to stop indexing their content, they're able to do so quickly and effectively by sending Google an opt-out request. Google also provides publishers with instructions to block their content from Google News, should they choose to do so. [GoogleNewsBlog, Dec. 2, 2009]

Opting out of Google News does not remove content from Google Web Search results. If a publisher opts out of Google News, but stays in Web Search, their content will still show up as natural web search results. [GoogleNewsBlog, Dec. 2, 2009]

Google Is Investing in the Future of Journalism

Google donated $5 million to nonprofits devoted to developing journalism in the digital age. $2 million went to the John S. and James L. Knight Foundation, a nonprofit that supports programs that drive innovation in journalism. The Knight Foundation used half of its grant to augment the Knight News Challenge, a media innovation contest that recognized 16 winners in 2011. [Official Google Blog, Oct. 26, 2010, June 22, 2011]

Google and the Associated Press are offering six $20,000 scholarships to journalism students to encourage and enable innovation in digital journalism. The Online News Association, the world’s largest membership organization of digital journalists, will administer the program. [OfficialGoogleBlog, Aug. 15, 2011]

Google Books Helps People Discover Books, Benefiting Users, Authors and Publishers

Google Books helps readers find information and gives authors and publishers a new way to be found. For instance, the Google Books Partner Program enables publishers to promote their books online for free -- so that users can search through them, and find out where to buy them or get them from a library. More than 40,000 partners have joined the Partner Program, including nearly every major U.S. publisher. [GoogleBooksBlog, May 23, 2011]

Google will work to make more of the world’s books discoverable online. The March 2011 decision by Judge Denny Chin to reject the Google Books settlement was disappointing, but Google is reviewing the Court's decision and considering various options. We believe this agreement has the potential to open up access to millions of books that are currently hard to find in the US today. [GoogleBooksAgreement]

Google Helps Rights Holders Manage Their Presence on YouTube

YouTube created Content ID to help rights holders manage their content on YouTube. Managing rights for content owners on YouTube has been important since the site’s early days. In 2007, this strategy led to the creation of a new technology called Content ID. Content ID is a full set of audio and video matching tools that give rights holders fine-grained controls for managing their content if someone uploads it to YouTube. Rights holders have the option of blocking, tracking, or making money from videos containing their content. More than 100 million videos have been claimed with Content ID. [YouTubeBlog, Dec. 2, 2010]

Content ID helps rights holders monetize their content. More than 1,000 partners use Content ID. Rights holders who claim their content with Content ID generally more than double the number of views against which YouTube can run ads, which doubles the rights holders’ potential revenue. Content ID contributes more than a third of YouTube’s monetized views each week. [YouTubeBlog, Dec. 2, 2010]

YouTube won its copyright case against Viacom. In June 2010, a federal court decided against Viacom in its copyright infringement lawsuit against YouTube. The court ruled that YouTube is protected by the safe harbor of the Digital Millennium Copyright Act if it works cooperatively with copyright holders to help them manage their rights online. [OfficialGoogleBlog, June 23, 2010]

Google Does Not Block Other Search Engines from Crawling YouTube

Bing and Yahoo both display YouTube videos on their search engine results pages. A search for [rebecca black friday] on Bing and Yahoo displays the YouTube video as the fourth result on Bing (following two Wikipedia entries and a Bing Images result) and as the third result on Yahoo (following two Wikipedia entries). [Bing | Yahoo]

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

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The Wall Street Journal was the first to report, in June, that Google was about to be served with subpoenas as part of an investigation by the Federal Trade Commission into “whether the Internet giant has abused its dominance in Web-search advertising.”  If the FTC gets around to asking (under subpoena and in confidence) what media companies think about that allegation, they better come prepared to stay awhile.

This, because although you won’t find many media companies willing to say so publicly, Google is roundly feared and detested, and for good reason.  Google dominates the online advertising market, “by skimming away the earnings of media companies as it scrapes up their content, denying them of the scale that would be required for effective competition with the gatekeeper to the Internet.”

This and other observations are among the findings in a white paper submitted to the FTC by The Media Institute last week.  Titled “Google and the Media: How Google Is Leveraging Its Position in Search To Dominate the Media Economy,” the paper amounts to an indictment of the business practices of a company that has achieved extraordinary success with consumers.

As stated in the press release: “Google has used two principal strategies for appropriating the creative content of others for their own gain.  The first, exemplified by Google News, takes content from potential competitors to launch new businesses while depriving those competitors of the revenue their original content generates….  The second strategy, exemplified by YouTube and Google Books, is to test legal limits of copyright and, when challenged, to resolve any disputes by further cementing its monopoly.”

The Institute’s white paper makes no specific recommendations to the FTC, saying only that we are confident that the Commission can “find an appropriate prospective remedy to protect competition in the media, search, online and mobile markets.”

Our commissioning and release of this paper has led some – like the excellent media reporter John Eggerton – to ask whether this isn’t sort of an unusual position for an organization like TMI to take, given our view that government ought to stay out of the marketplace generally, and the media specifically.

And the gentleman is right; it is somewhat out of the ordinary.  But it’s also the case that there’s nothing usual or ordinary about Google, or about the threat that Google presents to an entire industry – in this case the professional, for-profit media – which taken together represent something special and uniquely important in this country.  And as shown here and here, our concern with Google’s business practices predates the FTC investigation by at least three years.

More than this, we would argue that the careful application of the antitrust laws is completely consistent both with capitalism and the general wisdom in keeping the government at bay in most ways.

A good parallel can be found in the Institute’s robust promotion both of freedom of speech and of strong copyright laws. We know that there is a certain tension between the two, but we think that tension can be reconciled, and that in fact these two values are the opposite sides of the same coin – valuable in their own right and vital when taken together.

And in any case, the facts here speak for themselves.  As stated in the conclusion of the white paper:

Despite its stated values to the contrary, Google has shown a willingness to exercise its monopoly power to the detriment of media companies, publishers, and journalists. These are companies ready to compete in the digital age, and prepared to rise or fall on the quality of their content and the strength of their creativity.  They face challenges that will promote innovation.  But they also face a challenge – from Google – that discourages improvement, and that transforms any advance into a setback as Google misdirects users to its own webpages, displaying the content of others and foreclosing competitors from that same aggregated content.  Absent intervention by the Commission, the future of the media economy will remain in significant danger of being dominated by a single entity that will foreclose competition.

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

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For those numerous consumers of news and opinion whose political views are right-of-center, the ideology and ubiquity of people like Glenn Beck, Matt Drudge, Rush Limbaugh, and Andy Breitbart are a breath of fresh air.  Apart from the serious stuff, some of what they do – like Breitbart roller blading through a crowd of progressive protesters, or Drudge boasting of the MSM’s efforts to get a link on his website (“they kiss the ring”) – is fun.

More than this, all four have demonstrated a substantial talent for creating commercially successful journalistic products.  In 2009, for instance, the financial website 24/7wallst.com estimated that the Drudge Report was worth $46 million.  Given that the same report, though, suggested the Huffington Post was worth only $96 million, whereas AOL paid $315 million for it just two years later, the Drudge estimate is undoubtedly on the low side.

Their personal attributes notwithstanding, however, the simple truth is that none of these gentlemen, alone or together, provides a substitute for mainstream journalism or a cure for what ails it.  In part this is because all of them engage in opinion rather than reporting – and in Drudge’s case not even his own opinion but that found in the content he aggregates.  But it’s also because, like their liberal counterparts, they address issues solely from within their own ideological constructs, with predictable if sometimes bizarre results.

Take, for instance, Glenn Beck’s absurd suggestion that Sen. Scott Brown’s joking reference to his single daughters’ “availability” was tantamount to “pimping them out.”  Or Andrew Breitbart’s careless or deliberate distortion of the words of Shirley Sherrod.  Or, these days, of the prevalence on the Drudge Report of overwrought headlines that mislead about the content of the articles to which they’re linked.

There is a place for opinion journalism, and for conservative opinion, but the great journalistic need today is for mainstream, objective news reporting.  Indeed, it is the perceived absence of objectivity among the MSM that has created the market for conservative opinion, not just among the four individuals mentioned above but in talk radio generally, at Fox News, and on the Internet.

Which is not to say that this fact is widely acknowledged.  Actually it’s never acknowledged by those people and institutions, such as J-school professors and journalists themselves, who instead follow the lead of the grant-giving groups, like the Knight Foundation, whose munificent gifts set and pay for the journalism establishment’s agenda.

So instead of spotting the journalistic elephant in the room, which is the perceived lack of objectivity (bias, to use the word most commonly employed), the journalism reviews and media critics are uniformly pushing these days the notion that journalism’s greatest need is for more “localism” and “investigative journalism.”  And if the MSM were seen to be objective players in the news business these would be good and timely ideas.  But given that they are not seen that way, the question becomes who would read or watch such stuff, or believe it if they did?

Though the mainstream media’s problems are frequently conflated, there are at least two severable parts to the whole: the business problems, which derive from the damage inflicted on the MSM’s advertising revenue by the Internet generally (and Google specifically); and those strictly journalistic problems, only some of which are a consequence of business problems that have led to downsizing.

Management of the MSM have been slow to come to grips with their business problems, but even slower to deal with their biggest journalistic problem.  Whether this is because they share and approve of the perceived bias in their newsrooms, or because of the firewall that separates the business and editorial sides at most news organizations, the damage to the MSM, to professional journalism, and to the country is palpable – and not at all relieved by the growth of the conservative commentariat.

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

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For those in the communications policy business, perhaps the most jaw-dropping datum to issue from Tuesday’s elections is this: Of the 95 candidates for the House and Senate who signed a petition encouraging “net neutrality” regulation, all of them lost.  Not some of them.  Not most of them.  All of them.

It’s really quite remarkable.  Not even the Black Death killed everybody.  But there it is, a new world record for political toxicity.  The humorous aspects of this debacle aside, there is a serious lesson here: There is no appetite in this country for regulatory schemes whose effect is to promote government (and a few companies) at the expense of private-sector investment generally.

Yet this is precisely what net neutrality regulations, whether Lite or industrial strength, would do.  Intended or not, codified regulations would inevitably lead to government meddling in this freest part of the communications industry, and frustrate the kind of investment in the broadband infrastructure without which there can be no growth in this vital sector of the economy.

And for what?  As mentioned here, net neutrality is the condition that obtains today!  Nobody is being deprived or disadvantaged of anything worth talking about.  Indeed, a quick look at the kinds of organizations that have been promoting net neutrality pretty much says it all.

On the one hand we have groups like Free Press, whose interest in the subject is precisely because of the potential in governmental oversight to yoke communications companies to the agenda of the nation's “progressives.”  While on the other you have a company like Google that, in the best tradition of crony capitalism, wants to tilt public policy in a direction that benefits its private interests.

It is widely believed that FCC Chairman Genachowski  would like the FCC to be relieved of the responsibility of taking on the task of codification of the net neutrality rules.  He is to be commended for his reservations, especially since he is under great pressure from the net neutrality lobbies to act.

The wise course now would be to let the clock run out on any kind of FCC action.  If the Republican gains in Tuesday’s elections don’t speak clearly enough about the matter, surely the fate of the hapless signers of the net neutrality petition does.

[Updated 11-4-10, 1:50 p.m. EDT, to reflect latest election results.]

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

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The search giant Google is attracting criticism from those who see in that company’s business practices a threat to professional journalism, old and new.  The latest such comes in the form of a policy paper written by media attorney Kurt Wimmer, and published online by The Media Institute.

Honored this year by the Reporters Committee for Freedom of the Press, Wimmer has advised journalists and legislators in more than two dozen countries concerning new media laws, protection of journalists, and freedom of information.

The thrust of his paper is that, at a time when there is great concern for the future of the media, much of this concern is misplaced.  There’s no crisis in journalism per se, he argues, but rather a crisis in the monetization of journalistic content, a condition greatly exacerbated by the fact that one company dominates both search and online advertising.

Is anyone monetizing digital content?  Yes.  News and information continues to be monetized – at a rapidly increasing rate – by search engines, content aggregators, and others whose new, targeted advertising models have overtaken the spending that had supported journalism in the past.

Again, the dramatic new feature here is the split between content creation and content monetization – those who create the content are not those who are monetizing it.  Google, for example, had a record $23 billion in revenue during 2009, without producing a word of original content.  Google’s job is simply to monetize the content that others have created, and it has performed that job exceptionally well.  Today, more than 70 percent of the Web searches conducted in the United States (and up to 90 percent of those in Europe) flow through Google’s servers.  By its recent acquisition of AdMob, Google will control the vast majority of the mobile application advertising market as well.

Complaints about Google’s disruptive effect on professional journalism are not new, of course, and this is not the only active concern about Google’s business practices.  Other people have problems with the company’s abuse of copyrighted material (as in Viacom’s lawsuit against Google’s YouTube subsidiary), or with Google’s invasion of privacy, such as seen in the recent “Spy-Fi” affair.

What is new is the degree of scrutiny of Google’s practices by government antitrust officials.  As reported last month in a lengthy story in The New York Times, “the search giant’s decisions on such matters may soon be judged by higher authorities.”  As the Times reporter, Brad Stone, put it: “Almost a decade after Google promised that the creed ‘Don’t be evil’ would guide its activities, the federal government is examining Google’s acquisitions and actions as never before, looking for indications that the company’s market power may be anticompetitive in the worlds of Web search and online advertising.”

It’s become hard to know, in recent years, what the government may deem to be in restraint of trade, but if it happens, sometime in the near future, that it initiates an antitrust review of Google and you find yourself wondering why, read Wimmer’s piece and wonder no more.

Cross posted here on Huffington Post.

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Microsoft’s Chief Counsel for Intellectual Property Strategy, Tom Rubin, recently gave a speech to the UK Association of Online Publishers that has made some waves.

At its most basic, Rubin’s speech was a call for greater copyright protection of “quality content,” and an appeal to content providers for new approaches to the dissemination of their content online.

“The evidence is in,” he says, “and I think we can safely say that the ‘information wants to be free’ approach not only does not work, actually it has been a disaster for almost all newspapers.”

Even if, as a columnist for CNET suggested, Rubin’s speech was meant to position Microsoft, at Google’s expense, as the “safe” technology partner for content companies, many of the specific observations, and the very language employed, provide a welcome contrast to the carelessness and condescension that mark so much of the digerati's take on the subject.

Speaking of the Evil One, turns out that Google and Yahoo! called off their joint advertising deal just in the nick of time.

A story in the December 2 issue of Am Law Daily quotes Sanford Litvack as saying that the Department of Justice was just three hours away from filing antitrust charges to block the deal when the two companies abandoned their pact.

Litvack says that had the deal not been withdrawn the DOJ would have challenged it under sections of the Sherman Act that “ban agreements that restrain trade unreasonably,” and “make it unlawful for a company to monopolize or attempt to monopolize trade.”

As noted here in September, because of its opacity and potential harm to online publishers and advertisers, the deal alarmed many people, including us. Glad to see it go away, unwept.
 

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We’ll know soon whether the proposed Google-Yahoo! advertising deal will be challenged by the Department of Justice. Certainly there are signs, most notably the hiring of antitrust litigator Sanford Litvack, that it may do so.

But figuring out what is, and is not, in restraint of trade is kind of tricky these days.  In 2002, antitrust concerns derailed the merger of DirecTV and Echostar, a union that would have reduced the number of satellite TV companies from two to one.  Yet just this summer, the two companies that comprise the whole of the satellite radio industry were allowed to merge.

So the opinions that follow aren’t informed by any special knowledge of what the DOJ will do, or even by the factors that will carry the greatest weight within that agency.  By whatever market analysis the DOJ employs, the deal that some refer to as GooglyHoo either will or will not be allowed to go forward.

The question being addressed here is narrower.  It is what the deal might mean to online publishers.  Because of the inherent uncertainties in a deal not yet consummated, much less experienced, we don’t have all the facts.  But there’s a difference, as someone once said, between a lack of complete knowledge and a complete lack of knowledge.  We don’t know everything about GooglyHoo, but we know enough to be worried.

Importantly lurking in the background of this matter is the parlous state of journalism and the legacy media.  In the introduction to its State of the News Media 2008, here is how the Project for Excellence in Journalism (PEJ) put it: “The crisis in journalism, in other words, may not strictly be loss of audience.  It may, more fundamentally, be the decoupling of news and advertising....  Online, the problem is that the revenue model is in search, not conventional, advertising -- and journalism sites are now already lagging behind other Internet sectors financially.”

In a Perspectives piece published by The Media Institute earlier this week, attorney Stephen Kinsella suggests a number of ways in which the Google-Yahoo! ad deal could harm the interests of publishers.  Most directly, he says the deal would mean that “online publishers will earn less revenue from their search syndication and contextual advertising deals.”

“Google and Yahoo!,” Kinsella notes, “are currently the two major players in syndicated search and contextual advertising, and compete with each other for these deals with online publishers.  This competition is what pushes both companies to offer more advantageous terms to online publishers.  A Google-Yahoo! agreement will weaken Yahoo!’s competitiveness in bidding for these deals, simply because Yahoo! will have fewer of its own ads to serve as advertisers increasingly migrate away from Yahoo!’s higher prices following the implementation of the deal.”

A similar argument was made by the World Association of Newspapers (WAN).  On Sept. 15, this umbrella organization for some 18,000 newspapers worldwide asked competition authorities in Europe and North America to block the deal, saying it would have a negative impact on the ad revenues that the search firms provide to newspapers.

Quoth the WAN: “The competition that currently exists between Google and Yahoo! is absolutely essential to ensuring that our member titles receive competitive returns for online advertising on their sites….  In our view, the proposed advertising deal between Google and Yahoo! would seriously weaken that competition, resulting in less revenues and higher prices for our members.”

Concerns about the prospective anti-competitive effects of the deal have also been expressed by the leading U.S. advertising association, the Association of  National Advertisers, and with less vigor by the American Association of Advertising Agencies.

The concerns and objections raised by these individuals and organizations do not, of course, prove that the Google-Yahoo! ad deal would be ruinous to online publishers, or that the deal would mark the beginning of the end for Yahoo!.  But given the current state of the legacy media, and their future reliance -- if they have a future -- on online advertising, it is not surprising that this deal has alarmed many people.

Judging by some of its business practices and policy positions, as posted here in July, Google the company (as distinguished from Google the search engine) disappoints in many ways.  And at the end of the day this disappointment, if shared, may be a matter of some moment.  Because given the opacity and potential harm of this proposed deal, the question of support for it may come down to a matter of trust.  And the view from here is that Google hasn’t earned that trust.

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For a company whose corporate motto is “Don’t be evil,” Google has an unfortunate capacity to look past the most obvious things.

Take, for instance, its stance in favor of “net neutrality.” Insofar as this concept is more than a slogan it’s a bad idea, and especially so as a matter of policy.  Legislation like the Internet Freedom Preservation Act, for example, invites real government regulation of the Internet as a solution to an imaginary problem.

As seen in the title of the congressional legislation, the language of net neutrality proponents, always over the top, has lately taken on a kind of goofy grandeur, with some — like Save the Internet, a coalition coordinated by Free Press — trafficking in such pap as “Net neutrality, the First Amendment of the Internet.”  (Of course it is.)

But what’s the attraction in all of this for Google?

The critics’ answer is that Google wants to ensure, whatever the cost to the future development and independence of the Internet, its own dominant, and free riding, position.

Google’s approach to the problem of copyright infringement also calls into question the company’s high-mindedness.

As charged in the case of Viacom v. YouTube,  Google is accused of flagrant violation of copyrighted material on the website of its YouTube subsidiary.  Google’s defense is that it takes down offending posts after being notified, and that this is sufficient under the safe-harbor provisions of the DMCA.

But in its complaint Viacom makes a compelling case that the takedown process is an endless loop of notifications and re-postings, and that, in fact, copyright infringement is at the heart of YouTube’s business plan.

A number of observers have suggested that Viacom’s lawsuit is just an attempt to win a favorable licensing agreement, and that in the end the parties will work out some satisfactory arrangement between themselves.

Perhaps, but copyright infringement is not a crime against humanity, it’s a crime against copyright holders, and if a negotiated settlement is the result, so be it.  This said, much might be usefully clarified if the dispute goes all the way through trial.

In any case, the point is that, as with net neutrality, Google’s posture regarding copyright infringement seems to be driven more by its own interests than by any sense of a community of interests.

By the standards of those of us at The Media Institute, which is primarily a First Amendment organization, Google’s lack of any meaningful concern or action regarding freedom of speech and of the press is the most troubling aspect of the company.

We would not have this concern if Google were just a small affair, or if the legacy media were fat and sassy.  But neither is the case.  Google is a giant while newspapers, for instance, are in a fight for their very survival.

Just to establish a frame of reference, as this post is being written (midday, July 10), here are the market capitalizations of some leading media companies: Time Warner, $50B; Disney, $56B; Washington Post, $6B; Gannett, $4B; New York Times, $2B; and McClatchy, $427M. And Google’s market cap?  It is just in excess of $172B!

In other words, the market values Google more than it values Time Warner, Disney, Washington Post, New York Times, Gannett, and McClatchy put together!  In fact a lot more — 45 per cent more.

And the rub in this is that, as an historical matter, the most important players in promoting and defending the First Amendment have been Hollywood and newspapers.  Yet these are two industries much beleaguered by the Internet, of which Google is the leader.

Against this background one might expect a company determined not to be evil to mount a major effort, if not in assistance to the old media, then in lending a hand in promotion of the First Amendment. Sorry to say, Google’s record in this regard is a blank slate.

It’s in the nature of the way the world works that one can “be evil” in more than one way.  One can do it by acts of commission, and one can do it by acts of omission.  Judging by the examples above, Google does it both ways.