The Precursor Blog by Scott Cleland

Big-Tech Defenders Vastly Underestimate Its Power Relative to Government's

Scott Cleland — Tue, 22 Jun 2021 22:20:14 +0000

The Heartland Institute

BIG-TECH DEFENDERS VASTLY UNDERESTIMATE ITS POWER RELATIVE TO GOVERNMENT’S

JUNE 22, 2021

Big-Tech is much more powerful than its defenders assume.

Proposed bipartisan legislation to modernize U.S. antitrust law and enforcement standards for the 21^st century digital marketplace calls for a fact-driven comparison of Big-Tech’s unchecked power relative to Big Government’s Constitutionally limited power.

Big-Tech has proven its monopoly and cartel power can be more powerful than Big Government.

Big Government’s Constitutional limits denied two impeachment attempts to remove President Trump from office and to prevent his ability to run again. In mid-January, Big Tech collusively cancelled President Trump, his eighty million online followers, and his right-of-center, competitive social media alternatives – with impunity.

When unchecked by antitrust law, Big-Tech monopoly gatekeepers together are dominant enough to determine what Americans see and say online. This means in 21^st century America, there no longer is a real competitive marketplace for ideas, and no longer are public squares open to all political voices.

The political reality of Big-Tech monopoly intermediaries is that the public and politicians must go through, and trust, Big-Tech to not interfere with them, and to not dictate political discourse or outcomes. The most respected research on this problem, Dr. Robert Epstein’s seminal research on Big-Tech manipulation, shows how unmonitored Big-Tech has the power to manipulate elections.

Now compare the power of Big-Tech – Google, Facebook, Amazon, and Apple – to the power of Big Government, using standard public market and government statistics.

Big-Tech’s current ~$6.5T in market capitalization value is more economic value than the annual GDP of every single country except for the U.S. and China. If Big-Tech were a country, its collective revenues of $1.035T would rank as the world’s 17^th largest economy, and its collective cash hoard of $342b alone would rank as the 40^th biggest economy.

Compare how big Big-Tech is relative to the U.S. Federal Government.

Big Tech’s 2020 annual revenues are more than the U.S. Government’s 2021 annual budget for all discretionary domestic spending. Big Tech’s annual operating cash flow of $280b could annually fund a military budget that is: larger than #2 China’s; comparable to the EU’s; and about 40% of America’s.

Compare Big Tech’s growth rate to America’s and to U.S. Big Business’.

According to Fortune 500 data and US BEA statistics, from 2012-2020, Amazon, Google, and Facebook together outgrew USGDP by +1,480% (15x) and outgrew the revenue production of Big Business, the other 497 Fortune 500 companies, by 4,497% (45x). This results when the FTC does not enforce antitrust law for Google and Big-Tech for a decade.

Consider the many other ways Big-Tech has the unfettered monopoly power to do things to others against their will, their rights, and their well-being, that Big Government cannot do.

Anticompetitively, Big-Tech can unilaterally intermediate all of everyone’s online data and interactions opaquely with impunity.

Big-Tech monopoly power can meddle unfettered in other companies’ businesses without their permission, knowledge, or recourse.

That means they anticompetitively can interrupt competition, free market forces, and economic value creation; interfere with competitors’ direct-to-consumer relationships, branding, marketing, selling, customer service, and delivery; interject into others’ business models discriminatory ranking, self-preferencing, and arbitrary rules, fees, and terms; intercept and profit from competitors’ inside information, trade secrets, confidential business information, and proprietary data; and interdict and cancel potential competitors before they become a real competitive threat.

Politically and economically, only Big-Tech monopolies can unilaterally and collusively control what every American sees, says, shares, buys, and sells online.

Practically, Big-Tech are America’s digital gatekeepers that everyone, including the U.S. Government, must go through, depend upon, and be surveilled by, for everything, everywhere for life, work, and play.

In sum, the evidence indicates Big Tech defenders are underestimating how powerful Big-Tech is and ignoring that unchecked Big-Tech monopolies have more power to take away Americans freedoms than Big Government, because the USG is limited by the Constitution, and its separation of powers, Bill of Rights, rule-of-law, and due process, that do not limit Big-Tech’s exercise of its monopoly power.

Never forget, unlimited power in any form is tyranny that freedom-loving people should always fear.

Scott Cleland has testified before the Senate and House Judiciary Antitrust Subcommittees seven times. He is President of Precursor®, a responsible Internet consultancy; served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration; and Institutional Investor twice ranked him the #1 independent analyst in communications when he was an investment analyst. He is author of Search & Destroy: Why You Can’t Trust Google Inc. and publisher of Googleopoly.net.

Why the Internet Is Industrial Policy Not Free Market -- Heartland Op-ed

Scott Cleland — Tue, 25 May 2021 16:02:22 +0000

THE HEARTLAND INSTITUTE https://www.heartland.org/news-opinion/news/why-the-internet-is-industrial-policy-not-free-market

WHY THE INTERNET IS INDUSTRIAL POLICY NOT FREE MARKET

MAY 25, 2021

By Scott Cleland

Big Tech’s defense against any potential governmental accountability is wielding the myth that their success is a result of their free market merit, innovation, and competitiveness.

Myth busted.

Common sense scrutiny proves the Internet and Big Tech are not the mythic result of laissez faire free market capitalism, but the real product of massive U.S. Government (USG) intervention via U.S. Internet industrial policy in Section 230 of the 1996 Communications Decency Act.

Only the “interactive computer service” (ICS) industry created and defined by the USG in Section 230, are endowed with elite, supra-national status, and lawless impunity of being “unfettered by Federal and State regulation.”

Big Tech’s defense against any potential governmental accountability is wielding the myth that their success is a result of their free market merit, innovation, and competitiveness.

It is not merit when the game allows one side to not play by the rules when the other side must. It is not innovation when government policy mass-enables ICS-only regulatory arbitrage of existing industries in ways that are illegal for existing industries. It is not competitiveness when government industrial policy bestows only ICSs with unbeatable, government advantages.

The Internet industry has branded its regulatory arbitrage impunity as “disruptive innovation.” They get the joke. It is a cheaters charter akin to racing against a runner whose shoelaces are tied together.

Government-incented regulatory arbitrage is the opposite of laissez faire free market capitalism.

In hindsight, Section 230’s most disruptive industrial policy impact was dividing the U.S. economy into predetermined winners (ICS) and designated losers (non-ICS, i.e., everybody else) -- via the most unlevel playing field the USG could possibly create.

Section 230’s massive intervention of removing most rule-of-law risks online, predictably fueled widespread fraud and wild speculation that ultimately cost investors and pensioners $4 trillion in the 2000 Dotcom Bubble market crash. Again, widespread fraud and wild speculation fueled the 2019 ~$1 trillion cryptocurrency-crash, and it is at it yet again in 2021’s ~$2 trillion ‘Cryptocurrency Bubble II.’

The Internet industry’s regulatory arbitrage has disrupted the constructive and productive rest of the economy, by adopting business practices, models, strategies, products, and services, that the rest of the economy companies cannot do legally or ethically because they are subject to Federal and State enforcement of intellectual property rights, a duty of care, and government fiduciary, safety, security, privacy, and antitrust, rules.

U.S. Internet industrial policy has transmogrified our economy into a franken-system of out-of-control crony capitalism and crony socialism online. Its classic regulatory capture and Big Tech’s Big Advocacy enable ICSs to capitalize winner-take-all economic benefits, while socializing their many costs to the designated losers and the public.

It is no coincidence USGDP has lagged its historical averages for twenty years. See a big reason why.

From 2012-2019, 497 Fortune 500 companies (i.e., the 500 minus Amazon, Google & Facebook,) grew revenues 14.6%; current USGDP grew output 32.3%; and Amazon, Google, and Facebook together grew revenues 341%.

This evidence reveals the macro-outcome of Big Tech’s unfettered regulatory arbitrage. From 2012-2019, Amazon, Google, and Facebook together outgrew the other 497 Fortune 500 companies by a winner-take-all 2,235% -- the antithesis of broad free market prosperity.

Coercive U.S. Internet industrial policy is the opposite of a voluntary free market.

1996 U.S. Internet policy arbitrarily dictated unequal protection under the law in creating two rival classes in America --the unfettered ICS aristechcracy and the fettered everyone else.

Fast forward to 2021, the unfettered Big Tech aristechcrats’ algorithms, terms-of-service, and end-user-licensing-agreements lord over the fettered masses because USG Internet policy has subjugated them to private regulation without limited-government, constitutional rights, rule of law, due process, or redress.

1996 U.S. Internet policy in practice coercively inverts many of America’s values and priorities today by imposing top-down, tech-first tyranny, where Internet technology’s best interests reign above all others. Technology comes before people and tech determinism before rule-of-law. It is globalism first, America last, and unfettered Big Tech above limited government for all.

This Internet industrial policy also imposes all-purpose, global, peer-to-peer (P2P) technologies that are enabled by a USG-invented essential TCP/IP protocol, that by an original design mistake, disturbingly cannot be authenticated, secure, or made private at scale, but it is still promoted by U.S. policy for use for everything everyone, conducts everywhere for work, life, and play.

This USG Internet policy is massively coercive because it is a take-it-or-leave-it proposition. To get any of the Internet’s many good things one must accept all the major unfixable, vulnerabilities and risks that come with it, with insufficient means to protect oneself or one’s family from them.

In sum, only top-down, coercive Government industrial policy, not a bottom-up, voluntary free market, could impose on everyone, one universal, all purpose, global network on which no one and nothing can be safe and secure.

Myth busted.

Scott Cleland is a Christian, conservative, Republican, and President of Precursor®, a responsible Internet consultancy. He is not a lawyer. He served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration; and Institutional Investor twice ranked him the #1 independent analyst in communications when he was an investment analyst. He is author of Search &Destroy: Why You Can’t Trust Google Inc. and publisher of Googleopoly.net.

The Achilles Heel of Big Tech’s Cancel Power -- Daily Caller Op-ed

Scott Cleland — Mon, 17 May 2021 18:08:39 +0000

CLELAND: The Achilles Heel Of Big Tech’s Cancel Power | The Daily Caller

DAILY CALLER OPINION SCOTT CLELAND |CONTRIBUTOR|May 17, 20211:04 PM ET

CLELAND: The Achilles Heel of Big Tech’s Cancel Power

Big Tech’s unchecked.

If the four CEOs of Google, Facebook, Twitter and Amazon collectively could cancel online a sitting Republican U.S. president and his political allies with impunity in January, what checks them from collectively cancelling tens of millions of Republicans again?

What checks Big Tech from using their Section 230 impunity in the 2022 midterm elections and collectively canceling many Republican Senate and House candidates, their political allies and online followers that express broadly held Republican views that Big Tech deems objectionable?

It is in the raw political interests of the government’s incumbent party and unchecked Big Tech to collectively cancel the opposition party online to retain control of their levers of power long term.

Do any checks stand in the way of “The Collective Cancel” political precedent becoming practice?

We the people and the Constitution do, via repeal and/or a successful constitutional challenge of Section 230’s unchecked impunity.

What is the Achilles Heel of Big Tech’s cancel power?

It is the tentpole assumption that Big Tech are pure “private” enterprises, so they have unlimited corporate constitutional freedom of speech to mass-censor others. That assumption is false and not supported by the evidence.

They are legally defined as “interactive computer services” (ICS) in Section 230.

Section 230 effectively deputizes Big Tech ICSs to be quasi-government-agents for regulating speech online in ways that the U.S. Government (USG) itself cannot constitutionally do.

The overwhelming evidence below indicates Google, Facebook, Twitter and Amazon are essentially enabled, empowered and subsidized, quasi-government-agents of speech regulation, and dependent on special government treatment.

Without many major enabling USG actions, Big Tech would not exist.

It invented the Internet’s essential enabling protocol, TCP/IP, and it created the original enabling Internet TCP/IP packet switching network. And until 2016, the Department of Commerce contractually controlled the Internet’s operationally-indispensable, enabling “root zone” file.

Without many major USG enabling policies and Section 230, Big Tech companies could not be global, universal and dominant like they are.

To promote innovation and competition, the FCC for decades ensured tech data services uniquely would not be regulated or have public interest duties like all other communications services.

To promote the Internet and competition, Congress in Section 230 of the 1996 Communications Decency Act ensured only ICSs would operate “unfettered by Federal and State regulation.”

To promote ecommerce globally and universally, the Clinton-Gore Administration issued a Framework for Global Electronic Commerce, that was private sector led and self-regulated. It then convinced most foreign governments to adopt the enabling U.S. ecommerce framework.

To promote decency online, Congress created a de facto quid pro quo relationship and implicit conditional contract in Section 230 between the USG and ICSs.

“No provider or user of an interactive computer service shall be held liable on account of any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”

In 1996, Section 230 de facto deputized ICSs as quasi-government agents of speech regulation.

The evident quid pro quo agency here is the USG endowed ICSs with the exceptionally valuable economic benefit of broad immunity to regulate free expression online, conditioned on a good faith, explicit fiduciary decency duty to the public.

Pertinent to Big Tech’s mass censorship impunity, a fiduciary is bound legally and ethically to act in the other’s best interests, i.e., Americans freedom of speech over Big Tech’s corporate freedom of speech.

Without the USG’s Section 230 quid pro quo, Big Tech would not have the unaccountable power to do “The Collective Cancel.”

Big Tech openly admits its deep dependence on the government maintaining Section 230 as is.

The Internet Association concedes Section 230 provides “essential liability protections that have allowed Internet platforms to scale and diversify” via a shield … from liability” that affords no “requirements to police their users actions.”

The Internet Association also defends its Section 230 censorship power as “important” because it “ensures platforms can provide a place for users to collaborate without being held liable or responsible for censoring user content.”

In sum, a Constitution predicated on preserving liberty and preventing tyranny with checks, balances and rights could never authorize overriding them to deputize private entities with unchecked government impunity to mass censor the political speech of a quarter of America’s population.

If those at risk of losing their Constitutional liberty here do not try to challenge Section 230’s constitutionality and do not try to repeal it constitutionally, they will lose it by forfeit.

Edmund Burke warned “The only thing necessary for the triumph of evil is for good [people] to do nothing.”

CLELAND: Why Repeal Not Reform Section 230? Daily Caller Op-ed

Scott Cleland — Fri, 23 Apr 2021 15:17:34 +0000

^{https://dailycaller.com/2021/04/23/cleland-why-repeal-not-reform-section-230/}

^DAILY^CALLER

CLELAND: Why Repeal Not Reform Section 230?

SCOTT CLELAND -- CONTRIBUTOR -- April 23, 2021 10:20 AM ET

Repeal of Section 230’s 1996 lawless Wild West Internet policy is inevitable because it is based on an immoral premise and has inflicted severe damage to America’s constitutional liberties, national security and economic prosperity.

Repeal vs. Reform

Repeal of Section 230 would serve America and Americans much better than reforms that perpetuate lawless U.S. Internet policy and guarantee Big Tech remains unaccountable and Americans remain unprotected online.

Repeal would affect a major national policy change, while reform incrementalism would preserve the online status quo.

Repeal would be a comprehensive and constitutional solution, while content moderation reforms are piecemeal solutions that carry constitutional risks.

Repeal would empower 2022 and 2024 voters with a national policy conversation that asks candidates if and how they are going to ensure Big Tech is accountable and Americans are protected online?

Most importantly, repeal of Section 230 and its lawless U.S. Internet policy would legally restore the Constitution, Bill of Rights, rule-of-law, right and wrong, due process, redress and a duty of care online — without new regulation.

Reforms imagine Congress can constitutionally regulate free speech online, when that is largely the Judicial Branch’s constitutional role, to adjudicate case by case, what is constitutionally protected free speech versus what is illegal speech.

Repeal Is Inevitable

America’s one Internet policy and law, Section 230, is based on what Congress knew about the nascent 1996 Internet, which had bulletin-board functionality and dial-up speed, was used by one U.S. senator and the other several million Americans that used it did so for an average of thirty minutes a month.

Section 230’s lawless Internet policy de-governed and conformed America’s constitutional system to the utopian and anarchic Internet policy experiment of an amoral, borderless, permissionless digital commons, open to everything and everyone, with no central authority.

Today that lawless policy applies by default to everything everyone does online everywhere in the U.S. for work, life and play in 2021, and applies without any online First Amendment rights, recourse or redress, forever, until Section 230 is repealed or overturned by the Supreme Court.

Let’s see how twenty-five years of online lawlessness has inflicted severe damage to America’s constitutional liberties, national security/public safety and economic prosperity.

Constitutional Liberty Damage

Section 230’s immoral lawless policy premise rejected the Founding Fathers’ Constitution, Bill of Rights and their cornerstone, limited-government, Judeo-Christian moral premise that “every person be subject to the governing authorities” per Romans 13:1.

Our Founding Fathers presciently warned us: “…morality is a necessary spring of popular government” — George Washington ; “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other” — John Adams .

Prior to 1996, the Internet was not regulated so Section 230 was not deregulation, but a de-governing experiment that abdicated all federal and state regulation to private corporations.

The feudal damage to our constitutional liberty is Section 230’s de facto, supra-legal, Franken-system where attackers and offenders have impunity and the attacked and offended are abandoned online.

What has filled this vacuum?

A Big Tech oligarchy of Google, Facebook, Amazon, Twitter, et al, have asserted themselves as virtual global governors and unaccountable private regulators via opaque algorithmic rule of code and take-it-or-leave-it corporate Terms of Service and End User Licensing Agreements.

Big Tech taught the whole world a lesson in unleashing its Section 230 supreme superpower by unilaterally deplatforming President Trump and his supporters online in January.

Now Big Tech is appreciated as an existential threat to governments, leaders, political parties, movements, elections, opponents, competitors and their users — without redress.

The feudal fealty lesson here is everyone now is a digital vassal and must go through and depend on the Big Tech overlords for all online data and interactions.

Section 230 impunity also strongly incentivizes automating away workers, jobs, industries and communities; and dehumanizing users as products and data to sell, and children as lab rats to test, addict, deform, depress and abuse with impunity.

National Security/Public Safety Damage

Since 1996, Section 230’s lawless Internet policy de facto has unilaterally surrendered America’s online borders and sabotaged much of America’s online national defense and security.

Online, America simply cannot protect itself and its people, because it irrationally assumes the Internet only enables good never evil.

U.S. cybersecurity is an unmitigated disaster that is only getting worse. China and Russia can attack with impunity thanks to Section 230.

In America, who thinks it is a good national policy outcome that no one and nothing is safe and secure online?

Economic Prosperity Damage

Section 230 empowers, subsidizes and advantages Big Tech winner-take-all impunity, which severely damages economic prosperity and opportunity for all Americans, workers, and entrepreneurs.

The Internet Association explains Section 230’s winner-take-all advantages for Internet platforms as “essential liability protections that have allowed Internet platforms to scale and diversify” via a shield … from liability” that affords no “requirements to police their users actions.”

The Internet has never been a free market. It is a digital commons of cyber-socialism and crony capitalism given the massive and rampant corporate welfare and regulatory capture involved.

Big Tech’s winner-take-all impunity empowers Internet platforms to capitalize benefits and socialize costs. It has cost Americans ~$5 trillion in market losses from four Internet market bubbles.

My estimate is it has been a ~$3 trillion drag on US GDP economic growth from 2012-2019; and that the U.S. taxpayer has cumulatively subsidized Big Tech by over $3 trillion.

The 1% of S&P 500 stocks that are Big Tech comprise 25% of the S&P 500’s value, and they have captured most of the increase in market wealth in recent years.

Three Big Tech gatekeeper monopolies dominate consumer spending and decimate competition.

Conclusion

Section 230’s lawless Internet policy is a self-defeating disaster damaging America’s liberty, security and prosperity that demands repeal or overturning in the Supreme Court.

America’s 2022 and 2024 voters overwhelmingly want Big Tech to be accountable and Americans to be protected online.

That is not too much to ask of their elected representatives.

Section 230 repeal is simple.

Scott Cleland is a Christian, conservative, and President of Precursor®, a responsible Internet consultancy. He served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration; and Institutional Investor twice ranked him the #1 independent analyst in communications when he was an investment analyst. He is author of Search &Destroy: Why You Can’t Trust Google Inc. and publisher of Googleopoly.net.

Cancel Section 230’s Cancel Powers

Scott Cleland — Mon, 19 Apr 2021 15:02:11 +0000

DAILY CALLER OPINION CLELAND: Cancel Section 230’s Cancel Powers | The Daily Caller

CLELAND: Cancel Section 230’s Cancel Powers

SCOTT CLELAND CONTRIBUTOR April 17, 20214:07 PM ET

Section 230 warrants repeal because it created, and empowers, two different types of problematic power-without-accountability to customers, competition, government or the courts.

Section 230’s extraordinary unaccountability advantages for Internet companies are an out-of-control, Big Tech monopoly-making machine.

There is no antitrust fix for Big Tech monopolization without first, or simultaneously, repealing Section 230, the evident root cause of, and superpower behind, Big Tech’s evident monopolistic impunity.

Section 230’s Wild West Internet policy and law empowers Big Tech to cancel and deplatform any competitor or dissenter, even the President of the United States, with impunity.

Wild West Internet policy long ago de facto cancelled Americans’ First Amendment freedoms when it also de facto cancelled the U.S. Constitution, Bill of Rights, rule-of-law, and due process online, and replaced them with private governance of algorithmic rule-of-code, Terms-of-Service, and End User Licensing Agreements.

That is the law as interpreted by the courts. Only Section 230 repeal can constitutionally fix that mess.

U.S. antitrust enforcement and Section 230 unaccountability cannot successfully be addressed separately, because Section 230 is America’s Internet competition law.

Section 230 is part of the 1996 Telecommunications Act, that had a purpose “to promote competition and reduce regulation;” and Section 230 sets U.S. Internet policy as an Internet “unfettered by Federal or State regulation.”

No other modern law has been more about competition, and no other section of the 1996 Telecom Act did more to advantage nascent Internet competitors to succeed globally, by granting nascent Internet companies special sweeping protections from competitors, regulators, and negligence lawsuits.

Those extraordinary advantages succeeded in America dominating the Internet globally and enabling the Internet to become ubiquitously adopted and useful to most everyone today.

However, at some point in the last twenty-five years that nurtured infant industry became a mature industry juggernaut that commands more market power than all previous incumbents before it.

Section 230’s then pro-competitive, 1996, infant Internet protections from competition, regulation and liability, eventually became anti-competitive, Big Tech winner-take-all advantages, subsidies and impunities.

No surprise, after twenty-five years of the U.S. government giving Internet companies every conceivable government advantage, privilege and subsidy Big Tech utterly dominates markets for information, communications and consumer spending in the United States and much of the world.

If Section 230’s globalist, Internet-first, competition policy continues unfettered, today’s already dominant Internet platforms will only continue to dominate and monopolize, the rest of the economy that they have yet to cancel, command or control.

The terrifying logical conclusion of continuing this unfettered tech-first policy of monopolistic impunity, is one integrated private/public sector network for everything in America — just like China has now.

Also, if Section 230’s extraordinary impunity continues unfettered, Big Tech will be emboldened to continue to cancel and deplatform whatever competitor or dissenter that presents a potential threat to their online hegemony..

Tellingly, Supreme Court Associate Justice Clarence Thomas has spotlighted Section 230’s big problem of dominant private parties having government immunity to censor or cancel public speech and government speakers.

He warns of the competition problem of “dominant digital platforms” having “dominant market share,” “network size” and “highly concentrated” control.

He warns of Section 230’s problem of giving digital platforms “unrestricted authority” and “unbridled control” of “unprecedented… concentrated control of so much speech in the hands of a few private parties.”

He warns that the Supreme Court has not reviewed Section 230 for twenty-five years. In that vacuum, he warned that lower courts were “extending Section 230 immunity beyond the natural reading of the text… [and that] … can have serious consequences.”

Justice Thomas also concluded by implying Section 230 is not working. “We will soon have no choice but to address how our legal doctrines apply to highly concentrated, privately owned information infrastructure such as digital platforms.” Translation: the courts will have to fix this if Congress does not.

At a February 25 House Judiciary Committee hearing, Ranking Member Jim Jordan clearly warned Big Tech, “if they continue to undermine the First Amendment, and other liberties that Americans enjoy, Section 230 protections should go away. Its really that basic.”

Senate Judiciary Committee Ranking Member Chuck Grassley, in an April 13 floor statement on the power of Big Tech to censor free speech, said: “It’s time to examine the need for Section 230 immunity… and to what extent these tech companies are abusing their monopoly power.”

“When a company has monopoly power it is no longer constrained by market forces… the only choice consumers have is to take it or leave it. Section 230 appears to compound this problem. These companies are unaccountable to their customers, the courts and to the government …The system is rigged.”

The more Congress investigates “the need” for Section 230 the more they will find a luxury legal aid subsidy for non-needy, billionaires.

If one focuses on how Section 230 is used and abused, it becomes obvious that it’s a one-sided loophole that only benefits Internet companies at everyone else’s expense by ensuring Internet companies are not held responsible for harms their businesses facilitate online.

Section 230 is the most America-last, technology-first law and policy imaginable, that does virtually nothing to protect America, Americans, or children online.

At bottom, Section 230 is an inherently parasitic premise, a one-way loophole, that protects platforms from people by not protecting people from platforms.

It’s that simple.

A simple problem means Congress has a simple decision.

Do American voters want Big Tech unaccountable, and people unprotected online?

Or do American voters want Big Tech accountable, and people protected online, by repealing Section 230?

Elected officials know it is the latter.

Scott Cleland is President of Precursor®, a responsible Internet consultancy. He served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration; and Institutional Investor twice ranked him the #1 independent analyst in communications when he was an investment analyst. He is author of Search &Destroy: Why You Can’t Trust Google Inc. and publisher of Googleopoly.net.

Why DOJ’s US v. Google Antitrust Lawsuit Is Likely to Win in Court

Scott Cleland — Wed, 21 Oct 2020 17:12:56 +0000

“The court of public opinion” is not a court of law.

“The truth” is not sufficient in a court of law like it is in the court of public opinion. In a court of law, the well-known legal “truth” standard and oath is telling “the truth, the whole truth, and nothing but the truth.”

Public relations, politicization, market capitalization, and acclamation, are not relevant antitrust arguments in a court of law. Google’s evident, self-serving, political definition of “the consumer welfare standard” has become damaging dogma politically undermining the legitimacy of antitrust law and antitrust law enforcement based on the facts and the rule of law standard of “the truth, the whole truth, and nothing but the truth.” [See White Paper & Evidence here.]

Whether one thinks the U.S. Government’s antitrust case against Google ultimately will prevail in court or not, will be driven largely by whether one listens only to Google’s “truths”, or whether one listens to Google’s truths and also reads the government’s formal complaint to get the “the truth, the whole truth, and nothing but the truth.” The entire justice system is based on an adversarial process to determine if the law was broken or not.

It’s sad one has to say this, but this is a U.S. Federal Court proceeding based on the law, precedent, evidence, and due process, not a crowd-sourced jury, stock price judge, or a popularity vote.

Why the U.S. v. Google Sherman Antitrust Section II Lawsuit Is Likely to Prevail in Court

Yesterday, the DOJ filed a long-expected, landmark, Sherman Act Section II complaint in the U.S. Circuit Court in the District of Columbia, alleging Google unlawfully maintained monopolies in the markets for general search services, search advertising, and general search text advertising, via anticompetitive exclusionary practices.

This initial part of an expected broader Google antitrust case is likely to ultimately prevail in court for a variety of strong reasons.

Pragmatic Winning Strategy:

This case as currently charged is exceptionally pragmatic, disciplined, and laser-focused, on Google’s core, evident, unlawful exclusionary acts memorialized in copious contracts where the Government’s statutory and evidence case is strongest and Google’s past defenses are least effective.

The DOJ is wisely not making the case about Google’s discrimination of search results, like the FTC or the EU did, and where Google’s antitrust defense is relatively strongest and most developed. DOJ makes its case about Google “anti-competitive and exclusionary” business contractual arrangements, where Google’s good legal defenses are meager.

By design, this case evidently is constructed not to satisfy a broad variety of complainants and grievances, but to win, and win handily in court, on the most unlawful and harmful, “anticompetitive and exclusionary” parts of their core search and search advertising businesses that comprise over 80% of Google’s revenues and most all of Google profits and market valuation.

Think of this DOJ case strategy in part, as purposefully and highly targeted, in effectively applying Pareto’s 80-20 Rule, a widely-used business and economic axiom where one’s focusing on the right 20% of inputs can get one 80% of the desired outputs. The DOJ apparently has learned from the FTC and EU efforts to be pragmatic prosecutors and avoid U.S. antitrust charges where Google’s available legal defenses are relatively strongest.

Text-Based Case:

A reasonable reading of the Government’s complaint would see a case purposefully focused on presenting a strong “textual” Sherman Act Section II antitrust case about how Google has done exactly what Section II makes unlawful -- i.e., “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations” -- in the defined markets for general search services, search advertising, and general search text advertising.

Hugging and building upon the Sherman Act Section II text is a winning strategy when Google has been so long and so loose with the facts and characterization of U.S. antitrust law.

Alleged Unlawfulness Based on Strongest Precedent:

The complaint makes clear it relies primarily on the most analogous U.S. antitrust precedent, U.S. v. Microsoft. It is evident in reading the complaint that the DOJ is very closely adhering to the winning formula in that case that was affirmed by the U.S. Court of Appeals of the DC Circuit in 2004.

The U.S. v. Google complaint says: “10. Google’s practices are anticompetitive under long-established antitrust law. Almost 20 years ago, the D.C. Circuit in United States v. Microsoft recognized that anticompetitive agreements by a high-tech monopolist shutting off effective distribution channels for rivals, such as by requiring preset default status (as Google does) and making software undeletable (as Google also does), were exclusionary and unlawful under Section 2 of the Sherman Act.”

In hugging so close to the Sherman Act text and the strongest and most analogous U.S. antitrust precedent here, the DOJ has made Google’s defense harder with the task of convincing the court that newer precedents should contravene the text and the most relevant, appeals-court-upheld U.S. v. Microsoft precedent.

Very Strong Fact Set:

This U.S. v. Google case is much stronger than U.S. v. Microsoft, because the Microsoft case was essentially based on an event in an immature PC computer market involving Microsoft anticompetitively harming and excluding Netscape’s browser by tying in Microsoft-OEM licensing agreements that licensers of Microsoft’s OS had to load Microsoft’s browser as the default browser.

A reasonable reading of the U.S. v. Google complaint would glean a case occurring in an ecosystem with multiple mature monopolized markets and with a decade of contractual evidence involving multiple interwoven products involved in interlocking and reinforcing contracts of many business arrangements.

The DOJ has presented copious evidence and quotes of Google’s anticompetitive and exclusionary intent, strategy, and success to prove its anticompetitive conduct charges: “111. Google is a monopolist in the general search services, search advertising, and general search text advertising markets. Google aggressively uses its monopoly positions, and the money that flows from them, to continuously foreclose rivals and protect its monopolies.”

Google is the DOJ’s Best Witness:

This targeted case is so strong because it is almost entirely based on contracts and anticompetitive and exclusionary contractual requirements enforced with penalties, that Google has conceived, written, required, and signed, i.e., contractual conduct involving multiple similar standard Google business contracts with numerous signatories that Google cannot repudiate, deny, or disavow without perjuring themselves in Federal Court or pleading their Fifth Amendment right to not incriminate themselves.

In addition, in most instances the government has incriminating documents and quotes from Google executives, managers, and employees that illuminate its knowing anticompetitive and exclusionary intent and strategy.

Google’s “Deeply Flawed” Defense:

Google’s public statement said: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they're forced to, or because they can't find alternatives.”

It appears that Google did not read the complaint before publishing its “deeply flawed” rebuttal.

A reasonable reader of the DOJ complaint would find that most of the DOJ’s case and evidence provided copious and compelling proof of the opposite of Google’s public assertion, that Google’s anticompetitive exclusionary provisions in most of Google’s core business contracts were all about Google contractually requiring that en masse users would not have search engine choice, because their search choice would be set by Google’s default and often it could not be changed from the default if a user chose to change it.

In sum, the question Google witnesses clearly do not want to be asked in this trial under oath is if “People use Google because they choose to, not because they're forced to” why would it be necessary for Google to have so many exclusionary contracts for over a decade that force consumers to get Google search installed by default?

This is a simple case. If real consumer choice is a key to consumer welfare, the Government wins.

*****

The Internet Imperative Is Protect People by Restoring A Duty-of-Care

Scott Cleland — Mon, 19 Oct 2020 17:08:53 +0000

https://dailycaller.com/2020/10/19/cleland-the-internet-imperative-is-protect-people-by-restoring-a-duty-of-care/

DAILY CALLER

The Internet Imperative Is Protect People by Restoring A Duty-of-Care

SCOTT CLELAND CONTRIBUTOR October 19, 2020 11:39 AM ET

How can American Internet law protect platforms from people but not protect people from platforms?

Congress passed the Communications Decency Act (CDA) as part of the 1996 Telecommunications Act to protect minors from indecent material, but in 1997 the Supreme Court struck down a key part intended to protect children from indecency online because it violated adults’ First Amendment rights.

The court retained Section 230’s “Good Samaritan” provision of the CDA, which intended to protect Internet platforms from people’s lawsuits if they moderated third-party content in good faith.

However, since then “many courts have construed the law [Section 230] broadly to confer sweeping immunity on some of the largest companies in the world,” according to Supreme Court Justice Thomas recently. He also added: “…Extending Section 230 immunity beyond the natural reading of the text can have serious consequences.”

In effect, Section 230 has descended into a de facto “Bad Samaritan” impunity loophole, according to the U.S. Department of Justice’s assessment of Section 230 recently.

This anti-Golden Rule loophole favors a Wild West, winner-take-all Internet where U.S. Internet platforms have no duty-of-care and no Golden Rule responsibilities to respect authority or people. Internet platforms can evade legal accountability, harm others and facilitate illicit activity without legal consequence, according to the U.S. DOJ.

The Internet Imperative problem is that America’s only Internet law has been interpreted by courts to protect online platforms, but not protect people from online harms as Congress clearly intended. The bipartisan solution is amending Section 230 to restore a duty-of-care, i.e., restore the balance inherent in freedom-with-responsibility and in the Golden Rule.

No Duty of Care Online Is Unsound Public Policy

A recent U.S. Department of Justice letter to Congress on Section 230 warned: “For too long Section 230 has provided a shield for online platforms to operate with impunity… to escape liability even when they knew their services were being used for criminal activity… [and] to evade laws and regulations applicable to brick-and-mortar competitors” [i.e., accountability arbitrage.]”

Practically, this Section 230 impunity means courts often summarily deny victims’ lawsuits before full examination of all the facts, effectively denying most victims their right to access the justice system for redress of their online harms.

Through judicial activism and congressional inaction, Section 230 has transmogrified into a most unsound and unethical public policy that shockingly turns a blind eye to online activities that would be criminal offline.

The DOJ letter to Congress transmitting its draft legislation to reform Section 230 stated: “Section 230 immunity is meant to incentivize and protect online Good Samaritans. Platforms that purposely solicit and facilitate harmful criminal activity — in effect, online Bad Samaritans — should not receive the benefit of this immunity.”

Government Has Failed to Protect People from Online Harms

Protecting people from harms, from which people can’t protect themselves, is a government raison d’être.

The most basic government protection of people is a standard legal duty-of-care to not harm others. It should be a given for everyone, like it always was before activist courts created a de facto Section 230 “Bad Samaritan” impunity loophole.

Any sound system of justice is based on a duty-of-care ethic because it is the legal version of the Golden Rule — treating others as one wants to be treated. Law generally prohibits what no one wants done to them: e.g., being harmed, cheated, robbed, etc.

A Nation Divided Cannot Stand

Now that everyone, everywhere, conducts everything over the Internet, America is increasingly a nation divided by an ever-present, polarizing, duty-of-care double standard.

We are a nation divided by polar offline-online laws and incentives. Offline law promotes a duty-of-care via freedom-with-responsibility and the Golden Rule, i.e., doing what is right, true, fair, and peaceful. Online law now perversely promotes freedom-without-responsibility and no-duty-of-care impunity that favors and celebrates the opposite, e.g., what is harmful, fake, self-centered and disruptive.

No-duty-of-care for others or society — combined with what comes with it, asymmetric accountability, unequal protection under the law; and unequal access to justice — predictably brings out the worst in people and evidently fuels societal dissension, disruption and decay.

No-Duty-of-Care Favors and Incents Harmful Gatekeeper Business Models

Section 230 overwhelmingly incentivizes Internet platforms to leverage their “Bad Samaritan,” special impunity to take advantage of their conflicted middleman position over commerce and content online, i.e. gatekeeper-capitalism, where foxes go to guard henhouses.

These gatekeeper business models are harmful for five big reasons.

First, Internet platforms’ de facto, no-duty-of-care license to ignore the rules, laws and associated costs that non-platforms must obey and pay, incentivizes irresponsibility towards others by making irresponsibility cost-free, the opposite of how normal duty-of-care incentivizes freedom-with-responsibility by making irresponsibility costly.

Second, Section 230 impunity enables, incents and favors multi-sided gatekeeper business models that can non-transparently and unaccountably manipulate supply and demand. This can mean economy-wide severing of normal trusted direct customer relationships and supplanting them with dominant biased-broker models where middlemen can meddle, self-deal and self-preference with unbeatable inequity.

Third, a no-duty-of-care, gatekeeper business model can be irresponsibly dehumanizing. People can become products; customers become users to addict; suppliers become piggy banks to raid; and communities become dumps for platforms’ socialized costs and risks.

Fourth, the Internet platforms’ gatekeeper business model’s dependence on special government, no-duty-of-care impunity are not free market heroes. They are classic crony prototypes, dependent on special government privilege and advantage to operate and succeed.

Fifth, the Internet platforms’ special impunity means they can’t lose because they can capitalize revenues and socialize costs. Only with no-duty-of-care can they non-transparently capitalize their impunity advantages to grow revenues faster in disruptive ways that their competitors cannot ethically or legally grow revenues. Only they can non-transparently socialize the costs — of harming people and facilitating illegal activity — by dumping them onto victims, competitors, the government, and taxpayers.

A Corporate Responsibility Is to Protect Stakeholders and the Free Market’s Invisible Hand

In 2019, the Business Roundtable of top CEOs “redefined the purpose of a corporation,” and “outlined a modern standard for corporate responsibility” in a public commitment to deliver value for all their “essential” stakeholders: customers, employees, suppliers, communities and shareholders.

The Business Roundtable effectively has defined “stakeholder capitalism” as people focused, which aligns closely with society’s people focused, duty-of-care standard.

The “invisible hand” of a free market economy works and thrives automatically because it is others-driven and freedom-with-responsibility-based. Voluntary supply self-interests are responsible for finding, matching, and satisfying the voluntary demand self-interests of others.

This is in stark contrast to the apparent “invisible fist” of Internet platforms empowered by Section 230’s impunity that best characterizes Internet gatekeepers and pure shareholder-primacy capitalism, and that optimizes for Internet platform shareholders at the expense of everyone else.

Winner-Take-All Internet Platform Dynamics Weaken Economic Growth

One of the biggest unanswered questions about the U.S. economy is why U.S. economic growth has lagged significantly over the last sixteen years from previous decades?

A contributing factor apparently becomes clear in comparing Fortune 500 revenue data and BEA economic statistics, which expose the extreme disparity in long-term revenue growth performance of non-Internet companies and Internet gatekeeper platforms with Section 230 impunity.

Gatekeeper Growth Disparity: From 2012-2019: 497 Fortune 500 companies (i.e., the Fortune 500 minus Amazon, Google & Facebook,) grew revenues 14.6%; current USGDP grew output 32.3%; and just Amazon + Google + Facebook grew revenues 341%.

The Winner-Take-All Economic Effect: From 2012-2019: these three Internet platforms, Amazon + Google + Facebook, outgrew the economy (current USGDP) by 956% and outgrew the other 497 Fortune 500 companies by 2,235%.

No Thriving U.S. Economy: From 2012-2019: Fortune “497” companies’ revenue growth lagged: USGDP output growth by -55%; and the three Internet platforms’ revenue growth by –95.8%.

This data spotlights the evident winner-take-all, negative-sum economic reality of Section 230’s gatekeeper, crony capitalism that holds back the economy from thriving and serving all Americans.

The Internet Imperative Is Protect People from Online Harms

Since everyone, everywhere, conducts everything online, an Internet loophole facilitating criminal impunity online, is becoming an increasingly severe threat to public safety, civil society, and free market economic prosperity everywhere.

The best way to protect the unprotected is to restore a legal duty-of-care to the platforms, reestablishing the most basic protection of people and the essential legal Golden Rule ethic undergirding our justice system.

A bipartisan amending of Section 230 to protect the unprotected from harms online is a common good, good government, and good business.

Discovering Google’s Rule of Scofflaw -- Daily Caller Op-ed

Scott Cleland — Fri, 09 Oct 2020 14:45:18 +0000

https://dailycaller.com/2020/10/08/cleland-discovering-googles-rule-of-scofflaw/

DAILY CALLER OPINION

Discovering Google’s Rule of Scofflaw

SCOTT CLELAND CONTRIBUTOR -- October 08, 20203:04 PM ET

Google has a discovery double standard.

Google treats the discovery of others’ information the way they don’t want discovery of their information treated, the opposite of the Golden Rule.

The evidence shows Google expects everyone else’s private or proprietary information to be publicly accessible and useful, except Google’s.

Google knows information is power.

Google and antitrust authorities also know asymmetric information advantages can create, maintain and extend market power.

This is a timely and relevant concern as the two biggest legal cases that Google has ever faced are coming to a head in public, at nearly the same time.

On October 7, the Supreme Court heard the final Oracle v. Google arguments.

Google supposedly illegally infringed Oracle’s copyrighted Java APIs to accelerate adoption of its mobile, data-hoovering, Android operating system and Chrome browser. This ill-gotten advantage has enabled Google to dominate these leading data discovery tools, and then deny scale to competitors in discovering data that is necessary to compete in targeted advertising.

Very soon, the DOJ is expected to file a Sherman and Clayton Act monopolization case against Google for allegedly, illegally acquiring, maintaining and extending its online-search-related market power, i.e., info-discovery access and monetization.

Expect the case to spotlight numerous exclusionary contractual terms Google has employed to effectively deny scale to competitors’ discovery/access for: search queries, advertising bids and asks, and key corpuses of information, data, and metadata.

Some scale and legal perspectives are helpful here.

Google’s “mission is to organize the world’s information and make it universally accessible and useful.” It is a uniquely monopolistic vision to control and leverage the world’s discovery of information.

Google also controls and can exclude competitors from discovery of multiple unmatched corpuses of global information: e.g., search index, maps, news, books, videos, apps, and facts.

Google commands 92% share of global search per StatCounter and 10 of the top 12 Android apps downloaded over 5 billion times per Wikipedia.

Google’s immense market power over everyone’s “discovery” of digital information via search is also de facto power to influence the administration of justice.

That is especially true when it comes to how law enforcement researches and learns relevant facts and information that influence lines of questioning in official legal discovery concerning official investigations or court cases involving Google or its interests; and given Google’s well-documented scofflaw history.

Consider evidence of Google’s discovery double standard.

In 2010, in the Viacom v. Google-YouTube copyright infringement case, Google requested the judge to seal all the discovered documents in the case, which the court denied.

Given the now public Undisputed Statement of Facts in the case, it is clear that Google’s leadership knew that buying YouTube would involve violating copyright law.

At least three Google executives opposed buying YouTube for illegality reasons.

Google co-founder Sergey Brin said in an email: “… is changing policy [to] profit from illegal downloads how we want to conduct business? Is this Googley?” (SUF 162)

Google manager David Eun told then CEO Eric Schmidt in an email: “I think we should beat YouTube… but not at all costs. They are a video Grokster.” (SUF 158,159)

Another Google video manager said in an email: “It crosses the threshold of Don’t Be Evil to facilitate distribution of other people’s intellectual property.” (SUF 164)

Google’s discovery double standard was first discovered and spotlighted by a 2012 report, Uncivil Secrecy, by the Reporters Committee for Freedom of the Press.

It reported: “…far from making its own legal documents “universally accessible,” Google routinely uses overly broad requests to seal court filings, according to critics, in apparent contravention of its commitment to the public interest in the free flow of information.”

In 2012, Google thwarted normal legal discovery in the Texas State Attorney General’s antitrust investigation into Google by refusing to comply with a subpoena by claiming most all Google’s emails were subject to attorney-client privilege, even when no lawyer was included in the emails.

The most egregious example of Google’s discovery double standard was its 2014 lawsuit claiming Section 230 immunity from having to comply with a broad Mississippi State Attorney General subpoena backed by 41 State Attorneys General for a state law enforcement investigation of Google’s alleged facilitation of “dangerous and illegal activities through its online platforms.”

A 2015 Federal Court preliminary injunction blocked that subpoena on the grounds that discovery would cause Google irreparable injury.

A year later the Fifth Circuit Court of Appeals dismissed the preliminary injunction, ruling Google faced no “irreparable injury,” because “the normal course of state criminal prosecutions cannot be disrupted or blocked on the basis of charges which in the last analysis amount to nothing more than speculation about the future.”

Google’s disruption of the States’ discovery process effectively secured Google de facto sweeping, practical immunity from all U.S. State law enforcement investigation and prosecution, for sixteen months.

This past August, The Markup reported, that Google instructed “employees across the company that certain language is off limits in all written communications,” because everyone must assume that whatever is written could be subject to legal discovery in antitrust investigations.

Employees were coached what they could say and not say, and warned to not use certain words like “market share,” “barriers to entry,” and “network effects.”

This evidence indicates Google has a purposeful, institutional, and hypocritical, discovery double standard where Google treats the discovery of others’ information the way they don’t want discovery of their information treated, which is the opposite of the Golden Rule, and the legal discovery process.

Antitrust

Google

Rebalancing the Internet Imbalance of a 25-Year Utopian Policy Experiment -- Daily Caller Op-ed

Scott Cleland — Tue, 29 Sep 2020 16:43:18 +0000

https://dailycaller.com/2020/09/29/cleland-rebalancing-the-internet-imbalance-of-a-25-year-utopian-policy-experiment/

DAILY CALLER

Rebalancing the Internet Imbalance of a 25-Year Utopian Policy Experiment

SCOTT CLELAND CONTRIBUTOR September 29, 2020 11:38 AM ET

The Internet is now less a technological revolution and more of an unravelling, 25-year-old utopian policy experiment of freedom-without-responsibility.

There is no question that the Internet’s many technological innovations have been a phenomenal success given that everyone everywhere conducts everything over the Internet.

However, the Internet has also been a 25-year utopian policy experiment, and many of the Internet’s foundational utopian premises – i.e., a borderless, permissionless commons, open to everything and everyone, with no central or sovereign authority — have been unravelling or have largely collapsed.

In the 1990’s, the nascent Internet was viewed as a separate, virtual global dimension, ripe for utopian exceptions and experimentation.

Now that the Internet is mature and integrated into the physical life, work and play of everyone. The average Internet user no longer thinks of the Internet as a separate dimension, but as a taken-for-granted, integrated part of everything.

Rebalancing the Internet imbalance

Should people be protecting the Internet, or should the Internet be protecting people?

That question encapsulates the Internet imbalance problem and Internet rebalancing solution.

The Internet imbalance is the disruptive duel of ongoing, opposing online-offline value systems of governance and economics.

Think of it as disruption disrupted.

The Internet may be the grandest social experiment in world history.

First hypothesis: no government is better than government.

Are people better off overall without, or with, sovereign rules, rights and restraints?

Consider the copious evidence of a robust rebalancing of the Internet imbalance.

In 2013, the Snowden NSA leaks revealed ubiquitous NSA Internet surveillance and shattered any credibility that the U.S. had abroad in advocating for an Internet free of government interference.

That reality broadly catalyzed what I call the “Internet Reset,” the geopolitical secular change from an ungoverned global Wild West Internet to more governed national Internets, since most nations and the EU have established more sovereign authority, rules and control over the Internet that traverses their borders.

Evidently, the utopian borderless Internet has become a more sovereign-ized “splinternet” with a multitude of evident sovereign authorities, restrictions, and limits.

Consider the EU’s Single Digital Market, strategy, laws and policies; Britain’s duty of care Internet policy; China’s Great Firewall, cyber-sovereignty policy, “reinvention of the Internet proposal,” and Belt and Road Initiative involving several dozen nations; Russia’s independent “unplugged” Internet sovereignty law/policy; India’s India-first Internet policy; and 21 countries shutting down their Internet last year.

A G7 Task Force has created anti-terrorism and anti-money-laundering accountability to Facebook-Libra’s permissionless cryptocurrency. The Five Eyes are demanding Internet platforms to provide law enforcement access to encrypted networks. 140 countries via the OECD are negotiating a new international digital tax system to address Internet platform tax unaccountability.

America’s bipartisan Techlash has been a rebalancing process in seeking Internet platform accountability in a wide variety of ways.

Congress overwhelmingly amended America’s only Internet law, Section 230, to combat online sex trafficking of children. The DOJ has recommended legislative changes to Section 230 to increase incentives to deter online harms and illicit activities. An administration Executive Order has the Executive Branch and independent agencies reviewing Section 230. Multiple bipartisan bills have been introduced in Congress to address a variety of Internet unaccountability problems, e.g., privacy and data security; and social media addiction, manipulation, election interference and polarization.

The DOJ is in the process of an antitrust review of the market-leading online platforms. The DOJ, FTC and most State AGs are preparing antitrust cases against Internet platforms. And a bipartisan House investigation of Digital Markets is considering changes in antitrust law.

Another big U.S. disruption of the utopian Internet is the tech decoupling of the U.S. and China. The FBI has designated the China Espionage Threat online as a top national security risk. The FCC in a 5-0 vote designated China’s Huawei and ZTE Internet technology companies as national security threats.

An executive order banned China’s popular video-sharing mobile app, Tik Tok, as a national security risk given the amount of private data the app collects on Americans. To mitigate the national security concerns, President Trump approved in concept, a proposed deal that would have Oracle and Walmart have a controlling ownership stake and contractual roles that would enable them to protect Americans privacy and data security on Tik Tok. The deal awaits final approval by both the U.S. and China.

Not surprisingly, the results of this utopian social experiment’s first hypothesis that no government is better than government has been consistently rejected most everywhere, as most sovereign governments are in the process of applying rules and restraints to their Internet.

Second hypothesis: a propertyless-commons is better than a free-market.

Are people economically better off without, or with, economic perimeters, properties, permissions, protections, payments and profits?

In 1997, the U.S. Government’s new “Framework for Global Electronic Commerce” created a private-sector led, public commons with minimal government oversight or accountability – a de facto virtual geopolitical economic system of freedom-without-responsibility, i.e., a commons driven by self-interest with minimal obligation to respect or protect the interests of others.

In 1997, it is no coincidence that the Business Roundtable of top corporate CEOs redefined the purpose of a corporation from the then customer-driven, other-oriented, rules-based, market capitalism of the 20^th century to the emerging Internet-driven, self-interested, no-rules era of “shareholder-primacy” capitalism.

In 2019, after 22 years of Internet results and years of intensifying techlash against Internet freedom-without-responsibility, it also is not a coincidence that the Business Roundtable in 2019 again “redefined the purpose of a corporation,” and “outlined a modern standard for corporate responsibility.”

This time it would undo its 1997 change and restore a pre-1997, pre-internet, freedom-with-responsibility, purpose of a corporation in committing “to deliver value to all of their” stakeholders — customers, employees, suppliers, communities and shareholders – “for the future success of our companies, our communities and our country,” i.e., “stakeholder capitalism.”

If the Business Roundtable’s redefinition of the purpose of a corporation, from shareholder-primacy capitalism to stakeholder capitalism, is a good proxy of results, this utopian social experiment’s second hypothesis that a propertyless-commons is better than a free-market, has been rejected for not serving “essential” stakeholders and not producing “a free-market that serves all Americans.”

Internet disruption disrupted.

Overall, this 25-year experiment has shown that the Wild West internet Imbalance of freedom-without-responsibility has become the de facto freedom-to-harm others with impunity and to take away others’ privacy, security, dignity, identity and property without their knowledge or consent.

Moreover, everyone now has Internet trust concerns, because on the Internet no one is safe or protected from purposeful harms like deception; nothing is safe or private; and everywhere users question the trustworthiness of Internet content and intermediaries.

This Internet imbalance is the result of America prioritizing people protecting the Internet rather than the Internet protecting people, because America is the only country that protects Internet platforms from people, but not people from platforms.

In a nutshell, the last several years of the techlash has been rebalancing the online-offline, internet Imbalance away from the disruptive disorder of freedom-without-responsibility, minimal government and a public commons, towards the more constructive calm of freedom-with-responsibility and rules-based government and markets.

The rebalancing of the Internet imbalance is happening just as Newton’s third law of motion would predict: “for every action, there is an equal and opposite reaction,” i.e., disruption disrupted.

Lastly, if the failure of this utopian policy experiment was its implicit freedom-without-responsibility organizing principle, what’s the solution?

It is restoring a duty of care for Internet platforms like everyone else already has. That’s freedom-with-responsibility. That’s the Golden Rule of treating others as one wants to be treated. That Internet imbalance rebalancing would keep all that is right with the Internet, while fixing all that is wrong.

Congress

Economy

Google’s anticompetitive infringement of IP reduces innovation – IAM Op-ed

Scott Cleland — Mon, 21 Sep 2020 14:04:05 +0000

IAM (Note:IAM is the world’s leading intellectual property business media platform.)

Google’s anticompetitive infringement of IP reduces innovation

By Scott Cleland

September 19, 202O

In this week’s IAM Saturday Opinion slot, Scott Cleland identifies what he claims is a series of major Google IP infringements that were designed to strengthen its position in key markets at the expense of competitors who had got there first

Google’s most effective revenue and profit growth engines - online advertising, mobile advertising, the Android operating system, and Android smartphones – have all depended, to an extent at least, on anticompetitive infringement of IP owned by leading competitors. By seizing their hard-earned, first-mover advantages, Google has been able to gain, maintain and extend its internet platform’s market power.

Google denies this, claiming its success has been earned legitimately as “a law abiding company”.

Let me be clear, the invention of the PageRank search algorithm and Googlebot Web crawler by Google co-founders Larry Page and Sergey Brin’s are two of the best innovations in modern world history. However, the evidence indicates a business pattern of Google IP infringement that has enabled the company to secure the essential capabilities necessary for it to dominate in key areas:

Targeted online advertising (Overture’s ad auction engine trade secrets and patent);
Open source smartphones (Apple’s iPhone touchscreen command trade secrets and patents);
Mobile advertising (Skyhook Wireless’ location engine trade secrets and patents); and
Mobile operating systems (Oracle’s Java API copyright).

Without the advantages of these strategic IP infringements, there is little chance that Google could have produced even half the financial and business success it has today.

Why spotlight Google’s anticompetitive pattern of mass IP infringements now?

The US Department of Justice (DOJ) is expected to file an antitrust monopolisation complaint in federal court soon; and the Supreme Court will hear the Oracle v Google copyright infringement case on 7^th October.

A critical 1962 Supreme Court antitrust precedent, Continental Ore v Union Carbide, is particularly relevant here because it requires courts to look at an accused company’s conduct “as a whole.” It spotlights the importance of recognising patterns of anticompetitive and illegal practices that lessen competition, maintain/extend market power and cause consumer harms, such as reduced innovation.

Overture

Overture is the first and oldest example in the pattern because it is the original IP infringement success that seems to have encouraged Google’s co-founders to build their overall ongoing business model around the advantages of eliminating competition by taking their IP and by implementing proven market-leading innovations as Google’s own.

Google’s infringement of Overture’s trade secrets and patent are so important here because they were essential and necessary for Google’s original advertising business model to launch, succeed and enable its 2004 IPO; and since then to generate over a half a trillion dollars of advertising revenues.

Evidently, Google took and used without permission the trade secrets and patented concept of the search advertising business model in 2001 from Bill Gross, founder of a company called Goto.com (renamed Overture).

Gross invented, pioneered and proved all the essential elements of a search advertising business model that Google’s founders knew little about until they came across him - ie, targeted search advertising, keyword ad auction model, performance price-per-click ads and the search syndication business model of paying websites for the right to handle their search requests.

Bill Gross’ inventions remain core to Google’s dominant AdSense advertising business model and its success today.

In 2002, Google started operating a search advertising model based on all of Bill Gross’ trade secrets and patented inventions. As Google’s search ad revenue quickly skyrocketed, Gross’ company,

Overture, sued Google for patent infringement.

In 2003, Bill Gross sold Overture to Yahoo for $1.63 billion.

In 2004, to clear the way for its IPO, Google settled the patent lawsuit with Overture-Yahoo for around $250 million, avoiding a trial on the allegations that Google stole the idea and auction method for keyword advertising, the fount of Google’s future search advertising success and eventual monopoly power.

Google evidently settled because it did not want investors to focus on the fact that its phenomenal revenue growth and business model was not driven by Google’s in-house innovation.

At the time, Scott Kessler, an analyst for Standard & Poor's, said: "It was difficult for Google to acknowledge that they need[ed] another company's technology to enable their primary business to operate.”

Apple

What made Apple's Steve Jobs so angry with Google and Android?

The simple answer is he felt Google's leadership profoundly betrayed the longtime personal trust and friendship of Apple's leadership in taking what Steve Jobs believed were Apple's most prized possessions.

The fuller answer tells of the once close Apple-Google relationship.

Some are familiar with Apple's Steve Jobs' strong views about Google-Android's infringement of Apple.

In Steve Jobs by Walter Isaacson, you find this famous quote: "I will spend every penny of Apple's $40 billion in the bank, to right this wrong. I'm going to destroy Android because it's a stolen product. I'm willing to go thermonuclear war on this."

However, few are familiar with the story of what made Steve Jobs this angry. Moreover, few are familiar with the length and closeness of the Apple-Google relationship that explains the depth of the betrayal Steve Jobs felt.

Concerning the closeness between Apple's and Google's leadership team, Steven Levy wrote: "There was so much overlap that it was almost as if Apple and Google were a single company."

Operating under conditions of strict secrecy, Apple started development of the iPhone in 2004. In August 2005, Google quietly bought the Android start-up, when no-one outside of Apple was supposed to know that Apple was working on the iPhone. Google Chairman Eric Schmidt joined Apple's Board in August 2006.

In May of 2009, the FTC indicated that it viewed that Google and Apple sharing board members was anti-competitive, but Eric Schmidt defiantly publicly represented that Google is not a "primary competitor" to Apple's iPhone.

Under pressure from the FTC, Schmidt resigned from Apple's board in August 2009.

In November 2009, Google outbid Apple to acquire mobile advertising leader AdMob. Then Google launched its first smart phone, the Nexus One, in January 2010, just seven months after Google's Schmidt publicly represented that Google did not compete with Apple's iPhone.

In March 2010, Apple sued Google-Android partner HTC for patent infringement of the iPhone. At that time, Steve Jobs explained: "We can sit by and watch competitors steal our patented inventions, or we can do something about it. We've decided to do something about it. We think competition is healthy, but competitors should create their own original technology, not steal ours.”

Skyhook Wireless

This little-known company is highly significant to the pattern because Google’s evident IP infringement of Skyhook’s trade secrets and patents was critical to its strategy of maintaining and extending its PC search and search advertising market power into the emerging mobile search and search advertising markets.

To spotlight how strategically critical Google viewed Skyhook to be as a competitive threat in mobile, when Google contractually tied Google search as the default search app on handset manufacturers’ and carriers’ smartphone home screens, the only other Google app it contractually required to be installed by default was Google’s location engine, also known as its “network location provider”.

In 2010, when the market for smartphones and mobile advertising was still nascent, Google’s number one location engine competitor, Skyhook Wireless, which was the original inventor and leader in wi-fi location targeting efficiency, charged that Google stole its trade secrets in an unfair business practices lawsuit and its patented technology in another lawsuit.

Skyhook sued Google saying that Google was acting in a predatory, anticompetitive way, in basically preventing it from doing business by forcing its distributor customers -- Motorola and Samsung -- to stop using Skyhook software in their Android phones.

Skyhook Wireless’s business was so damaged by Google predatory behavior that it effectively was forced to settle with Google for a reported $61 million in 2015.

Oracle

On 12^th August 2010, Oracle sued Google-Android for billions of dollars because it “knowingly, directly and repeatedly infringed Oracle’s Java-related property”.

The presiding federal judge in the case agreed to include an incriminating Google email that showed that Android officials in Google knew they needed to license the Java intellectual property in dispute.

That most damning evidence showed that Google’s founders wanted Google “to investigate what technical alternatives exist to Java for Android”, but Google employee Tim Lindholm said in an email: “We have been over a bunch of these and they all suck. We conclude we need to negotiate a license for Java.”

The court record has accumulated substantial evidence that Google knew that it needed to license Java but decided against doing so.

The anticompetitive harms of Google’s infringement of Oracle’s copyrighted Java APIs have been severe.

Google decided to build Android upon the foundation of Java’s source code because it was necessary to successfully jumpstart Google’s 2008 launch of both Android as a smartphone operating system and Android Market as the app store predecessor of Google Play. Apple, Microsoft, Blackberry and others had a head start in the mobile space. Google needed to leapfrog them quickly or risk lock-out.

Java provided both a technical and a business solution. Google infringed Oracle’s Java code without any Java licence or payment in order to: speed Android’s time to market by avoiding time consuming internal development; attract device makers and mobile operators that already used and trusted Java technology; credibly call Android “open source” via the Open Handset Alliance; give it away for free to device manufacturers and mobile operators, and drive fastest unit growth; and tap into Java’s existing community of millions of app developers to create an Android app ecosystem that would need an Android app sales channel like Android Market and later Google Play.

Google’s infringement of Java IP is the linchpin anticompetitive catalyst that ignited the viral growth that would lead Google from having no mobile OS and no app store to commanding the dominant Android OS and dominant Google Play app store in the world today.

Then to keep that first-mover-advantage and momentum going, Google anticompetitively leveraged its Google search dominance network effects into mobile search, OS and app distribution, by contractually requiring device manufacturers and mobile network operators that used Android to effectively preinstall Google Search as the default search engine, Chrome as the default browser, and Play as the default app store.

Oracle is in year 10 of its IP infringement lawsuit against Google. It has already included a Supreme Court win and currently involves Google’s latest appeal to the Supreme Court.

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Scott Cleland served as Deputy US Coordinator for International Communications & Information Policy in the George HW Bush Administration. He is President of Precursor® a responsible Internet consultancy. He is the author of “Search & Destroy, Why You Can’t Trust Google Inc” and has testified before the Senate and House antitrust subcommittees on Google, and before Congress, 16 times.

Antitrust

Innovation

Intellectual Property

Google