-By Scott Cleland
My latest Google antitrust white paper, “Googleopoly IV: The Googleopsony Case,” is the first antitrust analysis which connects-the-dots between Google’s search advertising selling monopoly and Google’s information access buying monopoly or “monopsony” by explaining and documenting how Google is harming competition in digital: news, books, broadcasting, artwork, documents and analytics; and harming consumers seeking quality digital information that is not free.
(Googleopoly I was the first public analysis of why Google ultimately would emerge as a monopoly and Googleopoly II & III were the first public antitrust analyses why the DOJ should block the Google-Yahoo ad agreement, which the DOJ did block 11-5-08.)
Anyone trying to see-the-world-whole and and understand how the Internet’s digital information ecosystem fits together and is devolving– needs to read this white paper.
In addition, anyone who is trying make sense of the hornet’s nest of objections to the Google Book Settlement and journalism’s difficulties in getting paid fairly for their information, will find that many “light bulbs will go off” when they read this white paper.
The white paper is heavily-documented with 59 cites from ~30 sources, but most interesting are the 32 Google quotes which lay out, in Google’s own words, Google’s monopsonistic vision and clear awareness of their monopsony market power.
The abstract/executive summary of the white paper, including the paper’s conclusions and recommendations, follows.
In blocking the Google-Yahoo Ad Agreement November 5, 2008, the Department of Justice (DOJ) determined Google was a search advertising monopoly attempting to use the ad agreement to extend its monopoly into search advertising syndication. Google’s pattern of anti-competitive restraint of digital commerce continues largely undeterred. Google currently is extending its monopsony market power — as the dominant digital information wholesale broker to the global Internet audience — by restraining digital commerce in: news, books, broadcasting, artwork, documents and analytics.
- The thesis of this white paper is that Google is systematically extending its monopoly selling power in search advertising as monopsony buying power over much of the world’s digital information.
- The core insight of this white paper is that Google has learned that to fulfill its information-organizing mission it does not need to own the world’s information, it only needs to effectively gain and maintain control of many of the derivative digital uses of that information that are necessary for Google’s model to make the information accessible and useful: i.e. search-ability, storage in Google’s datacenters, compiling usage and monetization data, and the analytical ability to utilize that data.
- The warning of this white paper is that the old adage “information is power,” is particularly apt here, because arguably Google has assembled more global market power over more information, more information types, and more information sources — with less checks and balances on that power — than any entity ever.
This heavily-documented 22-page white paper has 59 cites from ~30 different mainstream sources. It uses 32 Google quotes to prove Google’s monopsonistic vision and clear self-awareness of its monopsony power. It also documents a pattern of anti-competitive Google behavior across six different info industries.
Conclusions:
- Access control of digital information now matters more than ownership of digital information.
- If digital information is to be valuable, the digital information monetization mechanism must value it.
- Google’s game is rigged against traditionally valuable information and non Google information.
- Google has converted wanton disregard of copyrights into a powerful anti-competitive network effect.
- The Internet or technology does not make information free. However, Google is trying to make info free.
- Information is power and de facto control of “all the worlds information” is unprecedented.
Recommendations:
- The DOJ/FTC should establish and publicize a hotline phone number and web address where those who believe they have been harmed by Google’s monopoly/mpnopsony market power can confidentially report evidence.
- The varied interests which have publicly filed copyright infringement or antitrust suits against Google should come together and file a cross-industry class action antitrust suit against Google.
- The DOJ should investigate, and if the evidence warrants it, prosecute Google for a broad pattern of anti-competitive exercise of monopsony power over digital information competitors.
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Scott Cleland is one of nation’s foremost techcom analysts and experts at the nexus of: capital markets, public policy and techcom industry change. He is widely-respected in industry, government, media and capital markets as a forward thinker, free market proponent, and leading authority on the future of communications. Precursor LLC is an industry research and consulting firm, specializing in the techcom sector, whose mission is to help companies anticipate change for competitive advantage. Cleland is also Chairman of NetCompetition.org, a wholly-owned subsidiary of Precursor LLC and an e-forum on Net Neutrality funded by a wide range of broadband telecom, cable and wireless companies. He previously founded The Precursor Group Inc., which Institutional Investor magazine ranked as the #1 “Best Independent” research firm in communications for two years in a row. His latest op eds can be seen at www.precursorblog.com.
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