Thursday, April 16, 2015

Is the FCC Chairman Considering Going After Google?

Now that European Union regulators have formally accused Google of abusing its dominance in the online search market, inside sources say Federal Communications Commission Chairman Tom Wheeler is considering whether the FCC also should act to curb alleged abuses of the search giant’s market power here at home. 

At the core of the EU’s case against Google is the question of whether Google’s secret search algorithms are skewed in a way that disadvantage Google’s competitors and favor its own business segments. In bringing the charges, the EU regulators stated: “The Commission is concerned that users do not necessarily see the most relevant results in response to queries – to the detriment of consumers and rival comparison shopping services, as well as stifling innovation.”

In other words, the EU is concerned that Google, controlling approximately 90% of the online search and search advertising market in EU countries, is acting in a non-neutral fashion to the detriment of consumers and its smaller online rivals, or potential rivals. Although Google only controls about 67% of the online search market in the U.S., Chairman Wheeler is said to be concerned that the dominant Internet giant, or “edge provider” in FCC parlance, may be using its secret search algorithms to act in a “non-neutral” biased fashion to disadvantage its online rivals and potential competitors.
In fact, FCC insiders say that Wheeler is concerned not only about the impact of Google’s actions on Google’s struggling existing competitors, but also about the adverse impact on the “next Google,” the one still in the garage. After all, for many years Google, a long-time staunch proponent of new FCC “net neutrality” mandates for Internet service providers, proclaimed that, in light of its own powerful market position, it advocated adoption of net neutrality mandates not because it was concerned about harm to its own position. Instead, Google declared, early and often, and selflessly according to those experienced in the curious ways of Washington, that it was concerned only about the “next Google.”
Despite Google’s well-known and documented close relationships with those in high places in the Obama Administration, sources say Wheeler may be undeterred. These sources say he is now prepared to resist any pressures exerted by President Obama to back off – bolstered by his belief that Google has declared many times in public, and even in private meetings, that its main concern, truly, is protecting the “next Google.” Those on the inside of the agency bureaucracy say Wheeler apparently is now committed to the ideal of ensuring neutrality and non-discrimination throughout the entire Internet ecosystem.
When a coterie of top-level staffers met with Chairman Wheeler and questioned whether the Commission would want to test its authority to investigate Google’s allegedly harmful discrimination resulting from the search giant’s secret algorithms, he supposedly brushed aside these concerns. According to sources, Wheeler maintains that, now that the Commission has adopted its 300-page order, with its 1777 footnotes, implementing net neutrality mandates, the agency has a sound basis for extending its neutrality and non-discrimination mandates to the edge providers, certainly at least to dominant ones such as Google.
Wheeler reportedly said that Google likely is subject to the neutrality mandates under the Communications Act’s Title II common carrier provisions because some of its services, such as its ubiquitous messaging and chat services, fall within anyone’s ordinary understanding of regulated “telecommunications.” And Google is now entering markets around the country as an actual broadband Internet service provider in competition with other broadband ISPs, such as Comcast and AT&T, that are now classified as regulated “telecommunications” providers under the FCC’s net neutrality order.
What’s more, at the meeting with his staff, Wheeler explained that, aside from agency jurisdiction under Title II, the FCC possesses authority under Section 706 of the Communications Act to require Google to cease its allegedly harmful discriminatory practices. According to the informed sources, Wheeler is adamant that the Commission’s reach under Section 706 extends to Google because the search giant’s actions impeding the “next Googles” will adversely impact broadband deployment and adoption. In other words, Google’s non-neutral actions strike at the very heart of the “virtuous cycle” theory of investment and innovation.
Apparently, when a top staffer suggested that it might not be wise to test Section 706 ’s jurisdictional reach even while the Commission’s net neutrality order is subject to court review, Wheeler reminded her that the major ISPs themselves – admittedly under the threat of potential Title II regulation – have accepted a broad reading of the Commission’s authority under Section 706.
The sources said that Wheeler reminded those in attendance that the main virtue of the “virtuous cycle” theory upon which the Commission’s expansive view of its Section 706 authority depends is the downright appealing nature of the slogan.
And, then, before abruptly ending the meeting, Chairman Wheeler added this:
“Let’s not forget Google’s own appealing slogan, ‘Don’t Be Evil.’ I don’t see how any company with a slogan like ‘Don’t Be Evil’ can come in here and argue against any actions we take that I think are needed to promote the virtuous cycle. That would be like calling me evil, and I’m not going to stand for it – no matter how well-connected Google is over at 1600 you-know-where!”
[IMPORTANT NOTE: The sources relied upon for this blog were in my head, not at the FCC’s headquarters building. For many of the same reasons that I oppose the FCC’s strict net neutrality mandates, based on what I know now, I am not in favor of regulating Google’s search business here in the U.S., and I am concerned about the EU’s action. But regardless of what I may think about regulating Google, it is more likely now than it was before adoption of the FCC’s most recent net neutrality order that Google and other major “edge providers” will be regulated by the FCC in the future.]