Riding the Back of the Net Neutrality Tiger

There was a time when I knew JFK's 1960 Inaugural Address by heart. Well, most of it anyway. In reading the interview in the April 9 edition of Business Week with Goggle's CEO Eric Schmidt, I was reminded of one of JFK's many memorable lines: "In the past, those who foolishly sought power by riding the back of the tiger ended up inside."

President Kennedy was referring to countries, not Google. But Google's market cap of approximately $146 billion (give or take a few billion) now exceeds the annual Gross National Product of more than 70% of the world's countries. Small wonder that the BW article was entitled, "Is Google Too Powerful?"

The tiger I have in mind that Google is riding is net neutrality, of course. In the Eric Schmidt interview, curiously net neutrality didn't come up. But it was on my mind at a couple of points in the Q&A. Schmidt was asked: "As Google passes 50% and rising of search market share, will that dominance change the way Google operates?" Answer: "I'm not sure I agree with the word dominance. Dominance is defined not by majority market share but what you do with it." Now I know that Google preaches, as Schmidt said during the interview, that "we would never try to violate people's trust." But I am wondering why Google is so sure--sure enough, apparently, to seek new laws and regulations--that broadband providers will adopt practices that harm consumers, at the same time that it asks lawmakers, policymakers, and the rest of us to accept that it would never try to violate our trust. And if the important question in Google's mind in assessing market power is "what you do with it," surely broadband Internet consumers to date have not experienced demonstrable harms sounding in net neutrality justifying new, broad anticipatory laws and regulations.

Another Q: " Some people think that Google has not been as transparent as it should be in areas such as click fraud, use of data, and its intentions in various markets....[D]o you think that Google needs to be more open?" A: "There's a real tradeoff between the sort of secret sauce, the special knowledge that Google has, and our business policies. An example would be that a lot of people are very interested in how our data centers work. But we've decided not to talk about that, because we don't see any end-user benefit for knowing how the data centers work and it would simply change the competitive landscape if we did."

Well, it's nice to know that, at least when it comes to its own business policies, Google understands that there are real trade-offs between sharing the "secret sauce" and changing the competitive landscape. In other words, I think Schmidt is saying that if new laws or regulations mandated that Google must be "transparent" and "open," like it is lobbying to have the government mandate openness for broadband providers, its own competitive position might suffer. So Schmidt would prefer not have the government mandate such transparency for Google's data centers or otherwise.

Now, I happen to believe that even with Google's position as the dominant search engine, there is no present need for new government mandates to regulate its business practices at its data centers or otherwise. Trust me. This is not because Google says that ""we would never try to violate people's trust." It is because I think, especially in light of the technological dynamism in Google's market, and in light of the existing competition, and the potential competition, consumers will be protected adequately without the tangible and intangible costs imposed by new regulations that likely would chill innovation and investment. And I think the same is true in the broadband Internet market.

I just wish, in pursuing its net neutrality lobbying strategy, Google would remember JFK's admonition: "In the past, those who foolishly sought power by riding the back of the tiger ended up inside."