Recall the minor Googlegate that erupted in October when it was revealed that Google's Internet telephone service, Google Voice, discriminated against certain high-cost rural locations by refusing to deliver traffic to those locations. The FCC ultimately sent Google a series of questions inquiring about the nature of its phone service and the justification for the discrimination. You can read about this controversy in my earlier post, Google: Phone Giant or Internet Giant?
Now, according to the December 8 WSJ article, one of the new services the dominant search engine is banking on is Google Goggles, which allows Google users to pull up information about a landmark or a product by taking a picture from a cellphone instead of typing in a query. The WSJ reports that the "service is only available currently for cellphones running versions of Google's Android software." In other words, if you want to use this cool new Internet service, you can't do so with your iPhone or other phones with non-Google operating systems. Or, in still other words sounding in FCC-speak, Google Goggles is offered on a discriminatory basis that favors devices using Google's operating system in a way that violate net neutrality principles.
Now I understand that Google's position will be that this has little to do with net neutrality because the Goggles offering is an "information" rather than a "telecommunications" service, or an "edge" service rather than one at the "core" of the network. But as I explained in Google: Phone Giant or Internet Giant?, this twenty-year old regulatory distinction is increasingly difficult, if not impossible, to maintain in today's digital age, at least not without imposing substantial consumer welfare costs that outweigh any consumer benefits. Under a net neutrality rule that prohibits discrimination, there will be constant, never-ending litigation concerning the not-so-bright line to be drawn between services at the core and at the edge of the Internet. Apart from the direct litigation costs, the intangible costs imposed by the uncertainty of not knowing what the regulators ultimately will do are likely to be great. Investment and innovation do not thrive in the face of such regulatory uncertainty and instability.
It may be that Google, exercising its increasing and highly visible political muscle, will itself be able to wriggle out from under the neutrality strictures. Indeed, the FCC's net neutrality rulemaking proposal appears going in to exempt "application" providers from the neutrality mandates, while focusing solely on Internet service providers.
I almost wrote next: "Well, more power to Google" for, thus far, avoiding FCC regulation. But in light of Google's dominant position in the web search and adjacent markets, and the way it is exercising its political muscle pushing for neutrality mandates that would entrench its own business models, I don't really want to wish "more power to Google." What I wish is that Google would realize that the "government-as-enforcer-of-Internet-neutrality-game" is a dangerous one, even for itself. Because once the government starts regulating any part of the Internet ecosystem, the necessarily blurry regulatory lines among Internet participants can be used as a sword turned any which way.
Having said all this, please do not mistake my bottom line, which I have stated in this space many times: I do not advocate subjecting Google to the FCC's outstretched regulatory arms, even though Google is doing everything it can to ensure that Internet service providers' freedom to innovate and develop new business models is constrained – or neutered, if you will. And my position would be the same even if the FCC were to decide – wrongly – to impose net neutrality regulations on ISPs.
I prefer to stand, consistently, on the fundamental principle that in today's competitive and technologically dynamic broadband Internet environment, neither Google, no matter its increasing Web dominance, nor the ISPs, should be regulated by the FCC in a fashion akin to last century's telephone common carriers, which was the same as the 19th Century's railroads.
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