Gab Drops Its Lawsuit Against Google; Considers Trying Its Hand At Lobbying

from the trading-pressure-from-below-for-pressure-from-above dept

It seems like barely enough time has passed for the filing fee check to clear, but Twitter-alternative Gab's lawsuit against Google has already been dropped. (h/t SophisticatedJaneDoe)

The dismissal [PDF] -- only the second item on the docket -- is as brief as the complaint (which alleged anti-trust violations by Google) was long.

Pursuant to F.R.C.P. 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure, the plaintiff GAB AI, INC. and or their counsel, hereby give notice that the above-captioned action is voluntarily dismissed, without prejudice against the defendant.

Gab alleged Google's booting of its app from the Play store amounted to a anti-competitive action in service of its "partnership" with Twitter. Twitter had given Google access to its fire hose for its search engine. Google's booting of Gab, however, appeared to amount to little more than an inconsistent application of Play Store standards. This made Google look bad, but didn't seem to back up claims of a Google-Twitter conspiracy to keep Gab's app out of the public's hands. (Adding to this lack of evidence was the fact Twitter was never listed as a defendant.)

There's nothing to be gleaned from the voluntary dismissal -- one that would allow Gab to refile in the future if it again feels this is the best route to take. Gab has released a statement shedding some light on the subject, however. The platform's reps feel Gab's time and energy may be better spent pursuing other options.

In light of antitrust attorney Joseph Simons being nominated to lead the FTC, Gab has decided to withdraw our antitrust case against Google. Gab has been in productive back-channel talks with Google since our initial filing of the case. We were encouraged to resubmit our app before the Android store, as opposed to going forth with continued expensive litigation, of which would have cost the company a great fortune in both time and resources. Google has instead offered Gab an opportunity to resubmit our application for an appeal to be reviewed for placement on their Google Play Store, which we are in the process of doing as we speak.

Gab also appears to be getting into the lobbying business. The post notes it will be focusing its efforts on pushing Congress towards taking action against "monopolized tech giants." Gab is also considering filing a complaint with the FTC and, apparently, expanding its tech business CV by "building a… decentralized internet."

While none of these efforts would prevent Gab from suing Google over its ejection of the Gab app, it at least appears the platform's principals have decided there are better ways to be the change they want to see in the tech world.

Filed Under: antitrust, cda 230, lobbying, section 230
Companies: gab.ai, google, twitter

DOJ Staffers: The T-Mobile Sprint Merger Will Reduce Competition And Should Be Blocked

from the merge-ALL-the-things dept

We've already noted how, despite some empty promises by Sprint and Japanese-owner Softbank, the company's (second) attempted merger with T-Mobile will be a notable job killer. How bad will the damage be? At least one analyst predicts the total number of jobs lost could be more than the total number of people Sprint currently employs (around 28,000). Other analysts estimate the deal could kill something closer to 20,000 jobs, and even the most optimistic tallies put the job damage at somewhere closer to 10,000 lost positions -- most of them either in retail (as duplicate stores are closed) or among redundant management positions.

The reduction in major wireless competitors from four to three will also have an obvious, detrimental impact on competition in the space, reducing price competition in the sector and potentially putting an end to the recent, welcome return of unlimited data plans. Just ask career staffers at the Justice Department, who this week leaked word that many of them would be advising agency bosses to block the deal unless their goal is less competition in the space:

"When Sprint and T-Mobile bring their expected merger plans to the U.S. Department of Justice for antitrust review, the career staff who do the bulk of the probe into whether the deal will hurt customers will likely recommend that it be stopped, three people familiar with their thinking told Reuters...The Justice Department's main concern is how the deal would affect competition in the U.S. mobile sector. Antitrust staff will want to let T-Mobile continue as it has done, aggressively wooing customers away from market leaders Verizon Communications and AT&T, the people said.

Of course whether DOJ and FCC leaders listen to this advice is another question entirely. Trump's "populist" rhetoric on the campaign trail suggested a tough antitrust President who'd block mega-mergers that harm the public interest and market health, but his decision to approve AT&T's mammoth Time Warner merger suggests those promises were relatively hollow. And as you may have noted Trump's FCC boss Ajit Pai is a rubber stamp for giant telecom operators; a commissioner that has yet to stand up to industry on any major subject of note during his five-year tenure.

As such, this is being seen as the first real chance for the administration to put its money where its mouth is, and the same Reuters report above notes that analysts are decidedly split on whether that will actually happen:

"An informal poll of seven antitrust experts contacted by Reuters found them split between predicting that the deal would be stopped and saying they did not know if it would be allowed. A tiny fraction of deals are blocked. As influential as the career staff is, the final decision will lie with Trump's antitrust enforcer at the Justice Department, Makan Delrahim, and the Federal Communications Commission."

There's an ongoing mantra in the telecom space that blind deregulation is some kind of panacea, and that by stripping away all government oversight (including antitrust enforcement) of the broken and uncompetitive sector, connectivity and competition will magically sprout from the sidewalks. But history and real-world data consistently undermines that theory. Regulators' decision to block AT&T's attempted acquisition of T-Mobile -- and Sprint's first attempted merger with T-Mobile -- caused in a notable spike in competition thanks to a resurgent T-Mobile, resulting in unlimited data plans, better international roaming rates, the end of punitive long-term contracts, and more.

Again, Sprint has any number of potential suitors or partners that could help the company better compete (Altice, Comcast, Charter, Dish) without reducing overall competition in the sector. Crushing T-Mobile's motivation to disrupt the market by eliminating a major competitor is a notably bad idea, no matter what the industry-funded sales pitches over the next few weeks will try to suggest.

Filed Under: antitrust, doj, fcc, mobile
Companies: sprint, t-mobile

Alt-Right Twitter App Developers Sue Google After Gab.Ai App Is Kicked Out Of The Play Store

from the symbolic-acts-of-litigation dept

Google's decision to boot a controversial social media app from its Play store has resulted in a lawsuit. And it's a very strange lawsuit -- one that attempts to turn inconsistent moderation efforts into anti-trust allegations against Google.

Some background information is necessary. Some of this can be gleaned from the complaint [PDF], which was put together by Marc Randazza (of First Amendment fame), Ron Coleman (key to the Slants' Supreme Court trademark win), and Jordan Rushie (who has participated in/fought against copyright trolling efforts). Given the litigation credentials behind the filing, it's surprising there's not more to the complaint.

But first, the background:

Gab.ai is the plaintiff in this suit. Gab sprung to life as a Twitter alternative, built in response to a perceived crackdown on alt-right accounts. It's not as though the accusations are false. Twitter has frequently applied its moderation standards unequally, resulting in bans and shadowbans of alt-right accounts. As the lawsuit points out, Twitter removed alt-right figurehead Milo Yiannopoulos verified checkmark -- not because Milo wasn't who he said he was, but because it apparently didn't like him or his millions of followers. Six months later, Twitter banned him for good, citing his harassment of actress Leslie Jones.

So, much like Voat became a Reddit for people who thought Reddit censored too much speech, Gab became Twitter for those who felt Twitter censored too much speech. Gab became a mostly-free alternative Twitter, supported by subscribers, and heavily-populated by alt-right Twitter users.

Gab claims to embrace free speech. It engages in very little moderation of users' content, only culling certain content like child porn, posting of private information, threats, spam, and use of the platform to sell illegal goods. It does not police "hate speech" like Facebook, Twitter, and Google do. It's the last part that bothers Google. Or at least that's the stated reason for Google's ban of Gab from its app store.

But this wasn't Gab's first app store ban. Apple blocked it twice, first citing pornographic content as the reason. (Obviously, Twitter allows pornographic posts and yet remains available in the iOS app store...) Gab added porn-blocking by default but was rejected again by Apple, with the company pointing to its rules on hate speech.

Pretty much the same thing happened with Google. Google claimed Gab did not include a "sufficient level of moderation" and did not act to remove content "encouraging violence and hate against groups of people."

Gab's response to Google's ban pointed out it shouldn't need to police speech that isn't actually unlawful just to stay in Google's app store graces. Roughly a month after Google's decision, Gab has sued. What should probably have been left to public shaming of Google for belatedly distancing itself from Gab's social media construct has now become a plea for federal intercession.

The lawsuit runs down the history of Gab, as well as Twitter's shutdown of prominent alt-right/white supremacist accounts. The antitrust action appears to be limited to Google's partnership with Twitter. Google now has access to Twitter's "firehose" -- all public posts from all Twitter users in real time. This allows Google to return tweets in its search results.

Apparently, this partnership -- combined with Google's domination of Android app services -- is evidence of Google's anticompetitive behavior. The problem with the argument is Google's unwieldy application of its app store policies doesn't appear to be Google attempting to eliminate a competitor. Gab doesn't directly compete with Google+. If anything, it's a Twitter competitor. Google's only interest in Twitter is better search results. Kicking Gab out of the app store doesn't remove its web presence, nor does it prevent Gab users from downloading the app directly from Gab itself.

Much is made of the danger of sideloading apps. And it's true sideloading poses greater risks to Android users, especially if they're careless with their sources. While this behavior is somewhat discouraged by the Android system during phone setup, the option to sideload can be turned on and off as needed to allow the installation of apps not included in Google's Play store.

The lawsuit makes better points about removal from the Play store having deleterious financial effects on Gab, including the loss of ad placements in Google store and targeted ad campaigns utilizing Google's tools to find new app users.

Included in the filing are several reasons why Gab's removal is inconsistent with Google's own app policies. But that doesn't turn this into an anticompetitive act on Google's part. The end result may be indistinguishable but there are plenty of innocuous reasons for the app's removal that have nothing to do with Google killing Gab to protect its partnership with Twitter.

But that's pretty much what the filing hopes the judge will find. Google's history of anticompetitive behavior is detailed in the lawsuit, as well as its forays into patent enforcement. Twitter's inconsistent application of its policies to shut down alt-right accounts is also detailed, providing evidence of nothing, considering Twitter isn't party to this lawsuit.

Hidden in all of this are two paragraphs on Section 230 which misconstrue protections afforded to entities like Gab.

Even if it were possible for a social media platform to censor "defamatory and mean-spirited content" generated by 250,000 users, a level of content censorship by a social media platform that extended to "defamatory" and "mean-spirited" content place at risk that service's status as a protected Internet Service Provider, as opposed to a publisher or speaker, under 47 U.S. Code § 230, also known as Section 230 of the Communications Decency Act ("CDA").

Unlike an Internet Service Provider, a publisher or speaker is not granted the "safe harbor" benefits of Section 230, and may be held liable for defamation or other torts or other liability arising from content published on a platform it owns or manages.

This assertion greatly misconstrues how Section 230 protections work. This would be worth noting in any case, but especially so since it involves Marc Randazza, who has penned screeds pointing out the opposite: moderation efforts by ISPs do not undermine Section 230 protections.

I do delete comments from time to time. If I notice them and they are “excessively violent” or “harassing” or “otherwise objectionable,” I delete them. Why? First, its my blog, so my fucking rules. You have a right to express yourself, but not necessarily here. Second, I have absolutely no doubt in my mind that I can delete one comment and leave 100 filthy, objectionable, harassing, defamatory, nasty, and brutish comments and still not be liable.

Section 230 has been a wonderful thing. It has allowed the Internet to grow, and allowed services like Facebook, Craigslist, Fling.com, Pissedconsumer.com, and any number of other fun websites to exist. It allows me to have a comments section on each post, without worrying about whether I’ll be liable for something posted there. It does foster free speech online. So hooray Section 230.

And the relevant part of Section 230, being brushed aside here to portray Gab's lack of moderation as somehow being essential to its 230 protections:

No provider or user of an interactive computer service shall be held liable on account of—

(A) 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…

Indeed, it's this very part of CDA 230 that likely will help Google get this lawsuit tossed. Under widely established precedents concerning CDA 230, Google is free to moderate its platform -- in this case, the Android Play Store -- however it likes, without increasing its own liability. To misrepresent CDA 230 by saying that moderation takes away CDA 230 protections... and then ignoring that those same protections probably prevent this lawsuit is just strange.

This is a bizarre lawsuit, to say the least. It almost looks like a proxy salvo in the ongoing war between the "Alt-Right" and the "Establishment Left," which is no longer political parties in power but West Coast tech companies shutting down speech they don't like.

The problem is, Google can legally police speech however it wants. It pays the price in goodwill and public perception, but arbitrary enforcement of app store policies isn't the same thing as antitrust violations, even if the end result is the death of apps and platforms.

At the end of it, we're left with a lawsuit that serves mostly to cater to its base: pissed off Gab users. That's fine, if that's all you want from your legal representation. Google's booting of the Gab app isn't any more correct than this resulting lawsuit. It's a move that caters to its base: progressives who feel speech they don't like shouldn't be allowed anywhere.

Google's motivations for the shutdown are probably as simplistic as they are inexcusable: Google simply didn't want to be known as the place where people could go to get the Gab app. Apple's earlier rejection relegated it to the Android ghetto and Google is engaging in broken windows policing. It's ugly all over and it does nothing to reconcile diametrically-opposed thinking, but it's not anticompetitive. It's just stupid.

Filed Under: alt right, antitrust, apps, cda 230, moderation, play store, section 230
Companies: gab.ai, google, twitter

$89 Billion AT&T, Time Warner Merger Approval Looking Likely Despite Trump Pledge To Block Deal

from the merge-ALL-the-things dept

Needless to say, consumer advocates and smaller competitors aren't too keen on AT&T's $89 billion plan to acquire Time Warner. They argue that AT&T's long history of unethical behavior, empty promises, and anti-competitive shenanigans make it extremely likely the company will use its greater size and leverage to ill effect. They worry that AT&T will make it harder for competitors to license content necessary to compete with AT&T's DirecTV Now streaming service, and arbitrary usage caps and other tricks like zero rating to similarly put competitors at a disadvantage.

Traditionally, these kinds of vertical integration deals aren't blocked because it's harder to clearly prove potential antitrust harm, even if AT&T has a thirty-year documented history of all manner of fraudulent behavior. On the campaign trail, Trump repeatedly promised that this was a deal his administration simply would not allow, given the "concentration of power" the deal would deliver:

"In an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN -- a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.

Trump, of course, said a lot of things on the campaign trail, including promising to break up Comcast's already-completed 2011 acquisition of NBC, something Trump couldn't have done even if he wanted to. And while some thought that Trump's disdain for Time Warner-owned CNN would throw a wrench in the deal works, there's no indication that's going to happen. AT&T has already streamlined its chances for the deal by selling any assets that would have triggered an FCC review, and Trump subsequently appointed a DOJ antitrust boss on record stating he has no problem with the deal.

The fact that Trump's FCC has become a rubber stamp for every shitty idea coming out of AT&T's, Verizon's and Comcsast's collective heads should also likely clue people into which direction deal approval was leaning.

So not too surprisingly, media reports on the progress of the merger talks indicate AT&T's conversations with antitrust officials have shifted from whether the deal will be approved to finalizing what, if any conditions will be affixed to the deal:

"The early-stage discussions suggest that government lawyers have nearly finished their months-long look at how AT&T, the biggest pay-TV distributor, would reshape the media landscape with its bid for the owner of CNN and HBO -- and shows that the sides have moved on to talking about how they can make the merger work without harming rivals."

More accurately, they've moved on to talking about how they can make it appear that the merger could work without harming rivals, since, as we've long documented, the conditions affixed to these kinds of deals are traditionally only theatrical in nature. More often than not, the conditions are proposed by these telecom companies themselves, often requiring that companies do something they'd already planned to do anyway. In AT&T's case, it usually involves fudging their existing broadband deployment numbers, then promising a new broadband expansion that may or may not actually materialize.

We've documented how AT&T in particular is a long-standing professional at making all manner of bullshit promises if their mergers get approved, with regulators never really learning much of anything with hindsight. With Trump being no stranger to flimsy telecom promises of his own (his promise to block this deal being example A), the merger's going to create a wonderful opportunity for bullshit synergies the likes of which we may never see again.

Filed Under: antitrust, competition, doj, donald trump, fcc, merger
Companies: at&t, time warner

All Out Of Ideas, Legacy News Providers Ask US Gov't For The Right To Collude Against Google & Facebook

from the failure-to-adapt dept

About a month ago, Buzzfeed's founder and CEO, Jonah Peretti summed up my feelings about watching old news media organizations running around everywhere blaming Google and Facebook for their own failure to innovate:

“A lot of the traditional media players are opportunistically attacking Facebook and Google because Facebook and Google have figured out a better model for delivering information and entertaining people which is real-time, personalised, shareable and global – all these things that you can't do in broadcast and print,” he says.

“These traditional media companies have had decades of massive cashflow and they decided to stockpile that instead of investing in digital. They just kept managing earnings on their traditional businesses even though we have known for 20-plus years that the internet was going to be a big thing and now all these things have unfolded, with some surprises but in a way that was not that hard to predict. Now we are at the point where Facebook’s and Google's revenues are starting to be a substantial portion of the pie, they are attacking them, saying it is unfair.

“The truth is that Facebook and Google have always taken a long term perspective – so has Netflix, so has Amazon – that the internet would win out in the end. A lot of the big media companies always took a quarter-to-quarter perspective, a maximise earnings perspective, and that has resulted in them being in a tough position and so they attack Facebook and Google because of it.”

This is, more or less, what we've been arguing for nearly two decades. There are a ton of opportunities for these companies if they actually embraced digital -- but they did so in drips and drabs and often stupidly chasing fads, rather than actually figuring out how to deliver content that people actually wanted in a way they wanted it. So, for the past few years, they've focused on whining about how it's so gosh darn unfair that the companies who did figure it out -- Google and Facebook -- are now making lots of money.

And... now those legacy firms are seeking the nuclear option. The News Media Alliance -- formerly the Newspaper Association of America -- has spent the last few years pushing bad idea after bad idea to try to "save" the news organizations that failed to actually innovate (for example: asking Trump to whittle away fair use). We mocked the fair use proposal as complete nonsense, but in order to make it happen, the News Media Alliance is... asking the government for a special exception to antitrust law to allow its members to collude against Google and Facebook... and to generally make the internet less interesting and more expensive.

Today, the News Media Alliance – representing almost 2,000 news organizations – called on Congress to allow publishers to negotiate collectively with dominant online platforms. The objective is to permit publishers to have concrete discussions with the two dominant distributors of online news content, Google and Facebook, on business model solutions to secure the long-term availability of local journalism produced by America’s newsrooms.

Supposedly there are three goals here: to get greater copyright control over news and to create a snippet tax, to force Google and Facebook to work with news organizations on some sort of subscription program, and to get "a fair share" of revenue and user data. None of these make much sense. As Matt Schruers at the Disruptive Competition Project points out, all three of these goals have issues:

Let’s consider those three objectives: IP protection, subscriptions, and a “fair share” of revenue and data. First, news publishers do not need an antitrust exemption to lobby for more IP protection; federal law already allows it. (As I’ve noted before, News Corp. is already quite fond of doing so.)

Second, Google and Facebook are already pursuing new strategies for supporting subscriptions. The NMA proposal, however, suggests a collective turn to subscription models, removing consumers’ ability to choose among products with different business models, including ad-supported ones. Individual newspapers should have the freedom to experiment, pursuing the model best suited to their business. Consumers are best served when they can choose between competing models.

Third, Chavern wants a “fair share of revenue and data.” In pursuit of this, the NMA would make an end-run around copyright law’s fair use doctrine, which permits the indexing of content, so as to force digital services to pay for the privilege of sending traffic to their sites. As I discuss below, news publishers have tried this in Europe. It hasn’t gone well.

There are lots of other problems here as well. As Mathew Ingram pointed out, there's tremendous hubris in the NMA members thinking that they're the only ones producing quality journalism:

This sense of entitlement is at the core of what the NMA is proposing. In effect, it is suggesting that mainstream newspaper companies are the only entities capable of producing quality journalism, and therefore they deserve a get-out-of-jail-free card so they can engage in what amounts to collusion. And they are hoping Congress will see Google and Facebook as the enemy.

Here’s a thought: What if these newspaper companies had spent a little more time trying to compete over the past decade or so, instead of relying on their historic market control to keep their profits rolling in? What if more had tried to improve their websites and their mobile versions, so that users wouldn’t install ad blockers, or turn to other solutions like Facebook Instant Articles?

Every single competitive threat the newspaper industry has faced, from Craigslist to Facebook, has been visible long before it decimated the industry’s profits, and most of the newspapers in the NMA did little or nothing to deal with them until it was too late.

Indeed, some more local news organizations are already pushing back against the NMA's plans. The Local Media Consortium, which admits some overlap with NMA members, points out that this whole thing seems like the wrong approach:

First, Chavern’s position ignores the LMC’s work during the last four years forging partnerships essential to us as providers of quality local content and local business solutions. Those partnerships align the news industry – print, broadcast and ultimately digital – with tech companies in a symbiotic relationship. The LMC has provided revenue opportunities for all levels of local media – and we’ve done that while leveraging our scale to garner both the attention and respect of the tech platforms. We have built partnerships based on shared value, not entitlement.

Second, I am concerned about the mixed messages the NMA’s stance is creating within the industry and our own LMC membership. The NMA board includes several members of the LMC, and these board members may not be fully aware of our relationship with tech companies. Chavern’s op-ed suggests a lack of knowledge of the tens of millions of dollars our partnership with Google has netted the industry, or the inroads we have made influencing innovation with Google, Facebook, Apple and Yahoo

That is, the LMC is looking at new tech and innovation as an opportunity. The NMA, on the other hand, seems to be looking at it as the enemy. This is a fairly typical response for legacy industries who failed to adapt, then flail about wildly against those who succeeded, but it's never good for consumers (there's a reason we don't allow collusion to happen after all...).

Rafat Ali probably summed all of this up best:

Look, I get it. Google and Facebook are big and successful and making lots of money. And because these news organizations failed to do much to adapt (or, at best, made superficial embraces of digital), they're pissed and they blame Google and Facebook for their own failures (not unlike the recording and film industries). But that misses the point. There's a reason why this happened, and we shouldn't have the US government reward those who didn't innovate by taxing those who did. The end result would be bad for the public. It would be bad for innovation.

And, sure, I'm saying this as a news publication that is concerned about Google and Facebook's power in the market -- but it's on me to figure out how to adapt and leverage the benefits that platforms like that (and others) bring. Not to go running to the government seeking to collude with others and to cement weak business models in place. Frankly, for companies seeking to blame others rather than their own failures, it's probably best that they go out of business sooner, rather than later. Clear the field for others who are willing to innovate and embrace technology, rather than whine about it.

Filed Under: antitrust, collusion, competition, innovation, news, newspapers
Companies: facebook, google, news media alliance, newspaper association of america, nma

Comcast, Charter May Soon Get Even Larger With Joint Acquisition Of Sprint

from the merge-ALL-the-things!!! dept

With the telecom sector seeing the Trump administration as somewhat of a blank check, the industry is busy considering all manner of mergers and acquisitions that would have been blocked under any number of previous administrations for being competition-killers. Verizon has made an offer to buy Charter (Spectrum), Sprint has been trying to merge with T-Mobile, AT&T's pushing for approval of its acquisition of Time Warner, Altice USA is gobbling up smaller providers hand over foot, and the industry is consolidating at a faster rate than ever.

While obviously not all M&As are bad by default, ignored in this rush is that several recent high-profile telecom deals have been utter shitshows for the American consumer.

While the Obama administration did block both AT&T and Sprint's attempted acquisitions of T-Mobile (which wound up being a very good thing for competition and consumers), its approval of Frontier's acquisition of Verizon's unwanted DSL customers in Florida, California and Texas resulted in endless outages and problems courtesy of a bungled integration. The Obama administration also approved Charter's $79 billion acquisition of Time Warner Cable and Bright House, resulting in not only much higher prices for consumers, but (somehow) even worse customer service for already one of the least-liked companies in America.

Undaunted by any potential history lessons, now Trump-era merger mania rolls on with the news that Charter and Comcast are considering either a joint acquisition of Sprint, or a minority ownership stake in exchange for a more lucrative network sharing deal for both companies' wireless services:

U.S. wireless carrier Sprint Corp is in talks with Charter Communications Inc and Comcast Corp about a partnership to boost the two U.S. cable companies' wireless offerings, according to sources familiar with the matter. Sprint, controlled by Japan's SoftBank Group Corp, has entered into a two-month period of exclusive negotiations with Charter and Comcast that has put its merger talks with U.S. wireless peer T-Mobile US Inc on hold till the end of July, the sources said on Monday.

Said deal could involve an outright acquisition of Sprint by the two cable giants, though one source suggests that's unlikely at first. More likely is a joint minority investment by both companies in exchange for a discount network sharing arrangement to help fuel both cable companies' attempts to get into the wireless sector. Comcast has already launched a WiFi-centric wireless voice service that uses the Verizon Wireless network for backup, and Charter is planning a similar service for 2018. That would, depending on how it went, likely evolve into a full acquisition of Sprint down the road.

Both companies had already struck a deal to partner on handset contracts, including a promise not to acquire a wireless carrier without first informing the other company. That deal was criticized on some fronts as a way for the two cable companies to avoid having to directly compete as they pushed their respective services to market.

How all of this shakes out (and whether it's good for anybody not named Sprint, Comcast or Charter) remains unclear. The deal could be an improvement over a Sprint acquisition of T-Mobile as it would not only keep the four major wireless competitors intact, but would bolster Sprint's historically rocky balance sheet ensuring it remains a somewhat viable competitor. That said, Charter and Comcast are no strangers to anti-competitive behavior, and adding another entire service segment to this well-documented dysfunction could prove disastrous for what's already some of the worst customer service in any industry in America.

Filed Under: acquisition, antitrust, broadband, competition, fcc, mergers, mobile
Companies: charter, comcast, sprint

Three Thoughts On EU's $2.7 Billion Antitrust Google Fine

from the thinking-this-through dept

By now, of course, you've probably heard that the EU Commission has fined Google €2.4 billion for antitrust violations, specifically regarding shopping search (there are at least two other investigations going on around antitrust questions involving Android and Adsense). The specific issue leading to this fine is that Google, for years, has been pushing its own comparison shopping results in response to searches on products, and other comparison search vendors feel this is unfair, as users are more likely to just jump to Google's shopping options in the boxes up top -- usually called the "onebox" (for what it's worth, I almost never click on those boxes, in fact, I almost never use Google for product search, preferring other, better, dedicated sites -- but that's a single anecdotal point, while the EU is citing some data it claims supports its position). Anyway, rather than digging all that deep, let's go with three thoughts I had in reading through the EU's announcement (linked above), Google's response and some of the other coverage.

1. I still don't understand why Google didn't handle this differently starting years ago. Three years ago, we wrote about this in connection to the antitrust fight over "place reviews" where Yelp & TripAdvisor made the fairly compelling (and data-backed) argument that Google users would prefer if the "onebox" were populated using Google's search algorithm, rather than only showing Google's review pages via Google Local/Zagat/whatever it's called. The same thing could apply somewhat to shopping search as well, and pull from other shopping search engines -- and, voila, no more antitrust issue. In that setup, competition in the market rules -- and if Google can produce the best results, it wins. If others can do better, then they win. Seems like a fairly straightforward solution as it would have eased the pressure on Google, and wiped out this kind of fine. Indeed, such a response would even feel more "Googley" in the early-2000's definition of "Googley" where the company seemed much more willing to drive people elsewhere on the web, rather than keep people in.

2. Even given that first point, I'm still... nervous about having European bureaucrats (or, really, any bureaucrats) telling any company how they can design their webpages. As Wired's Klint Finley points out, once bureaucrats -- who have no idea the realities of designing search results pages, let alone designing any webpages -- start telling websites how they can and cannot design their sites, trouble follows. I know that some are saying (and I've talked about this in the past) that this is just the EU slapping down big American companies for being "big" and "American" but I really think this is a case of EU regulators getting so deep in the weeds and then deciding that Google is too big and that they (the bureaucrats) don't like how its shopping search results work. That kind of meddling in webpages should worry everyone. Yes, you can say that it will only be used against giant companies... but once you open the door to bureaucrats telling you how your webpages can work, they might not stop at just the big ones. Danny Sullivan summed this up nicely:

   Next up: EU to decide a search engine offering news, image & local search is somehow a violation of being a "fair" search engine. https://t.co/hUAYAbO6V9

   — Danny Sullivan (@dannysullivan) June 27, 2017

3. Given all that: will this actually change anything substantial? Even if Google accepts this and doesn't appeal (which it probably will...) it can easily afford the fine. But, more importantly, will this actually help other comparison shopping engines? That's much less clear. That same article (by Rob Pegoraro) has a number of interesting quotes, including a few from Jan Dawson of Jackdaw Research noting that in the market for product searches (as in my anecdotal experience), most don't start at Google:

   “Around half of searches for products now start on specific e-commerce sites or apps, especially Amazon in the countries where it operates,” emailed Jackdaw Research principal Jan Dawson.

   Dawson also noted: "Although those comparison shopping sites still exist, they're far less relevant today, and even a change to Google’s search engine isn't going to turn that around."

So... if this isn't going to hurt Google and isn't going to help other companies in the market, then... what's the point exactly? Yes, Google could have done things differently, but this doesn't help really.

Filed Under: antitrust, eu, eu commission, fines, product search, search
Companies: google

DOJ Refuses FOIA Request On Emails, Claiming 'Personal Privacy'

from the that's...-not-how-this-works dept

We've talked in the past about how government FOIA officers seem to really love exemption b(5) which covers "inter-agency or intra-agency memorandum or letters which would not be available by law to a party other than an agency in litigation with the agency." But, in my experience, I've seen a ton of the next exemption: the b(6) exemption, often called the "privacy exemption." Officially, the law (5 USC 552(b)(6)), says only that "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy."

That seems like a perfectly reasonable exemption. Even if it is part of a government discussion, we don't want the government revealing medical files or something of a similar nature. But, over the years, this has gotten abused in weird ways, such as the time a FOIA officer used b(6) to redact Beyonce's name in a FOIA request about Beyonce. Really.

However, now I think we've seen the b(6) exemption to end all b(6) exemptions. This came to investigative reporter David Sirota, who filed a FOIA request to find out about emails between Makan Delrahim and employees of the DOJ's antitrust division. This is potentially useful info, because Delrahim was just nominated to head that very division. But, more importantly, Delrahim has been a powerful lobbyist for Anthem who tried to help it get its merger with Cigna approved -- an effort that just recently failed in court, but may have another chance with Delrahim in a position of power.

Thus, Sirota made a fairly standard FOIA request for communications between Delrahim and the DOJ's antitrust division during the time that he was working as a lobbyist for Anthem. And, stunningly, the DOJ came back with a Glomar response (you know, the infamous "we can neither confirm nor deny...."), pointing to b(6) as the reason why (along with b(7)(C) which is for records that "could reasonably be expected to constitute an unwarranted invasion of personal privacy" -- kind of a repeat of b(6), really).

If you can't read that, the key paragraph notes:

Please be advised that we can neither confirm nor deny the existence of records responsive to your request. If records did exist, acknowledging communications between Antitrust Division employees and private individuals without their consent would constitute a clearly unwarranted invasion of personal privacy, and could reasonably be expected to constitute an unwarranted invasion of their personal privacy. Such information is, accordingly, exempt from public discourse in accordance with 5 U.S.C. §§(b)(6) and (7)(C)

This is... wrong. That's not even remotely close to how those exemptions work. Tons of FOIA requests to the government regularly turn up emails from private individuals. To say that merely confirming or denying the existence of such records would violate privacy under FOIA is laughable.

The FOIA glomar rejection letter is signed by Sue Ann Slates, who is the chief of the FOIA unit at the DOJ's antitrust division, and has been for years. But it literally took me less than 5 minutes to find an example of Slates signing off on FOIA responses that include tons of personal emails from private individuals. Notice, that one (more properly) notes that some portions of the emails may be redacted under (b)(6), but certainly not any admission that such emails exist. Hell, within that very FOIA response, there's this:

That's an email header revealing a bunch of emails, both of government officials and private individuals. Such revelations in FOIA responses are quite common. Revealing the simple fact that Delrahim -- as a lobbyist working on antirust issues -- might have emailed the DOJ's antitrust division (where he also used to work) is in no way the kind of "privacy violation" that is intended under FOIA's exemptions against revealing "personnel and medical files."

I don't know if Sirota is intending to appeal or file a lawsuit over this, but it feels like, once again, we have FOIA officials abusing their power to avoid responding to legitimate FOIA requests and hiding behind incredibly expansive interpretations of FOIA exemptions.

Filed Under: antitrust, david sirota, doj, foia, foia b(5), foia b(6), makan delrahim, privacy, sue ann slates

In Dodging FCC Review, AT&T's Time Warner Mega-Merger Just Got Much Easier Under Trump

from the merge-ALL-the-things! dept

There are about 100 AT&T lobbyists currently making the rounds in Washington, trying to convince regulators and the press that the deal will provide an incredible boon to consumers. The folks who actually try to protect consumers aren't so sure, arguing that a larger combined company could make it harder than ever for streaming competitors to license the content they need to compete with AT&T (and its own streaming service, DirecTV Now). And that's before you even get to the fact that AT&T's using usage caps to give its own services an unfair leg up in the market (aka zero rating).

But AT&T's path toward deal approval just got notably easier. While the deal will be reviewed by the DOJ, AT&T and Time Warner are configuring the deal so that it doesn't trigger any of the requirements for FCC review. As it stands, the FCC's jurisdiction would only extend to the deal with the transfer of certain spectrum licenses, or one of Time Warner's TV stations in Atlanta. But Time Warner just got done stating they'd be selling that station ahead of the merger. And new FCC boss Ajit Pai says he doesn't see the need for FCC involvement in the review process:

"Pai said that because the transaction will involve no license transfers, the merger would not come before the FCC. Last week, Time Warner said that it would sell its sole broadcast station, WPCH in Atlanta, to Meredith Broadcasting for $70 million. "That is the regulatory hook for FCC review. My understanding is that the deal won’t be presented to the commission.” Pai’s remarks came at the Mobile World Congress on Monday."

That, of course, leaves whether AT&T's latest mega-merger gets approved solely in the hands of the DOJ, with Trump as the wildcard. There's a certain segment of analysts that still thinks that Trump's disdain for Time Warner-owned CNN's news coverage could kill the deal (the President repeatedly promised to reject the deal on the campaign trail). But it's not clear these analysts quite understand the "synergies" this merger will provide AT&T (historically a pro at making bogus merger promises) and Trump (also an apparent expert at taking credit for job creation he had nothing to do with).

Trump and AT&T would be like a 70s supergroup -- with bullshitters instead of musicians. As such, I'd imagine the deal gets approved by the DOJ, but under an absolute cavalcade of public relation bloviation the likes of which we've never seen before -- all promising that the deal will create jobs, protect the nation's children, expand broadband deployment, and save the planet from potential alien invasion. AT&T, for its part, continues to promise in letters to concerned Senators (pdf) that this latest mega-merger is all "about giving consumers what they want":

"Put simply, this merger is about giving consumers what they want. Together, AT&T and Time Warner will create exciting new ways for consumers to enjoy video anytime, anywhere, and on any device, with unprecedented levels of customization and interactivity. The merger will allow us to offer customers more attractive bundles of broadband and video services, prodding cable companies and other competitors to respond by improving their own services. And the merger will further incentivize AT&T and other wireless carriers to deploy lightning-fast 5G wireless technology faster and deeper in their networks. As a result, this deal will increase competition and accelerate the innovation/investment cycle, all to the benefit of American consumers."

Doesn't that sound lovely? While reports still seem to suggest Trump personally opposes the deal, he's been appointing regulator chiefs at most key agencies that pride themselves on a "light regulatory touch," and for whom blocking such a deal would be dramatically out of character. Ultimately, it's likely that the opportunity for bogus job creation claims will be too hard for Trump to ignore, resulting in some cognitive dissonance gymnastics among those Trump supporters who actually took his campaign pledges to thwart harmful media consolidation seriously.

Filed Under: antitrust, doj, fcc, mergers
Companies: at&t, time warner

Report: Verizon Considering Comcast Merger In Supernova Of Dysfunction

from the bigger-is-always-better dept

Despite Trump's criticism of the AT&T Time Warner merger (largely believed to be due to negative CNN coverage), most Wall Street and telecom sector analysts expect the next few years will see an explosion in previously-unthinkable mega-mergers. Sprint is expected to make another bid to acquire T-Mobile after the deal was blocked by regulators back in 2014. Comcast or Charter are expected to make their own bid for T-Mobile if Sprint can't come up with the cash. Other rumored acquisition targets for giant telecom companies include Dish (and its hoarded spectrum) or any number of massive media empires.

But one of the more unlikely rumored M&As that keeps popping up is a Verizon acquisition of Comcast. The idea was floated by UBS analyst John Hodulik in a recent research note to investors, with Hodulik claiming the deal provides incredible "synergies" while propping up Verizon's fifth-generation wireless (5G) ambitions:

"Densification of wireless networks required to meet the needs of video-centric subscribers increases synergies of cable-wireless combinations and provides the springboard for 5G-based services," he proclaims. "A roll-back of Title II re-classification could further increase incentives for cable," he adds, casually citing the likely dismantling of net neutrality and the FCC under Trump.

He put forth a number of models that include Dish fusing with T-Mobile or other variations. But he noted that a Comcast or Charter merger with Verizon would create "significant synergies" and "integrated products" while being "accretive to revenue and EBITDA growth."

Adding to this speculation this week is a New York Post report claiming that Verizon is looking to acquire either Comcast or Charter:

"Verizon Chief Executive Lowell McAdam may be getting ready to answer rival AT&T’s moves to buy DirecTV and Time Warner. The New York wireless giant is weighing the acquisition of a cable company to help grow demand for its wireless data products, two well placed sources told The Post. The CEO told friends at the Consumer Electronics Show in Las Vegas earlier this month that he wants to buy into cable, one source said.

"They need it for 5G,” said a second source, confirming McAdam’s interest. The most likely targets would be “Charter or Comcast,” the source noted."

The problem is the deal doesn't make a whole lot of technical sense given the companies' dramatically different networks. Verizon has no shortage of core network transit capacity to fuel its own 5G ambitions. And while the cable industry's large network of WiFi hotspots could be used to offload 5G wireless users, Verizon has actively been trying to get out of the fixed-line broadband business. The company has largely frozen its FiOS fiber expansion, and has spent the last few years actively trying to drive away DSL customers it doesn't want to upgrade. Verizon's trying (with mixed results) to pivot to media and advertising.

While Verizon may be interested in NBC, would it saddle itself with tens of millions of new residential broadband customers just as it's trying to back away from the saturated residential broadband market? A more likely effort would involve the "smaller" acquisition of a pure media company like CBS to keep pace with AT&T's $100 billion Time Warner bid and Comcast NBC Universal. Verizon's own streaming service is being called a "dud" by the company's own advertising partners, and owning a richer catalog of original content would go a long way to prop up Verizon's goal of becoming a Millennial advertising juggernaut.

Much of the chatter could simply be Wall Street cashing in on rumor-triggered telecom stock movement. That said, the competitive repercussions of fusing two of the biggest broadband providers and reducing competition further would be monumental. Whether a Verizon Comcast superunion happens or not, it's becoming incredibly clear that Wall Street believes we're entering a new era of rubber stamp regulators, where no deal is too big, and the consumer impact and employment toll of these kinds of megadeals is only a distant, fleeting afterthought.

Filed Under: advertising, antitrust, broadband, content, mergers
Companies: comcast, verizon