Attention Mr. Almunia: Does YouTube’s Bad Behavior Tell You Something?

Who took on the Standard Oil men and whipped their ass
Just like he promised he’d do
There ain’t no Standard Oil man gonna run this state
It’s gonna be run by folks like me and you

Kingfish, by Randy Newman

Monique Goyens, the Director General of the European Consumer Organization (BEUC), published an opinion piece in the leading German newspaper Frankfurter Allgemeine Zeitung (in both German and English) sharply critical of the embattled EU-Commissioner for Competition Joaquín Almunia and the controversial antitrust settlement that Mr. Almunia would like to reach with Google.  Or said another way, the controversial settlement that Google would like Mr. Almunia to reach with Google.

Mr. Almunia shouldn’t feel too badly.  The U.S. Federal Trade Commission let Google go free on antitrust charges, too.

Yes, the FTC actually hired Beth Wilkinson as the outside lawyer in charge of the Google antitrust investigation–because, you know, there just aren’t enough experienced antitrust lawyers among the professional staff at the FTC.  That would be the same Beth Wilkinson who was mentored by Jamie Gorlick when the two worked at the Clinton Department of Justice.  The same Jamie Gorelick who represented Google in the negotiation with Eric Holder’s Department of Justice of Google’s $500,000,000 settlement for violating the Controlled Substances Act.  The same Eric Holder who succeeded Jamie Gorelick as Deputy Attorney General during the Clinton Administration.  That would be the U.S. Federal Trade Commission that let Google off the hook entirely after Google gave money to an advocacy group that gave Federal Trade Commission Chairman Jon Leibowitz an award for his work.

But what’s interesting about Ms. Goyens’ critique of Mr. Almunia’s settlement with Google is that the EC competition laws are not only supposed to protect businesses, they are also supposed to protect consumers.  And Ms. Goyens’ association represents 41 consumer association in 31 European countries.  So Mr. Almunia needs to take this into account–a bunch of consumers aren’t buying his deal:

Increasingly, people who use Google are placing themselves in a virtual gated community, or what was once known as „a company town“ – you can go anywhere you like, as long as you use the company’s roads and you can buy anything you like, as long as you shop at the company’s stores.  Today, this online company town does not objectively lack the supply of anything, but the cost is a tremendous state of dependency.

Google is fond of saying that they lack a monopoly because their competition is “one click away”.  This is, of course, complete crap when it comes to the millions of people who were suckered into using Gmail, and Ms. Goyens makes short shrift of this argument as well:

Google continues to expand its range of activities and develop its own services and products – Gmail, YouTube, Maps, Calendar to name a few. It is becoming something of a gatekeeper to the internet and is uniquely positioned to direct consumers to information, while it continues to acquire a great deal of users’ personal information. To do without Google is often no real option when the worldwide number 2 – Baidu – is from China and could represent a language hurdle for most European consumers for the foreseeable future.

You have to understand that Mr. Almunia has been teasing this Google settlement for years.  The settlement is an alternative to a “Statement of Objections” which increasingly seems to be Mr. Almunia’s only realistic alternative.  A Statement of Objections is essentially a full blown antitrust investigation into Google and is something that Google really, really doesn’t want.  If Mr. Almunia continues down his current path, the European Commission is going to look not only toothless, but purposely ineffectual.  I mean, anyone who grew up in Texas politics would be lacking in manners and intellect enough to just assume the dude is on the take.  I don’t mean he’s getting brown paper bags of cash or selling cleans out of his trunk for walking around money, but something is just downright weird about the whole thing.  I’d need someone much smarter than me to explain it all, because surely Mr. Almunia has an explanation.  Perhaps one provided him by his new buddy Google Chairman Eric Schmidt, call sign “Uncle Sugar.”

If public officials try hard enough, it is possible that the public they purport to serve will hang a sign around their necks that’s really nigh impossible to remove.  Ms. Moyens gives us a taste of the kind of commentary that will no doubt dog Mr. Almunia the rest of his life if he continues on this path with his Google settlement:

After years of investigations and lengthy negotiations, the Competition Commissioner of the European Commission, Joaquin Almunia, has announced his intention to reach a settlement with Google. Despite the unanimous rejection of the proposed remedies by market players and consumer organisations, Commissioner Almunia has decided to leave the negotiating table empty handed.

The same is not true for Google. Not only do their latest set of proposals fail to address the problems identified by the Commission, but they appear to be tailored to maximise Google’s profits and commercial interests. The Commission is essentially offering Google a free pass to continue manipulating search results and excluding vertical service competitors from the online search market. The impact on consumer choice and innovation has been and will be significant.

The new proposals are based on the incorrect assumption that more prominent (and purchased) display of some of Google’s competitors is the best solution to discriminatory behaviour. Google and the Commission continue to ignore the views of the majority of complainants, third parties and the European Parliament to end its current practices of manipulation of search results.

Instead of remedying the discrimination within the market in which the California-based multinational is clearly dominant, the deal as it stands will provide Google with additional tools to strengthen this dominance. Side effects of the Commission coming away empty handed from a lengthy investigation will be the emboldening of Google and that future action by the Commission will be less likely and credible. Such a situation is worse than doing nothing.

Yes, worse that doing nothing.  Here’s a new data point for Mr. Alumnia:  Google’s bullying of independent labels in its “negotiation” (if you can call it that) with YouTube.

The very company that Mr. Almunia wants to let off the hook is threatening independent labels with a take or leave it deal that will penalize the labels on YouTube if they don’t give Google the terms it wants on an as-yet-unlaunched music service designed to compete with Spotify.  This will not only harm small businesses, but also the very consumers that Mr. Almunia is supposed to protect.

And why do you think that Google thinks they can get away with those threats, Mr. Almunia?

Because you let them.