Mr. Fuddlesticks is an anonymous YouTube user who posted embarrassing videos about the Renton, Washington, police department. They convinced a judge to let them request Mr. Fuddlesticks’ personal information from Google, YouTube’s parent company. While the charges were eventually dropped, Research Associate Nicole Ciandella thinks this highlights a major problem in applying telephone-era laws to the Internet era.
In the latest example of big government run amok, several politicians think they ought to be in charge of which applications you should be able to install on your smartphone.
On March 22, four U.S. Senators sent a letter to Apple, Google, and Research in Motion urging the companies to disable access to mobile device applications that enable users to locate DUI checkpoints in real time. Unsurprisingly, in their zeal to score political points, the Senators — Harry Reid, Chuck Schumer, Frank Lautenberg, and Tom Udall — got it dead wrong.
Had the Senators done some basic fact-checking before firing off their missive, they would have realized that these apps actually enhance the effectiveness of DUI checkpoints while reducing their intrusiveness. And had the Senators glanced at the Constitution — you know, that document they swore an oath to support and defend — they would have seen that sobriety checkpoint apps are almost certainly protected by the First Amendment.
While Apple has stayed mum on the issue so far, Research in Motion quickly yanked the apps in question. This is understandable; perhaps RIM doesn’t wish to incur the wrath of powerful politicians who are notorious for making a public spectacle of going after companies that have the temerity to stand up for what is right.
Google has refused to pull the DUI checkpoint finder apps from the Android app store, reports Digital Trends. Google’s steadfastness on this matter reflects well on its stated commitment to free expression and openness. Not that Google’s track record is perfect on this front — like all firms, it’s made mistakes from time to time — but it’s certainly a cut above several of its competitors in the defending Internet freedom.
Today, the European Commission opened a formal antitrust investigation into Google to probe allegations that the firm rigged its search engine to discriminate against rivals. This intervention in the online search market, however, will distort the market’s evolution, discourage competitors from innovating, and ultimately hurt consumers.
Google isn’t a monopoly now, but the more it tries to become one, the better it will be for us all. When capitalist enterprises strive to earn a bigger market share, rival firms are forced to respond by trying to improve their offerings. Even if Google is delivering biased search results, it is only paving the way for competitors to break into the search market.
The European Commission is wrong to assume that Google possesses monopoly power. Google accounts for just 6 percent of all dollars spent on advertising in Europe. And even loyal Google users regularly find websites through competing search engines like Bing or through social websites like Facebook and Twitter.
Before resorting to tired old competition laws, European policy makers should remember that the Internet economy is hardly understood by anybody—including by regulators. We are in terra incognita; no one knows how information markets will evolve. But one thing is for sure: Online search technology cannot evolve properly if it is improperly regulated. Why make risky investments in hopes of revolutionizing Internet markets if marvelous success means regulation and confiscation?
The real threat to consumers is not from successful high-tech firms like Google, but from overreaching government interventions into competitive market processes. As economists have documented in scholarly journals, antitrust intervention is especially problematic in the information age, because it severely underestimates the critical role of innovation in dynamic high-tech markets.
In the information age, ingenuity—not market power—is the key to success. America’s high-tech sector is strewn with former market leaders who were no match for the relentless forces of creative destruction. Rapid, unpredictable change is the hallmark of the modern digital economy. Google may be on top in many high-tech markets today, but it won’t stay there for long unless it keeps innovating and delivering a superior search product.
This post was co-authored by Ryan Radia and Wayne Crews.
Scores.org has a post suggesting that Google is a monopoly because its “tentacles tap into sizable market shares” referring to the search engine, map services, YouTube, Android, Gmail, and Chrome. The accusations rest on suggestive grievances and a superficial analysis of Google.
They protest that a search of “email” on Google shows Gmail first and then Yahoo! Mail, and that Google searches show only Google Maps, not MapQuest or Yahoo! Maps. This is like accusing a restaurant of being a monopoly because they don’t show their competitors’ menus.
Besides, are Google users harmed by first seeing Google Maps or Gmail? Seattle is still west of Chicago on Google Maps, and Gmail still sends and receives emails, just like Yahoo!. These matters are peripheral though; the true superficiality of monopoly accusations comes from mistaking Google users as Google’s customers.
Real customers pay. Google users don’t. Users are inputs in Google’s production process. Google’s true output is ad space. A monopoly, weakly defined, exists when a firm dominates the supply of an output. Google’s revenues do not come from their search engine, YouTube, Gmail, etc. directly. If Google is a monopoly it is because they restrict the supply of ad space to charge a higher price.
But to control the supply of ad space on the web, Google must draw as many users as possible. Absent of a government granted monopoly right, to maintain market superiority Google must provide superior services to users.
If Google actually is a monopoly, the result is that consumers are exposed to less advertising. The economic loss is that less advertising leads to less trade between users and advertisers who would have advertised on Google, but could not afford to because of the monopoly price.
The monopoly case for Google is weak and superficially generated. Considering their resounding success the alternative rationale for monopoly accusations against Google is far more plausible: their competitors are seeking to use the government to curtail it because they can’t keep up.
In this world there are two ways to supplant a superior competitor: (1) produce a more superior product or (2) get the government to knock them down a notch — by forcing them to compete “fairly.” In the former the consumers benefit from innovation, in the latter consumers lose because innovation is stifled. Lesson of the story is that if it ain’t broke, don’t fix it!
Google has been making headlines after the company revealed over the weekend that its driverless cars have logged nearly 140,000 miles on public roads (see this awesome video clip). These robot cars are able to navigate traffic through a combination of GPS, radar, mounted video cameras, and laser range finders. The basic technology has existed for several decades and has gradually been improving. DoD’s DARPA sponsored a series of annual Grand Challenge competitions a few years ago, awarding a team consisting of Carnegie Mellon University and GM engineers with $2 million in 2007.
I find these events incredibly encouraging. America’s surface transportation technology has seen no significant improvements in 50 years (in the case of rail transit, make that 120). Sure, cars have all sorts of new technologies, from mp3 players to automatic parallel parking features. But the roads? No real breakthroughs since the Interstate system was devised. Cato’s Randal O’Toole, a longtime supporter of this sort of technology, had a Wall Street Journal op-ed in March praising the concept:
Driverless cars and trucks will be safer. They will also be greener, first by significantly reducing congestion, and eventually because vehicles will be lighter in weight due to reduced collision risks.
Perhaps most important, driverless vehicles will bring mobility to everyone, not just those able to pass a driver’s test. While many people will still choose to own a car, increased numbers may rely on car sharing. Outside of ultra-high-density areas such as Manhattan, driverless cars will render urban transit and intercity passenger trains even more obsolete than they are today.
The American automobile fleet turns over every 18 years, so if Mr. Burns’s prediction that driverless cars will hit the market by 2018 comes true, we could have a completely driverless system by 2036. State highway officials could accelerate this timetable by working with auto manufacturers to set standards and a transition path. State and local highway agencies could install wireless communication systems at major intersections and highways—a much less costly undertaking than building new roads, much less high-speed rail.
The technology seems to be making great progress, but there are impediments. As O’Toole notes, “the primary obstacles were legal and bureaucratic, not technological.” After Google’s announcement, a flurry of auto-bloggers questioned the legality — some not even masking their contempt for a driverless auto future, citing a know-nothing California DMV bureaucrat who claimed Google’s robocars “would be just a big step up from cruise control.” This is true, if “big step” is defined as “a revolution in personal automobility.” Indeed, outdated traffic laws are the biggest problems facing this technology. Of course, once automakers are ready to make the leap (or “big step”), there will be a lot of pressure on politicians and bureaucrats to update their then-out-of-date regulations. That’s a bridge we’ll have to cross when we get there.
There will always be technology naysayers. My favorite pessimistic comment comes from the Business Insider’s Henry Blodget, the once-famous Dot Com optimist who lost most of his money when the tech bubble burst in 2000 (while he was telling everyone to buy as many tech stocks as they could to stuff in their 401ks):
Why is Google developing this technology?
Why is Google spending the $10+ million of shareholder money per year the project consumes (15 engineers, plus drivers, plus the cars).
Isn’t there something closer to its core business that Google could spend this money on?
Blodget argues that Google is straying too far from its core business and that there are better things for Google to do that would enhance shareholder value. While “mission creep” might characterize Google’s path in recent years, one might argue it’s a feature and not a bug. Google has a lot of talent, and continues to draw the best and the brightest from around the world. Google’s chief asset is this talent pool. Since it became the king of search engines, Google has broadened its business model to include all sorts of non-search-related technologies — and management is willing to invest in long-term product development. And they’ve been quite successful! Rather than denounce a consumer technology that won’t go live for at least a decade, Blodget should try to understand the implications (and profit potential) of driverless vehicles:
- Congestion could be drastically reduced while still cutting road expenditures.
- Injuries and deaths caused by drivers would fall dramatically.
- Environmental concerns would be addressed as fuel wouldn’t be wasted by drivers sitting on congested roads and the cars could be lighter thanks to the decreased collision risk.
- And last but not least, this would be the most significant innovation in the automotive sphere since the development of the assembly line! If only Henry Ford had stuck to his “core business” and continued designing race cars…
Richard Morrison and Jeremy Lott team up with Marc Scribner, Iain Murray, Alex Nowrasteh and Ryan Radia to bring you Episode 91 of the LibertyWeek podcast. We respond to the President’s anti-anti-government speech, handicap the British elections, examine anger over immigration and chew over the threats to the Google-AdMob deal.
Richard Morrison, Jeremy Lott and the American Spectator’s Joseph Lawler assemble to bring you Episode 77 of the LibertyWeek podcast. We explore the Massachusetts Senate race, Google vs. China on web censorship, the debate over global warming in Detroit, the cost of doing business in Venezuela and the inspiring philanthropic response to the humanitarian crisis in Haiti.
The New York Times reports that several cell phone manufacturers are turning to Google’s free operating system, Android, to run on their upcoming smartphone models. The switch to Android is likely to hit Microsoft and its clunky Windows Mobile platform the hardest, as companies that previously used Windows for their high-end PDA-phones seek to cut costs and offer consumers a more customizable product.
With Google joining the ranks of Nokia, Research-in-Motion, Apple, and Microsoft developing in mobile phone operating systems, the big four wireless carriers signing on to offer Android phones within the coming year, the deployment of 4G networks slated to take place in 2010, mounting consumer anticipation for Motorola’s soon-to-be-released Droid, and reported rumors that Apple is about to end its exclusive distribution deal with AT&T, it’s difficult to take seriously critics’ claims that a lack of competition and carrier-device exclusivity contracts are restricting consumer choice and keeping prices prohibitively high.
Here is a letter I sent recently to The Wall Street Journal:
September 22, 2009
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281To the Editor:
Your article “Bad News for Broadband” (editorial, Sept. 22) hints at, but does not make, a key point: net neutrality proposals are driving a wedge between service providers like AT&T and content providers like Google.
Strange, is it not? Their interests are actually closely aligned. If AT&T upgrades its network, Google benefits from the increased bandwidth. If Google improves its products, AT&T benefits from increased demand for broadband.
Net neutrality proposals give companies the incentive to seek rents at each other’s expense when they could be benefitting from each other’s innovations instead. This must be music to the ears of lobbyists, but how sad for consumers.
Ryan Young
Fellow in Regulatory Studies
Competitive Enterprise Institute
Washington, D.C.
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