Three years
ago, European Commissioner Neelie Kroes was a ‘Prosumer Champion’, defending
European Internet users from Microsoft’s abusive behaviour as the
dominant European – and global - PC
operating system vendor. She forced Microsoft to permit choice of Web browser for end users, as
well as search. European prosumers – those who rip, mix, burn, blog, tweet or
just update their Facebook status - were saved from monopoly. Or so some
thought.
The browser
war over, Ms Kroes explained that she was instituting a new European Interoperability
Framework to ensure
that “we do not have to fight an epic antitrust battle every time we want
interoperability”. The idea was to bias government policy and law towards
openness, to ensure that users were not locked into proprietary standards.
Interoperability would stop a world where you have to ask permission to
innovate. Together with the enforced openness of networks through the Citizen Rights and Better Regulation
Directives, and their accompanying Declaration of Network Neutrality, which were passed on 18 December
2009, the Teenies were to be the decade when interoperability and openness won
out over corporate control and segregation. How is that working out so far?
We know that
net neutrality has been abandoned as a policy by Ms Kroes personally, with
pesky Netherlands and Slovenian legislators
(who passed net neutrality laws in 2012) the only champions of the open Internet so far amongst the
27 member states. Microsoft for 10 months refused to allow browser choice by
default in Windows 7 in 2011, resulting in a massive fine of €561m levied in March 2013, a further skirmish in the browser
wars in which it had previously been fined €497m in 2007 and €860m in 2012. For
a company as massive as Microsoft, a total of almost €2,000,000,000 is peanuts.
Even today, Internet Explorer is the most widely used browser, though the
promise of free software Firefox is gaining ground while data-harvesting Google
Chrome languishes far behind, alongside walled garden enthusiasts Apple’s
Safari.
Google is
involved in the new war, for control not of the desktop but of our personal
data. While Facebook has since 2008 outstripped MySpace in social networking, a
market which has grown tenfold in 5 years, Google now dominates Internet
advertising, and is extending that lead into other sectors, notably e-commerce,
video advertising and mapping for location-based commerce. Extending your monopoly, hard-won
with innovative products, excellent engineering, well executed alliances and
fortuitous timing, into downstream product and service markets shows that
Google is copying Microsoft’s strategy from the 1990s. So has the European
Commission learned its lessons from the decade of Microsoft investigation and
then five years of litigation? Can we achieve interoperability without an epic
antitrust case? Google was first complained of in 2008 – how far have we got?
The answer
is almost nowhere, though we have so far avoided an epic antitrust case because
Google gave voluntary undertakings rather than being forced into a formal
settlement (Article 9 not Article 7 in the legal
jargon). Google has
apparently agreed – subject to formal closure of the case – that it will flag up clearly when it is
inserting non-neutral Google-affiliated links that appear before what you asked for – the
Internet’s most popular results. That is most of the settlement – an alleged abusive monopolist will flag
up where it is abusing that dominance. Does that sound like a consumer victory?
The EC has caved in on interoperability
and preventing abuse of a vertical monopoly, just as it earlier did on net neutrality (almost as
soon as the Commissioner recovered from her mauling by rightly suspicious
Parliamentarians at her confirmation hearing in March 2010, for failing to
guarantee consumer protection from network operators trying to block rival
content). Why has it caved in? To avoid a fight, and because Google achieved an
even more overwhelming victory in the United States, gifted to it in January this year by
Obama’s outgoing first term appointed Federal Trade Commissioners in the wake of the 2012 general
election, that multi-billion dollar lobbyist festival of political
backscratching sand backsliding.
Why does the
European Commission want to achieve that Pyrrhic victory without a fight? It is
in partly political – Google is seen as a greater innovator than the copyright
and patent maximalist European corporates, so European defeat for Google on
these grounds would threaten the home teams too. This betrays the Commission’s
shaky grasp of digital innovation, unless one attributes darker motives to
their support for big corporates over smaller true innovators and creators, not
to mention prosumers. The political also figures in the need to be seen to be
besting the US regulator, in a piece of pure theatre, Google pretending to feel
the pain of the EC solution, and US commentators pretending to be outraged at
EC interference. Even worse, the suggestion is that Commissioner Almunia wants
his part in history not only as a member of Barroso’s austerity Commission, but
as the quasi-regulator of Google, yet
without extracting a binding settlement or any settlement at all outside the European Economic Area.
But the
argument also goes to law and economics, and a view of regulating software
code. How can Google discriminate? Because it writes both the best algorithms
for searching across the Internet for most popular – i.e. most linked – pages,
and also because it intersperses these with its own links, to its affiliated
e-commerce or features such as maps. The former is what we can call its neutral
public service function, which is why it became the search leader. The latter
is its attempt to extract economic rents form users based on its neutral search
reputation. Think of it as the distance between BBC and BBC World, its more
commercial arm. The difference is that Google has no rules separating its two
functions, and no requirement to be neutral, nor auditing of that neutrality.
As
prosumers, we “believe” that its code (i.e. search result) is neutral, not
because it used to claim a decade ago to “not be evil” before its legal obligation
became that of maximising publicly traded shareholder returns. No, we “believe”
because we have no option. It is the Sky Electronic Programme Guide without even
the minimal regulation that European law imposes on Sky. If it is to become
neutral, we need to take seriously that public service function.
That is the
challenge for the new Commission in its ‘Europe2020’ agenda, to create an environment in which
we prosumers are able to trust our famously lucrative eyeballs, and content
provided as neutral is demonstrated to be that – to the advantage of
advertisers (who would have a more transparent view of trusted providers and
their audiences) and the poor bloody infantry, the prosumer, whether small
business, sole trader, eBay buyer or web surfer.
Professor Chris Marsden is Law
Professor at the University of Sussex and author, with Ian Brown (Oxford) of Regulating
Code (MIT Press, 2013).
No comments:
Post a Comment