ICOMP

The Initiative for a Competitive Online Marketplace (ICOMP) is delighted to announce the American Society of Media Photographers (ASMP), the premier trade association for the world’s most respected photographers, as our latest Council Member.

ASMP’s Executive Director Eugene Mopsik said, “We are delighted to have joined the ICOMP Council, ICOMP’s support and respect for intellectual property rights are very much in line with ASMPs principles. We look forward to working together on this and other matters to ensure a fair and competitive online marketplace.”

Founded in 1944 and with nearly 7,000 members, ASMP takes a leading role in promoting photographers’ rights, providing education in better business practices, producing business publications for photographers, and helping to connect purchasers with professional photographers.

We look forward to working together with ASMP in our campaign for a free, open and competitive online marketplace.

For further information please visit www.asmp.org

Regards,

The ICOMP Secretariat

The Initiative for a Competitive Online Marketplace (ICOMP) is delighted to announce leading vertical search company Nextag as our latest Council Member. Serving web-users since 1999, Nextag’s best in class consumer experience and search technology supports over 30 million people across the globe every month with their online product shopping, travel and event ticketing needs. Headquartered in San Mateo, California, Nextag and its Guenstiger subsidiary located in Hamburg, Germany together operate websites in 14 countries, including 10 countries in Europe.

Nextag’s CEO Jeffrey Katz said, “We are delighted to join the ICOMP Council and join forces to support a healthy online environment, encouraging fair competition, transparency, data privacy and respect for intellectual property protection.”

Nextag and Mr Katz have long advocated the principles that are needed to ensure the future of e-commerce remains competitive and vibrant. Testifying before the Subcommittee on Antitrust, Competition Policy & Consumer Rights of the U.S. Senate in September 2011, he explained how Nextag, and indeed other competing vertical search businesses and consumers, are harmed by the abuse of a dominant position in the online marketplace.

More recently, Mr Katz authored an opinion piece published in The Wall Street Journal that furthered these arguments, which are key to ICOMPs principles.

We look forward to working together with Nextag in our campaign for a free, open and competitive online marketplace.

For further information please visit www.nextag.com

Regards,

The ICOMP Secretariat

Google’s record of obstructing government investigations is growing by the day.  The latest example comes from Texas, where it is being reported that Greg Abbott, the Texas Attorney General, has launched legal proceedings against Google for failure to co-operate with the state’s antitrust investigation into Google’s search and advertising monopoly (The State of Texas v. Google Inc., case number D-1-GV-12-000887, in the District Court of Travis County, Texas).

The Texas Attorney General (an office established in 1836 to defend the laws and constitution of Texas and represent the state in litigation) launched the antitrust investigation two years’ ago.  The focus is on Google’s monopolisation of search advertising, which is the closest equivalent to the EU’s prohibition on abuse of a dominant position.

The investigation also covers Google’s search discrimination and manipulation practices described in the recent case as “preferential placement of Google vertical search services, demotion of rivals in Google’s search results rankings and the unauthorized use of user reviews, star ratings and other content that Google scrapes from competing vertical search sites”, as well as “whether exclusivity provisions in Google’s contracts with web site publishers unlawfully foreclose competition for search advertising syndication deals”.

The new legal proceedings relate to Google’s refusal to hand over more than 14,500 documents which are necessary for the Attorney General to carry out the investigation.  The formal requests for these documents were made in July 2010 and May 2011.

Google has argued that the documents are covered by lawyer-client privilege, which allows the client to decline to produce them in court proceedings or government investigations.  The Attorney General does not accept this claim and believes that Google’s claims are improper and overreaching in an attempt to prevent disclosure of sensitive and relevant documents.  For example, Google claimed privilege for an email between non-lawyer Google executives “discussing their recommendation to change how Google uses review content taken from competing sites” (aka scraping).

Refusals to co-operate fully with government investigations seem to have become the default setting for Google.

In January 2012, it was reported that the most senior Korea antitrust official intended to impose maximum fines on Google for obstructing an investigation.  This followed reports that when the Korea Fair Trade Commission raided Google’s offices in Seoul in September 2011, the company obstructed the investigation by deleting key files from PCs and asking its employees to stay away from the office. In May, it was reported that further raids had been carried out, again in response to Google obstructing the KFTC’s investigation.

In April 2012, the US Federal Communications Commission fined Google $25,000 after concluding the company deliberated impeded an investigation into Spy-Fi, the Google project that scooped up emails, passwords and other personal information transmitted over unsecured wireless networks in homes located around the world.

In May 2012, the French Data Protection Authority (the CNIL) wrote to Google expressing its regret that responses to earlier questionnaires concerning Google’s privacy policies were “often incomplete or approximate”.

Apart from the general concern that obstructing and delaying government investigations may mean justice delayed or denied for Google’s victims, there is a specific concern that Google does not feel bound by the same rules as apply to other companies.  It is bad enough to ignore the complaints of customers, it is quite another to act in disregard of government agencies.

There is another angle to this which is also extremely interesting.  The Texas antitrust investigation is remarkably similar to that being undertaken in the EU.  In May, the European Commissioner responsible for Competition Policy (and Commission Vice President), Joaquin Almunia announced that he had written to Eric Schmidt, Google’s Executive Chairman, informing Schmidt that he had reached the preliminary conclusion that there are (at least) four areas “where Google business practices may be considered as abuses of dominance” and therefore unlawful under EU competition law:

• Google’s preferential treatment of its own vertical search services over those of competing offerings.
• Google’s unauthorised copying of content belonging to vertical search services and using this content on its own properties.
• Google’s de facto exclusivity with partner websites requiring them to obtain most or all of their search advertising from Google, foreclosing competing intermediation services.
• Google’s restrictions on portability of online search advertising campaigns from its AdWords platform to competing platforms, particularly for software developers.

It will not have escaped the attention of the European Commission officials undertaking this investigation that the rules on lawyer-client privilege are much narrower in the EU than in the US.  The main difference in European antitrust investigations is that communications between lawyers and their clients are only privileged if the lawyer is from an independent law firm (ie not in-house) and is a member of a recognised EU Bar.  Therefore, even if some of Google’s claims for privilege are upheld by the Texas court, similar claims would be very unlikely to be upheld in Europe.  It is just possible that Google has inadvertently handed the European Commission a roadmap to find out exactly what has been going on at the heart of Google.

David Wood,

ICOMP Legal Counsel

*The full Attorney General’s complaint, can be viewed here.

Following an investigation by the Federal Communications Commission, the UK’s Information Commissioner’s Office has today has asked for more information from Google regarding the gathering of personal data by its Street View cars. The ICO, in a letter to Google stated that personal information such as complete email messages, instant messages and their content, medical listings and legal infractions “was deliberately captured during the Google Street View operations conducted in the UK”.

The letter lists a number of areas that it wanted clarification on from Google. Specifically:

• what type of data was captured;
• when Google managers became aware of the issue;
• how the news was managed and;
• why the full range of gathered data was not represented in a sample the firm presented to it in 2010.

The ICO has also requested a certificate to show that the data had since been destroyed.

In response, Google has released a dismissive comment by email to the effect that, “the project leaders did not want and did not use this payload data. Indeed, they never even looked at it”.

Regards

The ICOMP Secretariat

As the gateway to the Internet for the vast majority of users, Google has unparalleled influence over which content and services people discover, read, and use. Before Google’s need for growth compelled it to look beyond horizontal search, this unfettered market power wasn’t necessarily a problem. Google tended to focus its efforts on providing the best possible search results for its users, even though that usually meant steering them to other people’s websites as quickly as possible. Starting around 2005, however, Google began to develop a significant conflicting interest—to steer users, not to other people’s services, but to its own growing stable of competing services, in price comparison, travel search, social networking, and so on.

By manipulating its search results in ways that systematically promote its own services while demoting or excluding those of its competitors, Google can exploit its gatekeeper advantage to commandeer a substantial proportion of the traffic and revenues of almost any website or industry sector it chooses. As a result, there is now a growing chasm between the enduring public perception of Google as comprehensive and impartial and the reality that it has become increasingly neither.

The debate about net neutrality has tended to focus exclusively on the issues of equal access to the physical infrastructure of the Internet (the network), while ignoring the issues of equal access to its navigational infrastructure (the search engines). If we are to protect equal access to the Internet for users, established businesses, and the innovative start-ups that will power the next wave of growth of the digital economy, we must broaden our horizons beyond network neutrality to include the equally important principle of search neutrality.

In October 2009, we defined search neutrality as the principle that search engine results should be driven by the pursuit of relevance and not skewed for commercial gain.  Search neutrality is particularly pressing, because Google’s 85% share of the global search market (90% in the UK and 95% in much of Europe) places so much market power in the hands of a single US corporation. And there is ample evidence that Google is already abusing this power. Our European Competition Complaint against Google, submitted in November 2009, describes how Google leverages its overwhelming dominance of horizontal search to unprecedented and virtually unassailable advantage in adjacent sectors.

Despite being one of network neutrality’s most enthusiastic advocates, Google is fighting against the growing calls for search neutrality. In December 2009, we posed a question to Google: how can discriminatory market power be dangerous in the hands of a network provider, but somehow harmless in the hands of an overwhelmingly dominant search engine? So far, Google’s response has been evasive. Because it is difficult for Google to argue against the actual principles of search neutrality—the same principles it has long advocated for network providers—it has contrived an imaginary and fundamentally distorted version to argue against instead.

Clearly, no two search engines will produce exactly the same search results; nor should they. In many cases there is no “right” answer, and no two search engines will agree on the optimum set of search results for a given query. But any genuine pursuit of the most relevant results must, by definition, preclude any form of arbitrary discrimination. The problem for Google is that its Universal Search mechanism, which systematically promotes Google’s own services, and its increasingly heavy-handed penalty algorithms, which systematically demote or exclude Google’s rivals, are both clear examples of financially motivated arbitrary discrimination.

Despite Google’s concerted efforts to derail the search neutrality debate, by arguing vehemently against a form of search neutrality that no one is advocating, the real search neutrality has become an increasingly important focal point for those concerned about the insidious power of search engine bias. Most recently the EPP Group, Europe’s largest coalition of MEPs, declared search neutrality a core component of its Internet Strategy, and BEUC, the European Consumer Organisation, wrote an open letter calling on the European Commission to protect the principle of search neutrality.

In the traditional bricks-and-mortar world, Google’s anti-competitive practices would be obvious to all. In the seemingly impenetrable world of Internet search, however, Google’s ability to get away with these practices has often depended on its ability to bamboozle people: our video deconstructing Google’s recent testimony to the US Senate Antitrust Subcommittee provides the first public glimpse of the extent to which this strategy unravels in the face of informed scrutiny.

Google’s standard reply to the observation that it has a monopoly in search is to point out that “competition is just a click away”. But, Google operates in a two-sided market–with users on one side and websites on the other. While it is true that users have a choice of alternative search engines, the key point is that websites do not. As long as nearly all users continue to choose Google—as they have consistently done for the last decade—then businesses and websites have no alternative search engine by which to reach them.

The competitors Google is referring to when it says “competition is just a click away” are rival horizontal search engines like Yahoo and Bing, but the businesses being harmed by the anti-competitive practices described in our Complaint are not these rival horizontal search engines; they are the thousands of businesses that compete with Google’s other services—in price comparison, online video, digital mapping, news aggregation, local search, travel search, financial search, job search, property search, social networking, and so on.

The unique role that search plays in steering traffic and revenues through the global digital economy means that Google is not just a monopoly; it is probably the most powerful monopoly in history. Given the absence of healthy competition among search engines, and Google’s growing conflict of interest as it continues to expand into new services, there is an urgent need to address the principles of search neutrality through thoughtful debate, rigorous anti-trust enforcement, and perhaps very careful regulation.

Adam and Shivaun Raff,
Co-Founders of www.foundem.co.uk and www.SearchNeutrality.org

First posted on the Open Rights Group

Last week ICOMP members gathered in Brussels to take part in their quarterly Council Meeting; a series of discussions, meetings and events related to the ICOMP principles.

Amongst the many topics discussed was the recent announcement by Commissioner Almunia that he has outlined to Google four specific areas of concern following a lengthy investigation into allegations the company has violated competition law. The Council was unanimous in its agreement that this is a very significant step by the Commission and has undertaken to write to Commissioner Almunia.

In the letter ICOMP Chairman, Lord Watson, praised the Commission Vice President’s “firmness” saying that his ultimatum to Google “carries the promise of a new renaissance for the Internet”. The full letter can be viewed here.

Regards,
The ICOMP Secretariat

In courtrooms and government offices across the world, a drama is unfolding on the future of the Internet.  At issue is whether the rules that protect consumers and creators in the off-line world–especially against monopoly abuse and theft–apply with equal force online.  At stake is whether consumers can look forward to a future filled with vibrant choice and opportunity online, or whether they will see fewer choices, less creativity, and less innovation when they search the Web.

Fortunately, the last weeks of May offered two cautious signs of hope.  They occurred on different continents and in vastly different settings.  But they shared a common goal of protecting those whose efforts make the Internet exciting, informative, and entertaining from the ravages of unbridled power.

The first event took place on the last day of May in a federal courtroom in New York.  Judge Denny Chin, who is presiding over litigation in which Google stands accused of illegally copying millions of books, held that associations representing authors, photographers, and graphical artists could represent their members in the case.  Many of the artists whose works Google copied without permission are members of CEPIC, the world’s leading organization representing picture agencies and photo libraries in Europe and around the world and an estimation of 150.000 photographers.  From the beginning, CEPIC and its members expressed a willingness to license our works to Google, so long as Google respects our copyrights and provides fair compensation for the use of our works.  Google, however, spurned those requests.

Judge Chin made headlines last year in rejecting a proposed settlement in the case, noting that it would have “reward[ed] [Google] for engaging in wholesale copying of copyrighted works without permission” while also giving Google “a de facto monopoly” over certain works and “further entrench[ing] Google’s market power in the online search market.”  While Judge Chin’s May ruling was a less thrilling read–dealing mainly with the arcana of U.S. class-action rules–it was no less momentous, because it means that authors and creators whose works Google copied without permission can advance their rights as a group rather than, as Google vigorously argued, having each to fight Google individually.  The inequities of Google’s position were not lost on the court.  As Judge Chin wrote:

[G]iven the sweeping and undiscriminating nature of Google’s unauthorized copying, it would be unjust to require that each affected association member litigate his claim individually.  When Google copied works, it did not conduct an inquiry into the copyright ownership of each work; nor did it conduct an individualized evaluation as to whether posting “snippets” of a particular work would constitute “fair use.”  It copied and made search results available en masse.  Google cannot now turn the tables and ask the Court to require each copyright holder to come forward individually and assert rights in a separate action.

The second event occurred just a few days earlier, in an office building in downtown Brussels.  There, Europe’s top antitrust enforcer, Joaquin Almunia, announced that after having conducted a large-scale market investigation of Google’s business practices, his office had identified four areas “where Google business practices may be considered as abuses of dominance.”

One of those areas was Google’s misuse of online content.  Several companies, including several members of ICOMP and many others, claim that Google misappropriates their content and re-uses it on Google’s own sites, which harms competition by preventing these companies from generating a return on their investments.  Almunia noted that Google’s actions “appropriat[e] the benefits of the investments of competitors.  We are worried that this could reduce competitors’ incentives to invest in the creation of original content for the benefit of internet users.”  Expressing his desire for a “quick resolution” of the case, Almunia invited Google to offer remedies to address these concerns, but added that, should Google fail to do so within “a matter of weeks,” then “the on-going formal proceedings will of course continue, including the possible sending of a Statement of Objections.”

Two shared themes unite these otherwise disparate and far-flung events.  The first is the conviction that creativity deserves respect, whether online or off-line.  CEPIC’s members, like millions of other authors, performers, artists, and photographers–and even many Internet companies–invest their lives and livelihoods into making great content.  Our contributions are what make surfing the Web exciting and energizing.  Copyright law is the tool we rely on to protect our photographs and other creations against theft and to earn a living.  The clear message from both Judge Chin and Commissioner Almunia is that, while stealing content online might be easy, that does not make it right.

The second is that the dangers of monopoly power and abuse are just as real on the Internet as in the physical world.  Google is overwhelmingly dominant in search and related markets, with shares of over 90% in many countries in Europe.  Observers see signs of Google increasingly using its economic muscle to shove aside the rules that apply to everyone else and barge ahead when it is in Google’s self-interest.  (As one objector quoted by Judge Chin in his earlier ruling aptly put it: “[Google’s] business plan [in launching Google Books] was: ‘So, sue me.’”).  The separate decisions by Commissioner Almunia and Judge Chin should give consumers everywhere greater comfort in knowing that, even on the Internet, might does not make right.

Sylvie Fodor

CEPIC (Coordination of European Picture Agencies Stock, Press and Heritage)

http://i-comp.org/blog/am

http://i-comp.org/blog/4a