Google Refuses To Acknowledge The Law In Response To European Antitrust Complaint

Earlier this year, the European Commission (EC) sent a Statement of Objections (formal complaint) to Google for violating European antitrust (competition) laws.   In particular, the EC alleges Google “has abused its dominant position in the markets for general internet search services in the European Economic Area (EEA) by systematically favouring its own comparison shopping product in its general search results pages.  The Commission's preliminary view is that such conduct infringes EU antitrust rules because it stifles competition and harms consumers.” 

Yesterday, Google responded to the EC's complaint with a 100 plus page defiant response and blog post.  Interestingly, Google did not request a hearing on the matter and this tactic has provided credibility to Google's opponents' claims that if Google is confident that its legal position is correct as a matter of law it would request a hearing to defend itself.  A spokesman for the EC told Bloomberg News that "[i]t's common for companies to ask for an oral hearing but it doesn't happen all the time".

In my experience, guilty parties generally hide behind written submissions and avoid direct confrontation with their accusers.  According to Bloomberg News, "[h]earings can make a difference. Thirteen of the world's biggest banks succeeded at a face-to-face confrontation last year to unsettle an EU case into the credit-default swaps market...No fines have been issued in that case."  Therefore, Google's refusal to face the EC in an oral hearing indicates to me that it believes it has violated European competition law.

Google's cavalier behavior over the years in regards to competition, privacy, and accepting illegal ads clearly demonstrates that it believes its above the law.  Since the EC opened its antitrust investigation into Google, the company has paid hundreds of millions of dollars in fines and settlements due to illegal behavior.  In each of these situations, Google has dragged its heels when it was caught intentionally misleading regulators, and/or consumers, and/or the media.  

In 2011, Google paid a $500 million fine for knowingly accepting illegal advertisements from Canadian pharmacies.  Subsequently, it paid multiple million dollar fines in the United States and in Europe for privacy violations in connection with its Street View data collection project, its Buzz social network, its 2012 privacy policy change, and the Safari hack incident. 

Illegally abusing market position in Internet search (and/or other areas) is intertwined with data collection, usage, and privacy issues because in order to receive the most "relevant" search results to a search query a search engine must be able to access and process voluminous amounts of data very quickly.  For years, 90% to 96% of Google’s revenue has come from advertising which means it is dependent upon being able to obtain massive amounts of personal information at a low cost to feed its behavioral advertising machine. 

Countries have different legal criteria when determining whether a company has violated antitrust laws or if a potential merger will create an anti-competitive market.  Europe has a long history in regulating anti-competitive markets. Since Roman times, the continent has regulated commerce to ensure competition and fair play.  The EC is not targeting Google out of nationalistic fervor to boost EU based companies. Google is being targeted because it is clearly utilizing its dominant position to violate antitrust laws.

The EC has actively enforced its competition laws for years.  Last year, a $1.44 billion dollar fine against Intel was upheld for anti-competitive behavior after at least a fiver year plus fight. In 2013, Microsoft was fined $731 million dollars for not adhering to its previous antitrust agreements.  So, why does Google think they are are above the principles that have governed European markets for more than 2000 years?    

My hope is that the EC utilizes all of the legal and regulatory tools at its disposal to ensure that Google and other companies that violate EC competition and privacy laws are held accountable. Internet users around the globe are harmed when companies such as Google violate antitrust laws.

Copyright 2015 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Are You Willing To Pay For Social Media Content?

Due to the popularity of the original Napster and other early file sharing services, a large segment of the population believes it should not have to pay for the rights to digitally download music, movies, or other forms of Internet accessible entertainment. The Recording Industry Association of America has led the fight to stop the wholesale theft of intellectual property rights from its members. According to the RIAA's website, global music piracy causes more than $12.5 billion dollars in economic losses every year and the loss of more than 71,000 jobs.

Love or hate Apple, the company created an easy to use device, the iPod and set an unofficial price point of $.99 for each entertainment segment that is downloaded. In 2007, Radiohead provided fans the opportunity to pay whatever a fan wanted for the right to download their songs. Recently, Linkin Park was a driving force behind another pay what you want effort for non-profit Music For Relief that supports the Haiti relief effort. This business model may work in some cases, but the free rider dilema where too many people don't want to pay a fair price for a product or service is still a challenge that social media content providers must confront.

Amazon recently tried to replicate Apple's business model and industry position in the book business with their price point of $9.99 per Kindle download. However, major publishing house, Macmillian has refused to accept Amazon's price point and a legal dispute may be in the works.

As an active user of social media, I am fully aware of the cost of content creation and usage. Most social media websites are financially supported by advertising. Some have paywalls that offer a teaser before requiring a user to pay and others are fully subscription based. In the pornography industry, there are group subscriptions where belonging to one site automatically enables you to access other sites with your subscription or provides a reduced rate for membership.

The newspaper industry is on life support and it appears that Senator Cardin's proposal to allow newspapers to become non-profits has not been embraced by the marketplace. In contrast, Rupert Murdoch has been preaching about charging for his newspaper's content. As a Wall Street Journal subscriber, I believe the paper is one of only a couple of news organizations in the world that offers content that its users are willing to pay a subscription premium for. However, if I was offered a flat fee to access premium content for 25 of my most visited social media websites, I may be willing to pay for it if it was priced correctly. This subscription model would be based on the way cable companies offer premium channels on top of their basic packages.

There may be antitrust issues if a group of the most popular news organizations/social media content providers formed an entity and began offering their content in a pooled subscription. The Sports Broadcasting Act enables professional and collegiate sports leagues to package and sell pooled broadcasting rights. Even though member teams/schools are individual entities, Congress has carved out an exemption for this industry.

Why can't Congress carve out the same type of exemption for news organizations and/or social media and/or entertainment entities that would enable them to pool their resources? If professional sports leagues and NCAA member schools enjoy this type of special exemption why can't the news and/or the social media/entertainment industry also receive a special exemption under the law?

The bottom line is that content creation is not free and imaginative business methods must be utilized that may require new laws or a rethinking of some of our current laws. I believe now is the time for the business, legal, and political community to come together to draft a plan that accounts for this change in how people view, price, and protect intellectual property. To learn more about these issues you may contact me www.shearlaw.com

Copyright 2010 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Google Book Lawsuit Not Ending Any Time Soon

Earlier today, Judge Denny Chin of the United States District Court for the Southern District of New York granted a motion to delay an Oct. 7th hearing on the Google Book Lawsuit Settlement because it appears that Google and its allies are now willing to modify some of the proposed settlement terms to allay the fears of copyright holders and Google's competitors. I believe this is a good sign because this signals that Google may be more flexible in their position. Lets hope this is the case for all stakeholders since the proposed settlement has the ability to fundamentally change copyright law throughout the world.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

U.S. DOJ is Against the Google Book Settlement

Not surprisingly, the U.S. Justice Department came out against the proposed Google Book settlement. DOJ advised the U.S. District Court for the Southern District of New York that it should not accept the class action settlement in The Authors Guild Inc. et al. v. Google Inc. DOJ encouraged the parties involved to continue discussions to craft a resolution that all parties affected would be willing to accept. I hope that that the U.S. Copyright Office's official position along with the U.S. Department of Justice's official position will encourage Google to make a good faith effort to resolve the outstanding issues in a manner that does not shortchange copyright holders and does not create a monopolistic system that harms consumers.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

U.S. Register of Copyrights Attacks Google Book Settlement

The U.S. Register of Copyrights, Marybeth Peters agrees with most of my previously stated positions on the proposed Google Book Settlement. In particular, Ms. Peters stated in her testimony to Congress on September 10, 2009, "[i]n the view of the Copyright Office, the settlement proposed by the parties would encroach on responsibility for copyright policy that traditionally has been the domain of Congress...We are greatly concerned by the parties' end run around legislative process and prerogatives, an we submit that this Committee should be equally concerned. To read Ms. Peters entire statement click on the link above.

According the New York Times, [h]er ("Ms. Peters") opinion is important because it could be reflected in a brief expected from the Justice Department this month. The government has until September 18, 2009 to make a filing in the case so stay tuned.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Google Book Search Copyright Class Action Settlement

I have talked at length in previous posts about the proposed Google Book Search Copyright Class Action Settlement. In my opinion, the settlement is a raw deal for copyright holders and consumers due to many issues that I have discussed in some of my older posts. One of the most important sections of the settlement is the cash payment section that discusses how copyright holders are compensated for their work. Many rights holders will not be pleased with the details.

If you made a claim by the filing deadline and receive documentation from the lawsuit claims administrator you should read the documents thoroughly. If you disagree with your claim determination you may want to consider sending a rejection of the claim determination certified return receipt. If the company contacts you and states that there is nothing more they can do and asks you to send a letter or email stating that you now agree with their claim determination you may want to consider contacting an attorney to assist you with the claims process.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

The Google Book Lawsuit: Continued

A new group called the Open Book Alliance has just created a web site that states the case that the Agreement between Google,the Authors Guild, and the Association of American publishers should be scuttled. Members of the Open Book Alliance include: Amazon, Microsoft, Yahoo, the American Society of Journalists and Authors, the Council of Literary Magazines and Presses, the Internet Archive, the New York Library Association, Small Press Distribution, and the Special Libraries Association.

As I stated in an earlier post, I am against the agreement in its present form because it appears to grant Google an unfair monopoly, it short changes some copyright holders, and it may enable Google to track the published works that a user views. While I applaud Google for taking the lead on this initiative, Google should not be handed a monopoly just because it started the project.

The bottom line is that the parties who favor the Agreement will reap financial benefits from it while the parties who are against the Agreement may be financially harmed or may not benefit from the Agreement. History has demonstrated that monopolies stifle innovation and hurt consumers. For example, when Network Solutions controlled all domain registration the cost to register a domain name was exorbitant . However, after other companies were allowed to become domain name registrars the cost to register a domain name drastically dropped and more people were able to participate in e-commerce.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.