Submitted by Scott Cleland on Wed, 2018-02-21 12:26

Alphabet-Google is an unregulated monopoly that currently is de facto regulating the entire digital advertising ecosystem – in part via its new Chrome ad-blocker.

With minimal government accountability, it’s no surprise Google apparently is exercising its monopoly power anticompetitively and coercively.

Only an out-of-control, U.S. Internet policy could create such an upside-down situation where Internet platforms like Google are so ungoverned by the U.S. Government, that they are free to broadly govern other companies in coercive ways that even the U.S. Government legally can’t do.

Congress needs to pass legislation that restores a fair playing field with equal online-offline accountability to the law. Current U.S. Internet policy and law in the 1996 Telecom Act effectively exempts only Internet platforms from: FCC communications law; Federal and State regulation; liability for consumer negligence; and normal U.S. sovereign governance.

Internet platforms, like Alphabet-Google, act like they are above the rules and outside the law, because they largely are.

America’s 1996 Internet policy effectively partitions America into warring worlds of online Wild West rule-of-code and offline civilized rule-of-law. America is no longer a free market economy, but a favored market economy, with an over-riding Internet-first industrial policy that favors and advantages Internet platform interests over other interests.

Consider how Google alone can coerce publishers, advertisers, and users to adopt what’s best overall for Alphabet-Google.

Last week, Google announced that its Chrome browser, which is used by ~60% of global users, will block ads from any website that employs the most user-annoying twelve types of ads, based on the recommendation of the Coalition for Better Ads, a broad, well-intentioned, multi-industry coalition over which Google exerts outsized influence.

It is very telling that no other company is needed to implement this ad-blocker for it to be effective ecosystem-wide.

It is also telling that Google offered to be the ad ecosystem’s lone de facto ad-regulator and ad-policeman.

Note its euphemistic offer: “Google, a member of the Coalition, has expressed its interest in being accredited as an implementation entity to assess compliance with the Standards when the Program is fully operational. Consistent with this intention, Google has informed the Coalition that it will not filter ads for any company certified under the Program’s requirements. The Coalition is encouraged by the fact Chrome filtering will serve to limit unwanted ads…” [bold added.]

So what is coercive problem with Google-Chrome’s ad-blocking?

Consider what the New York Times learned of Google’s “compliance” enforcement plans.

“Website operators had a few months before the launch to become compliant; going forward, those who violate the standards will be given 30 days to get in line. If they don’t, Google will demonstrate its leverage not by simply removing offending ads from a noncompliant site, but by disabling all of its ads. Revenue to the offending websites would presumably plummet as a result.” [Bold added]

Now we should see the problem here. This is coercive and overkill. Power corrupts, and absolute power corrupts absolutely.

If Google was just interested in protecting users, from the annoying ads that the full multi-industry coalition supports blocking to improve the user experience, then why wouldn’t Google just block the offending ads from reaching the user and stop there?

Why is Google planning to turn off “all” of an offender’s ads and the revenues they generate, presumably via Chrome, Search, and Search Advertising Syndication? I can’t imagine that the rest of the coalition supports crushing a fellow publisher when their annoying ads effectively can no longer annoy users.

Let me be clear, stopping user-annoying ads that most all users do not want is a good thing.

However, severely and unilaterally punishing an entity by taking away much of its ability to conduct business at all, is not a defensible public service, but a capricious and extortionate punishment, when the ads in question were not illegal, and they have been commonplace for years without government action. (On what authority is Google claiming it alone can severely punish another company for something that is not against the law? Do they claim Section 230 immunity authority to do whatever they want to competitors with no liability?)

Dictating an unauthorized, de facto business death penalty for an entity that continues to be legally annoying, isn’t proportional or fair justice, if justice at all. Enabling the ungoverned Alphabet-Google monopoly to effectively govern as an unaccountable prosecutor, judge, and executioner over the entire digital advertising ecosystem is anti-competitive and should be viewed by the FTC as a potential unfair and deceptive business practice by Google.

Now for some perspective, consider the multiple levels of market power that enable Google to effectively regulate/police this ad blocking to eradicate four types of annoying desktop ads and eight types of annoying mobile ads ecosystem-wide.

While ~60% of Internet users use Chrome globally, that number in the U.S. is 39% and 51%for Apple Safari. However, now that Google search is the default search engine on all Apple devices including, Siri, for most people and most uses of the browser, the Google default search engine in effect can operate like the Chrome ad-blocker by demoting the search results of any ad offender where it would not be found by the user.

While Chrome has market power, Google’s primary monopoly ad-police power comes from its monopoly ~95% market share of U.S. mobile search syndication agreements.

As Google selectively appoints itself as the world’s annoying-ad-blocker policeman, its monopoly profits ensure it can afford to pay ad-blockers white-list ransoms to ensure Google’s ads are not blocked by users that want to block Google ads too. Heads or tails Googleopoly’s ads always win.

We have seen this Googleopoly movie before.

In search, Google abuses its search monopoly with non-transparent capricious algorithmic updates to demote search results of Google competitors.

In apps, Google abuses its monopoly police power over Android Apps by banningDisconnect.me, a leading privacy app that best protects users from malware, when Google Play itself is rife with malware.

In news, Google’s Accelerated Mobile Pages unilaterally will force publishers to update their sites at their cost to meet Google’s AMP “speed” specifications or be demoted in Google search rankings and in Google News.

In advertising, digital advertising is not a market, it is increasingly unaccountable Google and Facebook fiefdoms.

Last year, P&G’s CMO castigated Google and Facebook for the “murky, nontransparent and in some cases fraudulent supply chain” of digital advertising. This year, Unilever’s CMO threatened to pull its digital advertising from Google and Facebook unless is cleans up its “swamp” of brand-unsafe, fake news, racism, sexism and extremism.

In sum, dynamics like this spotlight the uneconomic, unproductive, and anticompetitive mess of an Internet-first industrial policy that de facto abdicates much normal U.S. Governmental power to ungoverned platforms to govern American taxpayers that thought the Government’s purpose was to provide equal, not unequal, protection under the law.

This divisive digital advertising dynamic is not normal, competitive, economic, civil, secure, productive, fair, or just.

This is just another of the many examples of unintended but very real perverse and destructive outcomes from an originally well-intentioned, but now out-of-control Internet policy of unequal online-offline freedom and accountability. (Please see the research series below for the other ways asymmetric regulation and accountability is increasingly destroying much our economy, society and polity.)

Forewarned is forearmed.

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Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google.