Google set two records yesterday: it was hit with the largest fine ever assessed by European Union anti-trust enforcers, which didn’t scare Wall Street because its stock price – actually, its nominal parent company Alphabet’s share price – hit the highest level ever.
The $5 billion fine was accompanied by an order for Google to radically change the way it markets the Android mobile phone operating system, according to a tweet by Margrethe Vestager, the EU’s competition commission and a former member of the Danish parliament…
Fine of €4,34 bn to @Google for 3 types of illegal restrictions on the use of Android. In this way it has cemented the dominance of its search engine. Denying rivals a chance to innovate and compete on the merits. It’s illegal under EU antitrust rules. @Google now has to stop it.
Google CEO Sundar Pichai shot back, also via Twitter, saying that the company will appeal.
The three business practices that Vestager says are illegal are:
- Requiring mobile phone manufacturers who install the Google Play store to also install the Chrome browser and Google Search apps.
- Paying manufacturers to give Google Search exclusivity, by not preinstalling other search apps.
- Requiring manufacturers who preinstall Google apps to pledge not to make, or even develop, devices that run alternate Android versions, aka Android forks.
Big manufacturers have tried to launch their own app stores and operating systems, notably Samsung with Bada and Tizen, but could not compete with Google Play’s ecosystem of apps, services and content. The only company that’s made any headway with an Android fork is Amazon, which installs the Android-based Fire OS on its own devices, and uses them to sell its own services. Amazon has also attracted Vestager’s attention and, like Google, hit a record high valuation yesterday.
2018 is shaping up to be a rough year for tech giants. Lawmakers in Washington, D.C. and regulators in Brussels are taking aim at them. Politics and protectionism might be behind it, but big, dominant companies are properly the concern of trust busters. They need to move cautiously and prudently, though, else the cure will be worse than the disease.
Last week, Google and GoDaddy used the power that comes with being at the center of the domain name system to block a white supremacist website. They weren’t alone in their revulsion with the ideas expressed or in taking effective action against them.
But using control over the Internet’s plumbing to censor speech – even speech as vile and disgusting as this – is a wrong and dangerous path to follow. As the Electronic Frontier Foundation explains in a blog post that gets it exactly right, a weapon that’s used in a good cause can just as easily be used for evil…
All fair-minded people must stand against the hateful violence and aggression that seems to be growing across our country. But we must also recognize that on the Internet, any tactic used now to silence neo-Nazis will soon be used against others, including people whose opinions we agree with. Those on the left face calls to characterize the Black Lives Matter movement as a hate group. In the Civil Rights Era cases that formed the basis of today’s protections of freedom of speech, the NAACP’s voice was the one attacked…
If the entities that run the domain name system started choosing who could access or add to them based on political considerations, we might well face a world where every government and powerful body would see itself as an equal or more legitimate invoker of that power…
These are parts of the Net that are most sensitive to pervasive censorship: they are free speech’s weakest links. It’s the reason why millions of net neutrality advocates are concerned about ISPs censoring their feeds…
Companies that manage domain names, including GoDaddy and Google, should draw a hard line: they should not suspend or impair domain names based on the expressive content of websites or services.
By saying there are circumstances when it’s okay to use technical control of the Internet to censor speech, Google and GoDaddy have put themselves in a bad position.
From now on, every group with a grievance against another group can demand the same action. Governments with a less than absolute commitment to free speech can require it, particularly the sort of regimes that hate-filled extremists aspire to emulate. They do not deserve and cannot be allowed this perverse victory.
Microsoft’s TV white space broadband initiative is many things – a worthy effort to expand Internet access, a way of squeezing more useable bandwidth out of finite radio spectrum, a call to action for rural economic development and, as willingly acknowledged, a business opportunity.
It is also a foray into the market economics of free software. White space is the gaps between active television channels, which vary according to where you are in relation to whatever TV stations might be around. The proposed solution to this spectrum management problem is active management via databases run by private companies. Like Microsoft.
Or like Google. Which opened up its database to all comers four years ago. Microsoft’s answer, which is wrapped in a well articulated but completely ordinary white paper about rural broadband access, is to offer up its intellectual property in a similar manner…
Our Rural Airband Technology Program will make our U.S. patents available under a royalty-free license to all comers, including to our competitors, for any work they undertake to stimulate broadband access through TV white spaces. These patents help tackle common problems associated with TV white spaces in a variety of ways…
Microsoft’s database-driven TV white spaces technology has continuously been improved through the use of machine learning that populates, maintains, and improves the content of the database, and cloud-based analytics to respond to database queries that, for example, leverages prior spectrum assignments for particular devices.
Google went from a Silicon Valley garage start up to being (at times) the world’s most valuable company by amassing vast quantities of data, giving away software that can make efficient use of it and then making gigabucks as the resulting traffic passed through – and made detours into – its servers.
In that context, its open access white space venture was nothing remarkable. And from that perspective, neither is Microsoft’s. Except that, well, it’s Microsoft. Welcome to club.
In a 4 to 1 vote, the California Public Utilities Commission voted to spend $47 million on the Digital 299 middle mile fiber project this morning. It’s a 300 mile network connecting Trinity and Humboldt counties to long haul routes in Shasta County. The no vote came from president Michael Picker.
The CPUC also unanimously approved Google’s purchase of Webpass, a mostly wireless broadband provider that is also licensed as a wireline telephone company – hence the need for commission review – and granted a request to begin consideration of new access rules that would allow licensed telephone companies to hang wireless equipment on utility poles.
Update, 23 March 2017: the CPUC voted 4 to 1 to approve the Digital 299 grant this morning, and unanimously approved Google’s purchase of Webpass and the enquiry into expanded utility pole access.
Three important decisions are in front of the California Public Utilities Commission this week: a $41 million (or perhaps $47 million) grant for a northern California middle mile fiber project, formally considering whether telephone companies can attach wireless gear to utility poles and what the aesthetic impacts might be, and allowing Google to buy Webpass, a mostly wireless Internet provider that’s also licensed to offer wireline service.
Although the pole access decision is routine – it would not establish new rules, just begin the process – the scope of the commission’s enquiry will be broad. But apparently that’s okay with utility companies, since none filed any objections. You can safely bet, though, that anyone with a stake in wireless services or utility poles will be watching it like a hawk.
The Webpass purchase is also uncomplicated on the face of it. Since Webpass has a CPUC-granted license to operate as a telephone company – a certificate of public convenience and necessity (CPCN) – Google needs permission to take it over. The transaction attracted the attention of a chronic protester, who was ultimately convinced to go away, and it has big implications for both current Webpass customers and Google’s plans (or lack thereof) to be a broadband service provider. Once it owns Webpass and its CPCN, Google can claim all the privileges of a phone company, including potentially the right to hang wireless equipment on utility poles.
Digital 299 is also on the agenda for this week’s CPUC meeting. It’s a proposed 300 mile fiber line linking existing routes that run through the Sacramento Valley along the I-5 corridor to the Humboldt County coast and points in between. There’s a draft decision on the table that would approve a $41 million subsidy from the California Advanced Services Fund, and commissioner Carla Peterman has promised to offer an alternate version that would add another $6 million.
The pole access item and the Webpass transfer are likely to be approved without comment – so far, there’s no indication otherwise – but the Digital 299 project faces an uncertain future. Two commissioners – Martha Guzman Aceves and president Michael Picker – have already expressed opposition. If just one of the three others join them, it’s dead.
Big or small?
Google Fiber won’t agree to a settlement with the only group to lodge a protest in California to its acquisition of Webpass, an independent Internet service provider. The deal requires approval from the California Public Utilities Commission because Webpass is certified as a competitive telecoms company, which makes it a regulated public utility.
This sort of review is usually routine. Exceptions are generally the result of past problems with CPUC rules – not an issue in this case – or occur when the companies involved are major players in California’s telecoms ecosystem. Charter Communications’ successful purchase of Time Warner and Comcast’s failed attempt to do much the same are two recent examples. Webpass and Google Fiber do not play in that league and neither the CPUC’s office of ratepayer advocates or any of the usual outside “intervenors” – organisations that make a living by protesting or otherwise getting directly involved in proceedings – raised any concerns about the transaction.
Except one. The National Diversity Coalition – an umbrella group that includes more than a dozen minority-focused organisations – challenged Google’s purchase of Webpass and called for a deeper investigation into whether the deal serves the public interest, and in particular how it would affect the communities it claims to represent. It is a standard tactic and is often used to extract concessions from the companies involved, sometimes for benefits that flow to the general public – Charter’s obligation to upgrade broadband service in redlined areas is an example – but also sometimes for payments or other perks that go directly to the intervenors themselves.
NDC’s argument boils down to Google is a big company, so it should get the full treatment. As is standard procedure in these cases, the two sides held settlement talks, but judging from the statement Google filed with the CPUC last week, NDC wanted a truckload of data regarding finances, corporate policy and practices and other matters that companies usually consider to be proprietary. All in an effort, Google said, “to extract various conditions and commitments from [Google and Webpass] wholly unrelated to the limited transaction before the CPUC”.
So instead of agreeing to NDC’s demands in exchange for it dropping its protest, Google is kicking the decision back to the CPUC administrative law judge and commissioner who are assigned to the case. A conference is scheduled for Wednesday morning in San Francisco.
I assisted the City of Gonzales in its challenge to Charter at the CPUC and its subsequent and successful negotiations. I am not a disinterested commentator. Take it for what it’s worth.
Many, many middle miles.
Google might be defaulting, excuse me, pivoting to wireless broadband technology in last mile broadband markets, but it appears to be moving full speed ahead with laying underseas fiber to connect continents. And Facebook is sailing right alongside.
Google, Facebook, TE Connectivity – the former Tyco Electronics – and Pacific Light Data Communication, a Hong Kong-based start up, are partnering to build a submarine cable between Los Angeles and Hong Kong, with a completion target of summer 2018. According to a Google blog post…
The Pacific Light Cable Network will have 12,800 km of fiber and an estimated cable capacity of 120 Tbps, making it the highest-capacity trans-Pacific route, a record currently held by another Google-backed cable system, FASTER. In other words, PLCN will provide enough capacity for Hong Kong to have 80 million concurrent HD video conference calls with Los Angeles.
FASTER – a collaboration between Google and a consortium of Asian telecoms companies – went online this summer, linking Oregon to Japan. Google is getting 10 terabits per second of capacity – one-sixth of the total – on that cable. And it has ownership stakes in four other submarine cable projects.
Facebook has also wet its feet in the trans-oceanic fiber game, joining Microsoft and Telefonica as investors in a planned route between Virginia and Spain. That’s scheduled to come online next year.
It’s not a business venture as such for either Google or Facebook. Instead, it’s the kind of classic make versus buy choice that’s leading both companies down the path toward greater vertical integration.
Barrier to competition.
Google still can’t get access to utility poles in the Bay Area. Whether or not it still wants it is an open question – Google closed its purchase of the wireless Internet service provider side of Webpass this week – but even if it doesn’t, the blocking action by incumbents anxious to protect monopoly markets has caught the attention of California regulators.
The California Public Utilities Commission was told last week that the club that controls pole access – the Northern California Joint Pole Association – has again rejected Google’s requests for membership and permission to use poles. Commissioner Liane Randolph had asked staff to look into it, and the report back was that a minority of association members was stalling Google’s application. That’s consistent with complaints from Google earlier this year that it was being unfairly, and perhaps illegally, blocked. The California cable industry’s lobbying front, the California Cable and Telecommunications Association, took the position then that Google wasn’t really a cable company, despite a CPUC decision that said yes, it is.
Randolph said that’s a problem that needs to be fixed…
If we are going to meet the policy goals of ensuring broadband and ensuring competition and customer choice, entities are going to need to be able to attach, they’re going to need to be able to attach safely and they’re going to need to be able to attach in an expeditious manner.
Fellow commissioner Catherine Sandoval agreed, and made a pointed suggestion that perhaps it’s time for the CPUC to step in…
As somebody who’s also an anti-trust law professor, I’m really concerned about whether the rules are sufficiently pro competitive. We have a here a policy that we want to encourage competition and choice, and we expect the pole safety committees to respect and facilitate that…I would also urge the committees to also not force us to go down the enforcement route.
The commission broadened access to utility poles in the public right of way earlier this year, when it adopted uniform pricing and access rules for mobile phone companies. Since then, lobbyists for cable and independent telephone companies have asked for the same “nondiscriminatory access to public utility infrastructure”. Which would be fair, if cable and telephone companies were nondiscriminatory in the way they exercise the considerable privileges they already have.
No need to wait.
Google is asking the Federal Communications Commission for permission to run wireless transmission tests in and around the 3.5 GHz band, which has been designated for use under new Citizens Broadband Radio Service (CBRS) rules.
One reason for the request is sure to be Google’s increasing focus on wireless technologies as a substitute for or supplement to fiber. But Google has another, immediately practical interest at stake too: widespread use of CBRS spectrum requires real time frequency coordination amongst users, who have varying degrees of priority in that band. That’s a core database business that Google wants to win and, as described in its FCC filing, intends to develop during the planned tests…
A key component to sharing in this band is the Spectrum Access System (SAS), which utilizes database technology to protect important federal government uses of spectrum. These systems will ensure that neither priority access nor general authorized access users interfere with the existing government and private users who will continue to need 3.5 GHz spectrum in a limited number of areas. SAS database systems also will allow new users to share effectively with each other. Google has been a leader in using databases to free-up available spectrum, and it is one of the companies working to develop a sharing system for the 3.5 GHz band.
There’s been a lot of breathless excitement regarding Google’s wireless test plans, mostly the result of eternal hope that magic radios will appear one day and render wireline technology obsolete. That hope is stoked by AT&T, which wants permission to replace rural and inner city copper with wireless systems, and other mobile broadband companies that, naturally, want those customers too.
There aren’t many details in the heavily redacted filing and it offers no reason to think Google is on the verge of a radical breakthrough in fundamental physics or radio technology. There’s also nothing that says they aren’t, so we might as well have some fun speculating.
But Google has another, perfectly good business reason for running its wireless tests. Real time frequency coordination will open up new spectrum and increase the bandwidth that can be pushed through existing allocations, making it a potentially lucrative service that can be sold to wireless operators, and put Google at the center of wireless network management and the data streams that go along with it.
That’s reason enough.
Another big, transpacific fiber cable is now lit. Less than two years after it was announced, the FASTER consortium has completed construction of a link between Bandon, Oregon and two landing sites in Japan, with a further extension to Taiwan. The group’s membership includes Google as well as several Asian telecoms companies, including China Mobile International, China Telecom Global, Global Transit, KDDI and Singtel. NEC built it.
Google is taking one-sixth of the capacity, 10 terabits per second out of a total of 60 Tbps.
Ten terabits per second is a lot of bandwidth, but it’s consistent with Google’s current consumption. Companies with major web platforms are investing in transoceanic cables, as well as domestic middle fiber capacity, because their internal data transport needs are on the same scale as the big, common carrier telecoms players. Facebook, Microsoft and Telefonica are investors in the planned Marea cable between Spain and Virginia, which will have nearly three times the capacity of the FASTER link. Construction on that project is expected to begin in August.
The distinction between a web platform and a traditional telecoms company is becoming increasingly irrelevant – when you send a message via Gmail or respond to a Facebook post from the other side of the world, it’s transported primarily on internal networks.
It’s simple vertical integration. When a company’s needs scale up to a certain point, it makes economic sense to own a resource rather than buy it. It’s no different than car companies, like Ford, that jumped into the steel business a hundred years ago.