Archives for June 2005
Is Google Evil? The Never-Ending Search for High-Tech Villainy
Beware lowly citizens of Planet Cyberspace, an ominous new threat lurks in your midst. Its name is Google and this beast won’t rest until it has taken control of all our minds. At least that’s what Wired columnist Adam Penenberg would lead us to believe.
In a June 23rd article entitled “Beware the Google Threat,” Penenberg spins a dark and foreboding tale of “big, bad” Google’s apparent sinister plot to take over the world and control our minds. You think I’m kidding? Well, let’s dissect Penenberg’s apocalyptic article in detail.
Grokster Loses
I would say I called the Grokster decision. The “substantial non-infringing use” standard did not exist in a vacuum. Rather, it was embedded in a set of considerations concerning the motivations and impact of a company’s business model. In Sony’s case, the Betamax was clearly an innovative new piece of hardware that incidentally enabled copyright infringement. Grokster, in contrast, was a novel way to evade copyright law that incidentally allowed people to share a few legal files. Rather than buying Grokster’s fatuous arguments and mechanistically applying the “substantial non-infringing use” standard where it clearly didn’t make sense, they looked at Grokster’s actual behavior and business model and concluded–correctly in my opinion–that Grokster was obviously a program designed to facilitate copyright infringement.
The interesting question is whether the court has created a new standard, a successor to “substantial non-infringing use”, that will provide the technology industry with a safe harbor for innovation. On a cursory reading, it appears that the opinion is decided narrowly enough–focusing on Grokster’s specific business model and the ample evidence that they fully intended to attract illegal file-traders–that this shouldn’t strike fear into the hearts of future entrepreneurs. As long as a product is designed for a legitimate use, the fact that many of its users engage in piracy shouldn’t put the product under a legal cloud. I could be wrong, though.
(Cross-posted to the Bit Bucket)
Schizophrenic SCOTUS
So, let me get this straight, if I own a broadband cable network, I don’t have to allow competitor’s access to my network, but, on the other hand if I own a home on a desirable plot, I not only have to allow those competing for the use of that resource (my home and land) onto my land, but have to essentially give it to them. Don’t get me wrong, I’m glad the Court upheld property rights in Brand X, But I’m curious why they didn’t apply the same rationale as they did in Kelo. As Adam notes below, the rationale in Kelo could have easily been applied to other property, such as cable networks. Open access advocates have made that very case for years.
Supreme Court Strikes Major Blow to Property Rights
I know everyone in the high-tech world is waiting for the Grokster and Brand X decisions to be handed down but, in my opinion, the most important decision of this Supreme Court term was handed down today in the property rights / eminent domain case of Kelo v. New London. The result was an unmitigated disaster for property rights.
The 5-4 decision (which went the wrong way thanks to Justice Kennedy) basically said that under the banner of “economic development,” the State may take private property whenever it wishes. This is a disastrous result for small land owners in particular since they will no longer have any reasonable protection from local governments who seek to re-zone certain communities to appease various special interests. But I should also point out that this decision, the third bad decision for property rights this term, could also come back to haunt communications and media companies, and others in the high-tech sector. That’s because this Court has just made it infinitely easier for the State to use various “public use” rationales for taking property of any variety. We’ve spent that last decade fighting about the rights of telecom and cable companies in the battle over forced access, and decisions like Kelo won’t make it any easier for those companies to defend the property right they are entitled to in the networks they develop.
Anyway, I could go on at length about what a disaster this decision is, but I will instead just cut-and-paste some of the remarkably powerful wording that Justice O’Connor used in her dissent, which was joined by Chief Justice Rehnquist, Justice Scalia, and Justice Thomas. At least these four justices still appreciate the importance of the Constitution, the Fifth Amendment, and property rights.
Muni Wi-Fi Systems & Crowding-Out Concerns
I’m sure that the pro-municipalization movement will be buzzing today about the front-page Wall Street Journal story entitled, “Phone Giants Are Lobbying Hard to Block Towns’ Wireless Plans.” But I hope those pro-muni forces also flip back to the B section of today’s Journal and read Walt Mossberg’s Personal Technology column on the latest developments in private wireless broadband. And they should also check out a very similar report by New York Times technology columnist David Pogue on page C1 of today’s paper.
In these two articles, Mossberg and Pogue review the new wireless broadband technologies coming to market today and point out that speeds are getting much better and coverage is growing rapidly. For example, Verizon’s $1 billion investment in its EV-DO wireless broadband network is finally bearing fruit. Speeds are 400-700 kilobits per second and coverage is available in 32 major metropolitan areas. And out-of-market coverage is provided too, albeit at slower speeds. Rivals like are rushing to build out similar networks and get newer, faster, more capable devices to market too.
Rutan Blasts Off for Planet Regulation
Entrepreneur and engineer Burt Rutan has won high praise, and rightly so, for developing private spacecraft. When it comes to developing space policy, however, his appreciation for private solutions flames out. In his interview by Ted Balaker, recently published on Reason Public Policy Institute’s website, Rutan unveiled his next mission for the spaceline industry: A journey to Planet Regulation.
My TCS Article on “What Ever Happened to the Big Media Boogeyman?”
I have an essay on the Tech Central Station website today entitled, “What Ever Happened to the Big Media Boogeyman?” In the piece, I note that just a few years ago, everyone was running around making Chicken Little predictions about how the media sky was set to fall on our heads in the wake of the AOL-Time Warner merger and the FCC’s media ownership decision. But today, by contrast, all the headlines tell a very different story: the old media players are in big, big trouble with all the new form of competition they now face.
Read the entire article here. And don’t forget, I’ll be debating these issues at the National Press Club this Friday along with former FCC Commissioner Susan Ness. Event starts at 10:00. Here’s the event / registration link.
Miami Herald Article on Impact of the PTC in Censorship Debate
The Miami Herald ran a nice piece yesterday highlighting the impact of the Parents Television Council in the debate over federal speech controls. Glenn Garvin was kind enough to call me for some background since he knows I have been at odds with the PTC in the past, and they have responded directly.
Anyway, in the Miami Herald article, I note that:
“This group is having a real impact in Washington,” and that “They are coming to have the equivalent of a heckler’s veto over a lot of decisions by the FCC and Congress regarding broadcast content.” I also address the old “public’s airwaves” argument and note that, “Even if the public owns the airwaves, it doesn’t diminish the First Amendment rights of the people in the broadcast industry.” After all, the public technically owns city streets, I point out, but that doesn’t mean the government can censor the newspapers sold in sidewalk coinboxes.’
Anyway, if you care to read the entire article, you can find it here.
European Union: Reduced Innovation Edition
This is hilarious.
Strange thing about an operating system with missing functionality… no one wants to sell it. That’s what the European Commission is discovering, as major PC OEMs are declining to preinstall the media-player-free Windows XP N on any of the systems they sell. While Fujitsu Siemens says they’ll sell it “on request,” Dell, Lenovo, and HP are all taking a pass on it.
EU antitrust regulators won their battle against Microsoft, securing a court order to “unbundle” Windows Media Player from Windows XP. Now consumers are free to get the products separately if they prefer.
And now we’ve learned that, strangely enough, when you offer people with a product with fewer features for an identical price, most people don’t buy it! (My girlfriend, who pines for the days of DOS 6, says she’d buy it; she seems to be in the tiny minority though)
I think this exercise has laid bare the absurdity of Microsoft’s antitrust critics, who claim that Microsoft has somehow been shoving unwanted browsers and media players down their customers’ throats. Those customers who who pay attention to such things can easily download FireFox and Quicktime. Those customers who don’t pay much attention, by definition, don’t care very much.
So who exactly are the EU’s antitrust busybodies helping? When they attain victory and consumers across the continent yawn, maybe the regulators were barking up the wrong tree in the first place.
Media Deconsolidation, Part 10: Viacom’s Breakup Official
The Viacom split is finally offical. Faithful readers know that I have been sounding off about this (and other media divestitutes) for many months now and wondering why we haven’t heard a peep from the Chicken Little media critic crowd about it. After all, whenever there’s even a minor media merger or acquisition proposed, these critics rush out hysterical press releases predicting that the End Times will soon be upon us.
And so I went searching again today online to find see if these groups had posted something–ANYTHING!–about the Viacom crack-up. But I have found nothing. The silence is deafening. I guess that’s no surprise since these critics have made a career of spinning gloom-and-doom tales without providing a shred of evidence about how consumers have supposedly been been harmed. Worse yet, they run around saying that the Internet and new technologies and media outlets change nothing and that the old media companies are still programming our brains. Just silly.
Supreme Court Rejects Media Ownership Case–What’s Next?
It was no surprise yesterday that the Supreme Court announced it would not be reviewing the Third Circuit Court of Appeals decision overturning the FCC’s media ownership revisions from 2003. Neither the agency nor the Bush Administration had the heart to re-fight the battle that Michael Powell waged to get these meager revisions through given the backlash it created two years ago.
So, where do we go from here? It’s pretty obvious. Media ownership reform will, once again, become a piecemeal, incremental process with each rule being considered individually over time. The FCC could have taken that path before, but Powell and staff opted for a more principled approach to the issue. He rightly viewed the media world not as a collection of distinct entities, outlets, and technologies, but rather as a big bucket of bits that were all increasingly commingling. Acknowledging the reality of media and technological convergence, Mr. Powell’s FCC decided to take a comprehensive approach to reforming this hodgepodge of confusing media ownership restrictions.
The problem was, by doing so, Powell had created a very juicy target for the media critics to go after. They were able to paint the reform effort as a radical gutting of all the media ownership rules even though the FCC’s revision of the rules only moderately relaxed the existing regulations–and even retained or strengthened some of the rules under consideration.
“Media Myths” Book is Finally Out!
Well, after mentioning it in just about every blog entry I’ve penned over the past few months, I’m happy to say that my new book, Media Myths: Making Sense of the Debate over Media Ownership, is finally out!
I open the book by posing the following questions:
* Are media companies in this country too big?
* How big is “too big”?
* Is the media diverse enough and competitive enough today?
* And what relationship, if any, does media size have to the health of our democracy?
I go on to show that, contrary to what some media critics claim, to the extent there was ever a “Golden Age” of media in America, we are living in it today. The media sky has never been brighter and it is getting brighter with each passing year. Citizens have more media options today than ever before. Indeed, far from living in a world of “media monopoly” we now live in a world of media multiplicity.
Regarding claims that extensive media regulation benefits consumers, I show that such rules do little to encourage increased media diversity and competition. Indeed, more often than not, they thwart important new developments that could enhance media diversity and competition. Citizens will be better off without such regulations because their private actions and preferences will have a greater bearing in shaping media markets than arbitrary federal regulations. No matter how large any given media outlet is today, it is ultimately just one of hundreds of sources of news, information, and entertainment that we have at our collective disposal. It is just one voice in our contemporary media cacophony, shouting to be heard above the others. Information and entertainment cannot be monopolized in a free society, especially in today’s world of media abundance.
Google Is a Media Company… and the Biggest One in the World
Apparently I’m not the only one who thinks that Google is a media company. Check out this Reuters story about how Google is not only a media company, but with its stock trading at a staggering $293 a share, it is the most valuable media company in the world. In just 10 months of trading as a public company, it has surpassed Time Warner to take that honor.
Meanwhile, Google and Yahoo! are “sucking the financial air out of the room” in terms of stealing away valuable advertising dollars from newspapers. According to this story, when it comes to new revenue, Google and Yahoo! have generated $4 billion last year–the same amount as the 10 largest newspaper companies combined! Folks, when two new companies are stealing away that much revenue from other industry players, that’s a sure fire sign that consumers find these products or outlets interchangeable. That is, they are substitutes for one another and they are part of the same “relevant market” in antitrust terms.
So, now that Google is a media company, should we start imposing silly ownership caps and audience reach limits on them the same way we do for the older media giants? I think most would agree that would be foolish, but the reality is that the old media operators still have their hands tied by regulators in many ways while Google and other new media giants storm ahead without any similar regulatory shackles. Seems sort of silly and blatantly unfair doesn’t it?
[UPDATE (6/10): Check out this interesting story about Google’s efforts to improve its automated newsgathering capabilities. The title of the story, “Can Google News Robot Rival the Newspapermen?” is great, but the subtitle is the real kicker:
“A Potential Nightmare Faces the ‘Dead-Tree-and-Ink’ Business.” No doubt about it.
Tax Competition & Telecommunications
Forbes has an interesting column on how to lower your mobile phone taxes by changing your area code to a lower tax jusrisdiction. Though this loophole will likely be plugged quickly, it illustrates the difficulty of jurisdictional controls in an increasingly borderless world and the increasing absurdity of regulations based on mere physical location. It also demonstrates the benefits of tax competition among the states.
Adam co-authored an excellent paper on the benefits of tax competiton a couple of years ago, which is worth a read.
From Luxury Good to Disposable Item (Parts 2 & 3): A $30 Disposable Video Camera and a $1400 Plasma Television
Two months ago, I told the story of how I found a $29 progressive scan DVD player at CompUSA. As I noted then, I found this amazing in many respects, but mostly because I had spent something like $1000 bucks on my first DVD player when they hit the market.
Well, I have found yet another reason to lament being an early adopter of technology. I opened the D section of today’s Wall Street Jounral to read Walt Mossberg’s review of the new Pure Digital Technologies disposable video camera. The price? An amazing $29.99! These video cameras will be sold at drug stores like CVS, which started stocking them on Monday of this week. In their stores, CVS will brand the cameras under their own name.
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