It remains unclear how interested the Federal Trade Commission (FTC) is in bringing a formal antitrust action against Google, but we at least know that inquiries have been made. I suspect these inquires are far more serious than whatever the agency is fishing for with its new Twitter inquires. After all, as I note in my latest Forbes column, “Google isn’t even a teenager yet (having only been founded in September 1998), but the firm’s rise has been meteoric and it has made a long list of enemies in the process. Practically every major player in the Digital Economy… is gunning for Google these days, both in the commercial and political marketplace.” In this sense, it’s not surprising the FTC might take a keen interest in the company with so many competitors complaining.

Still, I just can’t find much merit in an antitrust case against Google since, as I noted in my column, “The firm’s success seems tied to high quality products that users prefer over rival services. Importantly, barriers to entry are low: there’s nothing stopping new entrants from innovating and offering competing online services to match Google.”

Regardless, instead of arguing about the merits of an antitrust action against Google, let’s consider the more interesting, and I think intractable, question of remedies. Here’s what I had to say about that in my Forbes essay:

[possible remedies] include a so-called Federal Search Commission that would monitor search results to achieve “fairness” or “search neutrality.” Some academics have also suggested a possible mandatory “right of reply” for companies or consumers if they don’t like what a search for their name reveals. This is the equivalent of a Fairness Doctrine for search results. Another idea, borrowed from Microsoft’s antitrust saga in Europe, is a “browser ballot” for specialized search results like maps, stock reports and weather. Just as Microsoft was required by European antitrust officials to offer a “ballot” of alternative browsers before consumers first got online, Google might be forced to show several alternative links for search queries if Google-owned sites are also shown in the results. Even if ballots could be implemented without reducing the usability of search engines—a tall order—it would be difficult, if not impossible, to incorporate all the choices available to consumers. And if government only chose a few, it would be picking winners and losers. Better to let markets decide. Making Google’s proprietary search algorithm more transparent also sounds great until you realize it would make it easier for spammers and scammers to game search results.  Search regulation might also lead to dangerous forms of speech control. Just as the Fairness Doctrine was abused by politicians in the Analog Era, search-tinkering will likely prove too tempting to pass up.  For paternalistic policymakers, search regulation could be an opening to do what they’ve always wanted: “clean up” the Net.

These are just some of the problems with the remedies that have been proposed. Please read some of the essays by Geoff Manne and Josh Wright listed down below for a more in-depth exploration of these issues. Of course, we’re still very early in this process and, if a case against Google moves forward, I suspect we’ll see a number of other possible remedies suggested.

Regardless, I can’t help but have a vague sense of unease about the mere thought of Uncle Sam as Search Czar. Again, from my Forbes essay:

These regulatory solutions would put government bureaucrats in control of the day-to-day management of one of the most dynamic digital technologies ever invented. Treating Google like an essential facility to which all must have equal access on regulated terms would mean subjecting the Internet, still largely free of government control, to public utility-style regulation. It’s hard to imagine that regulating search like local sewage service will benefit consumers in the long run. Government simply doesn’t have a very good track record of steering markets—especially dynamic, fast-evolving ones like this—in more innovative directions.

I think consumers will be better served by Google and its many competitors spending their time focused on creating innovative new products and services rather than making Washington bureaucrats happy.

Additional Reading from TLF Contributors:

• The FTC makes its Google investigation official, now what? – by Geoffrey Manne & Joshua Wright
• What’s really motivating the pursuit of Google? – by Geoffrey Manne
• Search Bias and Antitrust – by Josh Wright
• Sacrificing Consumer Welfare in the Search Bias Debate, Part II – by Josh Wright
• The Problem of Search Engines as Essential Facilities – by Geoffrey Manne
• Why Google probe should worry consumers – by Ryan Radia (in San Jose Mercury News)
• Wired on Google’s Coming Antitrust Nightmare – by Adam Thierer

Forbes.com has just published an editorial that Berin Szoka and I penned about yesterday’s net neutrality announcement from the FCC.

The Day Internet Freedom Died

by Adam Thierer & Berin Szoka

There was a time, not so long ago, when the term “Internet Freedom” actually meant what it implied: a cyberspace free from over-zealous legislators and bureaucrats. For a few brief, beautiful moments in the Internet’s history (from the mid-90s to the early 2000s), a majority of Netizens and cyber-policy pundits alike all rallied around the flag of “Hands Off the Net!” From censorship efforts, encryption controls, online taxes, privacy mandates and infrastructure regulations, there was a general consensus as to how much authority government should have over cyber-life and our cyber-liberties. Simply put, there was a “presumption of liberty” in all cyber-matters.

Those days are now gone; the presumption of online liberty is giving way to a presumption of regulation. A massive assault on real Internet freedom has been gathering steam for years and has finally come to a head. Ironically, victory for those who carry the banner of “Internet Freedom” would mean nothing less than the death of that freedom.

We refer to the gradual but certain movement to have the federal government impose “neutrality” regulation for all Internet actors and activities—and in particular, to yesterday’s announcement by Federal Communications Commission (FCC) Chairman Julius Genachowski that new rules will be floated shortly. “But wait,” you say, “You’re mixing things up! All that’s being talked about right now is the application of ‘simple net neutrality,’ regulations for the infrastructure layer of the net.” You might even claim regulations are not really regulation but pro-freedom principles to keep the net “free and open.”

Such thinking is terribly short-sighted. Here is the reality: Because of the steps being taken in Washington right now, real Internet Freedom—for all Internet operators and consumers, and for economic and speech rights alike—is about to start dying a death by a thousand regulatory cuts. Policymakers and activists groups are ramping up the FCC’s regulatory machine for a massive assault on cyber-liberty. This assault rests on the supposed superiority of common carriage regulation and “public interest” mandates over not just free markets and property rights, but over general individual liberties and freedom of speech in particular. Stated differently, cyber-collectivism is back in vogue—and it’s coming very soon to a computer near you!

“Net Neutrality” proponents insist, however, that only regulation can save us from nefarious corporate schemers out to quash our rights and destroy all innovation. Over the last decade, a cabal of activist-minded cyber-law professors have successfully turned the world of Internet policy upside down by persuading an entire generation of law students, policymakers, and a number of large Internet companies that “Internet Freedom” means the very opposite of what it used to mean. Borrowing tactics that would have made Orwell proud, they have convinced many in the public and the policymaking community that the old Internet Freedom is slavery, in that we are all just tools of Corporate Big Brother. Thus, they offer us a new Internet Freedom: Neutrality über alles! Their freedom, as in Orwell’s Oceania, is not a freedom from the State, but a gleaming utopia that can only be created by the State.

We see the triumph of this thinking with Chairman Genachowski’s proclamation that, “This is not about government regulation of the Internet. It’s about fair rules of the road for companies that control access to the Internet. We will do as much as we need to do, and no more, to ensure that the Internet remains an unfettered platform for competition, creativity and entrepreneurial activity.”

Yet, no matter how vociferously the proponents of FCC-enforced “neutrality” insist that it is not regulation they seek, the reality is that the steps they counsel would put the FCC in the driver’s seat for a host of Internet economic and social issues. Internet companies and technologies will come to be regulated like crusty old “common carriers” and broadcast stations that must serve some amorphous “public interest.”

But as the FCC’s long history of meddling in media and communications markets makes clear, micro-management of dynamic markets is a recipe for economic stagnation, strangled innovation, and speech controls. And the path to regulation does not end with infrastructure providers. The specter of neutrality haunts not just today’s Internet service providers but also all high-tech innovators, like Google, Apple, Facebook, Microsoft and their descendents. Although the FCC’s original mandate was mostly to deal with spectrum “interference”—something that could have been, and actually was being, dealt with using property rights—the agency quickly expanded its mission: Broadcast regulation metastasized into government control over speech, innovation, campaign advertising and a “fairness doctrine” for news coverage. Likewise, Net Neutrality mandates will give rise to neutrality mandates for other areas.

The slope is slippery and we’re already heading down it: The push for “Wireless Neutrality” is already well under way and the FCC is currently investigating Apple’s rejection of the Google Voice application for the iPhone. Thus, “Net Neutrality” leads to “Device Neutrality” and “Application Neutrality,” but the same rationale would apply equally to any circumstance in which access to a communications platform is supposedly limited to a few “gatekeepers.” Some academics have already proposed a “Federal Search Commission” to deal with accusations of “search bias.” At the end of the day, we’ll need a full-blown Federal Information Commission with a Search Bureau, a Cloud Computing Division and several other ministries to micro-manage the many flavors of neutrality regulation.

The path back toward real Internet freedom lies in restoring the presumption of liberty enshrined in the First Amendment, which is not a sword with which the government can ensure fairness, diversity or openness, but a shield against government meddling in media, communications and online markets.

Cory Doctorow has called for a Wikipedia-style effort to build an open source, non-profit search engine. From his column in The Guardian:

What’s more, the way that search engines determine the ranking and relevance of any given website has become more critical than the editorial berth at the New York Times combined with the chief spots at the major TV networks. Good search engine placement is make-or-break advertising. It’s ideological mindshare. It’s relevance… It’s a terrible idea to vest this much power with one company, even one as fun, user-centered and technologically excellent as Google. It’s too much power for a handful of companies to wield. The question of what we can and can’t see when we go hunting for answers demands a transparent, participatory solution. There’s no dictator benevolent enough to entrust with the power to determine our political, commercial, social and ideological agenda. This is one for The People. Put that way, it’s obvious: if search engines set the public agenda, they should be public.

He goes on to claim that “Google’s algorithms are editorial decisions.”   For Doctorow, this is an outrage: “so much editorial power is better vested in big, transparent, public entities than a few giant private concerns.”

I wish Doctorow well in his effort to crowdsource a Google-killer, but I’m more than a little skeptical that anyone would actually want to use his search engine of The People.  My guess is that, like most things produced in the name of “The People” (Soviet toilet paper comes to mind), it will probably won’t be much fun to use, and will likely chafe noticeably. (For the record, I love and regularly use Wikipedia; I just don’t think that model is unlikely to produce a particularly useful search engine.  As Doctorow himself has noted of Google, “they make incredibly awesome search tools.”)

But I’m glad to see that Doctorow has conceded an important point of constitutional law: The First Amendment protects the editorial discretion of search engines, like all private companies, to decide what to content to communicate.  For a newspaper, that means deciding which articles or editorials to run.  For a library or bookstore, it means which books to carry.  For search engines, it means how to write their search algorithims.

Doctorow’s “We’ll build our own darn rocket ship in the backyard!” response  to his deep concerns about Google’s dominance of search does not, of course, impinge on Google’s editorial discretion—and for that, I commend him.  But others, most notably Frank Pasquale, have indeed proposed government action to address such concerns in ways that most surely would impinge on the First Amendment rights of all search engines.

Pasquale’s comlpaint about Google is essentially the same as Doctorow’s, but rather than proposing an innovative (if unrealistic) alternative (like Doctorow), he  has called (PDF) for the “creation of a Federal Search Commission to parallel the Federal Communications Commission” and declared that ” In order to reduce opportunities for clickfraud and unfair treatment of indexed entities, qualified transparency will be needed in order to open up the ‘black box’ of search engine operations to at least some third parties.”   He focuses on search algorithms because:

The heart of a search engine and the key to its success is its search algorithm. Effective algorithms are protected by a veil of secrecy and by various intellectual property rights. As a result, new entrants cannot easily appropriate existing algorithms. Moreover, many algorithms are trade secrets. Unlike patents, which the patent holder must disclose and which eventually expire, these trade secrets may never enter the public domain. Search algorithms may be analogous to the high-cost infrastructure required for entry into the utility or railroad markets.

He diagnoses the problem as follows:

given the emphasis on secrecy in the search engine business model, no one can verify that such rankings have not been manipulated or that subtler biases in favor of search engines’ partners are not being worked into the search algorithm… If search engines are to be accountable at all, if their interest is to be balanced against those of the various other claimants involved in search-related disputes, and if social values are to be given any weight, some governmental agent should be able to peer into the black box of search and determine whether or not illegitimate manipulation has occurred.

But what about editorial discretion?  Why should Google be forced to change its PageRank algorithms any more than The New York Times should be forced to change how it decides which stories to run?  Moreover, why should Google be forced to disclose how this process works?  Assigning a government monitor to sit in on meetings of the Times‘ editorial board “to detect bias” would clearly impinge on their editorial discretion.  Similarly, I don’t see why forcing a Yahoo!, Microsoft or any other search engine to disclose their equivalent processes for ranking search results should pass constitutional muster.

Editorial discretion means getting to make your own decisions, even if they might seem biased to those wise elites who “know better” because, well, it’s your decision and not the government’s!  Saying that speakers can make whatever decisions they want as long as they’re not biased means speakers don’t really have editorial discretion after all.

So, if recognizing that search algorithms are a form of editorial discretion is a problem (as Doctorow implies), it’s only insofar as this might frustrate the desires of those who would regulate search.

I finally got around to reading Planet Google: One Company’s Audacious Plan to Organize Everything We Know, by Randall Stross. It’s very well done. Stross is a frequently contributor to the New York Times and the author of several other interesting books on the technology industry. He knows how to weave a story together, and it helps that Google’s story is a pretty amazing one.

Each chapter discusses a different part of Google’s growing family of services — GMail, Google Maps, Google Earth, Book Search, and YouTube. Of course, it all started with search and Stross does a good job explaining how the ingenious Google search algorithm has grown from dorm room project to the greatest aggregator of human knowledge that the world has ever known. This, in turn, has powered Google’s hugely successful online advertising system. The real secret of their success with online advertising, Stross argues, is that “Google’s impersonal, mathematical approach search also provides you with the ability to serve advertisements that are tailored to a search, rather than to the person submitting the search request, whose identity would have to be known.”

Despite the benefits of such generally anonymous searching, as Google has grown and added new services and capabilities, concerns about the sheer volume of data that the company collects have led to heightened privacy concerns. Indeed, privacy is a core theme that Stross uses in the book to tie many of the chapters and issues together. Google is constantly struggling to strike the right balance between providing more access to the world’s information while also being careful not to raise privacy concerns. But it’s unclear exactly how much more information collection that users (or public officials) will tolerate before advocating stricter limits on Google’s reach.  As Stross points out:

Guided by its founding mission, to organize all the world’s information, Google has created storage capacity that allows it to gain control of what its users are you doing in a comprehensive way that no other company has done, and to preserve those records indefinitely, without the need to clear out old records to make way for new ones. Moreover, Google differentiates its service by refining its own proprietary software formula to mine and massage the data, technology that it zealously protects from the sight of rivals. This sets up a conflict between Google’s wish to operate a “black box” (completely opaque to the outside) and its users’ wish for transparency.

At the very least, users would like Google to disclose what protections are in place to safeguard their privacy. It is also natural that users would be curious about the machines that hold their personal data, as well as about which employees within Google have access to that data, and about the risks that it might be leaked, stolen, or transferred, for example, to a government agency that requests it. (p. 62)

Personally, I think most of these privacy fears are overblown. The mundane, trivial aspects of our daily lives aren’t really of much interest to Google. And to the extent users are concerned about their privacy, there are plenty of ways they can take steps to better protect their personal information or web-surfing habits.  Blocking ads, rejecting cookies, and using encryption are three steps that privacy-sensitive users can take to better shield the personal info or surfing habits. Finally, the concern about government access to data is best remedied by limits on what government can access in the first place. We shouldn’t be regulating Google or other companies to limit information collection based on a fear of government access; we just need to tightly limit the government’s ability to enlist private companies as agents of the state.

Still, as Stross points out, privacy concerns persist:

How can users be certain that their personal information won’t be put to uses to which an individual would never willingly consent? Privacy concerns extend across all Internet companies, but those concerns of our greatest where personal information is gathered in the largest pool. This makes the stewardship of Google’s machine a subject of public interest. Whatever is behind a door that is intentionally kept closed will appear sinister, whether deservedly so or not. For the sake of improving its public image, it’s possible that Google may relent and open its doors, at least enough to afford a peek inside. (p. 62)

I think that’s a fair point and this is something Google is really going to struggle with in coming years, especially as its search algorithm and other applications grow more powerful and comprehensive.  A good example of that is already seen with Google’s amazing “Street View” technology, which provides panoramic street-level views of maps searched via Google Maps. “What neither Google nor its critics realized,” Stross says, “was that our anonymity while walking about in public space in the predigital age was protected not by law but by the crude state of technology–we felt invisible only because cameras were not in place to capture our images.” (p. 145)

As a society, we had better get used to this because Street View is just the beginning of what will eventually grow into a far more sophisticated set of technologies as geo-mapping, geo-location, and image retrieval are married to virtual reality technologies. We’re really not that far away from Star Trek “holodecks” being projected into our living rooms, and once those holodecks let us walk down any street in the world, things are going to get both really exciting and a little bit creepy at the same time. But even if Google abandoned Street View tomorrow, somebody else would pick it up and run with it. Innovation in this space cannot be frozen. (Microsoft’s recent launch of Photosynth shows us that).  Google has already taken steps to protect privacy on Street View by blurring facial images and letting users flag “inappropriate or sensitive imagery for blurring or removal.”  That’s about all we can ask for.

Another theme that Stross develops nicely in the book is the ongoing war between Google and Microsoft. He argues that “Google’s ascendance has been accompanied by Microsoft’s decline.” (p. 195)  But that does not mean Google will be able to hold their current lead. As Stross rightly points out:

No computer company has ever been able to enjoy pre-eminence that spans two successive technological eras. IBM in the mainframe era could not head off the ascent of Digital Equipment Corporation in the minicomputer era, which, in turn, could not head off the ascent of Microsoft in the personal computer era.

And now Google has “succeeded in pushing Microsoft into a defensive crouch” and made life very difficult for that supposed “monopolist” of the PC era.  As a result, some Google critics claim this latest King of the Tech Hill cannot be toppled and that Google is the new “monopoly” we need to worry about.  But these fears are also overblown. Google faces threats today from many different providers and doesn’t really even have its act together in other areas. For example, Stross points out how Facebook and other social networking sites have been a real pain for Google. Facebook, in particular, is creating a massive walled garden that is largely outside Google’s search and information retrieval capabilities. “In a twinkling,” Stross argues, “Facebook became a miniature Web universe–behind a wall, inaccessible to Google.” (p. 30)  Meanwhile, in recent months, Google has annouced layoffs and has scuttled a variety of programs and projects which haven’t panned out, including experiments in social networking, virtual worlds, and a Twitter competitor.

But it is tomorrow’s providers and technologies that will pose the most serious challenge to Google’s current hegemony. No one can predict what big application(s) or competitor(s) will emerge next, but it all could happen faster than you think.  After all, let’s not forget that most of us hadn’t even conducted our first Google search 10 years ago, and no one considered Google a serious threat to Microsoft back in 1999.  Just a decade later, Google has Microsoft wondering if they have a future at all. Things can change that rapidly in the digital world and it should make us question the wisdom of government intervention into such a fast-moving field.

Moreover, government micromanagement of the services Google provides–especially search–is troubling to imagine. I don’t even want to think about how a DOJ consent decree would seek to control Google’s algorithm or the search business in general. But some critics are already speaking of “Googleopoly” and calling for a “Federal Search Commission,” foreshadowing the fight to come.  Google’s rapid growth and sheer size may end up tilting both policymakers and public opinion against them more and more in coming years as such “Googlephobia” increases. Stross notes that:

Google’s future will be determined to no small degree by the view that its users hold of the company itself. Google has enjoyed mostly favorable public notice in its first ten years, but maintaining a cuddly, anticorporate image when it stands among the U.S. companies with the largest market capitalization may pose an increasingly difficult challenge. (p. 18)

Indeed, Google’s “Don’t Be Evil” motto is already wearing a little thin in some quarters. And some of us still aren’t even sure what it means. As Google grows bigger and makes buckets more money in coming years–and they likely will–I think Stross is correct in arguing that Google’s honeymoon with the public and policymakers will likely come to an end. That doesn’t mean they won’t still be a great company doing great things, it’s just that they’ll be antagonizing even more competitors, lawmakers, and other groups than they already do today. And that will likely spell serious trouble for them. It’s never good to have so many enemies. Just ask Microsoft!

In the meantime, we shouldn’t lose sight of what an amazing capitalist success story Google has been and how lucky we are that they have been at least a little bit successful in their mission “to organize the world’s information and make it universally accessible and useful.”  It’s an incredible story, and Planet Google is a fine early history of the company and the new era of computing it has ushered in.