Over at Ars, Ryan Paul has an appropriately sharp-tongued response to the Mozilla Foundation’s troubling move to become a cheerleader for the European Commission’s ongoing antitrust efforts against Microsoft. Apparently Mozilla will assist the EC’s investigation “by offering expertise about the browser market.”
Paul focuses on what’s wrong with this in both a micro and macro sense. He rightly points out that the potential remedies here do not bode well for the future of this sector, since regulatory tinkering with high-tech product standards is bound to end badly and create a terrible precedent for future interventions. “It’s hard to find a rational argument in favor of mandatory standards enforcement,” Paul says. “It would be punitive and unhelpful to the advancement of the web.” Moreover, Paul notes that things have never looked better on the browser front:
Claims that Microsoft’s monopoly status has eliminated competition in the browser market sound hollow in the face of the profoundly vibrant browser market that exists today. The record-setting launch of Firefox 3 added up to over 8 million downloads in the first 24 hours alone. Firefox’s global market share continues to climb every month and the browser has grabbed almost 30 percent of the European market.
And let’s not forget about those two little companies called Google and Apple who have competing products in the field! They’re making serious inroads in the browser wars. Moreover, Microsoft is struggling to hold on to whatever “dominance” they have left in their core market: OS. As Paul concludes:
To the observant tech enthusiast, all signs seem to indicate that Microsoft’s monopoly is on its way out. The Redmond giant is in no danger of annihilation, but it’s definitely not positioned to dictate terms to the rest of the industry anymore.
But what is perhaps most shocking about Mozilla’s call for intervention is the way that Mozilla Foundation chairperson Mitchell Baker minimizes the importance of not just Firefox, but the entire open source movement, when justifying EC intervention in this marketplace.
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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.
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Never forget.
Is it any wonder that Vista took 8 years–and that there’s no firm market date for incremental update Windows 7–when even minor changes require updating thousands of pages of technical documentation for a team of state antitrust regulators?
For the depressing details, read today’s “Joint Status Report” filed by 17 states, the District of Columbia, the DOJ, and Microsoft.
The government’s continued meddling with Windows, some 9 years after it was branded an “abusive monopoly” and following the Vista’s fizzling, boggles the mind. In a way, the company’s efforts to sic the antitrust attack dogs on rival Google really are a desparate attempt to level the playing field.
The European Commission may order Microsoft to strip Internet Explorer from certain versions of Windows, according to a preliminary ruling against Microsoft stemming from a complaint brought by Opera. Opera claims that Microsoft is “abusing its dominant position” by bundling IE with Windows, and consequently denying consumers “genuine choice” among web browsers.
If the European Commission upholds Opera’s complaint against Microsoft, it wouldn’t be the first time Microsoft has been found guilty of antitrust violations stemming from applications bundled with Windows.
Back in 2004, the Commission ruled that it was illegal for Microsoft to bundle its Windows Media Player with Windows and ordered Microsoft to offer a Media Player-less version of the operating system. Microsoft responded by unveiling the wryly named “Windows XP Reduced Media Edition.” Unsurprisingly, the European Commission rejected the name, so Microsoft renamed the OS “Windows N.”
Despite Windows N’s fairly neutral-sounding name, consumers showed little interest in Windows N when it hit the shelves. It’s quite obvious why Windows N was a flop–why would anybody want to run an operating system lacking useful components, especially when plenty of alternatives are available online at the click of a button?
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The WSJ reports that a study will be released tomorrow noting an 8% drop in total “paid search” revenues in 2008. Google’s Fourth Quarter results will be released Thursday. While this is clearly bad news for Google, Yahoo!, Microsoft and other companies that sell ads next to the results of their search engines, it’s also terrible news for the Internet users who have come to take for granted not just these free search engines, but the other free services and content cross-subsidized by search ad revenue. A quick look at the offerings pages of Google, Yahoo! and Microsoft (downloads and some services) should remind you of a few of these ad-supported offerings.
What’s even worse for users is that search ad spending may be the “canary in the coalmine” for online advertising overall: A drop in search ad spending may suggest that display ad revenue for 2008 may have fared even worse. While search ad revenue funds offerings from search engine providers, display ad revenue is the bread & butter of millions of websites, from the “short head” (big websites like ESPN.com) to through the “long tail” (small websites). As advertisers cut back on buying web ads, there will be less funding available for “Free!” culture—and we’ll all suffer from the resulting decline in creativity and innovation.
Let’s hope 2009 is a better year for advertising—both search and display—than 2008.
Jerry Yang’s departure as Yahoo! CEO opens the door to a renewed bid by Microsoft to buy Yahoo!’s search business (or Yahoo! itself). Such a merger could produce a significantly stronger challenger to Google in the search market. With this possibility in mind, the WSJ just ran a fascinating history of the “paid search” 
business—the placement of “contextually targeted” ads next to search engine results based on the search terms that produced those results.
In a nutshell, Microsoft failed to see (back in 1998-2003) the enormous potential of paid search—just as small start-ups (such as Google) were starting to develop the technology and business model that today account for a $12+ billion/year industry, which is
twice the size of the display ad market and which supports a great deal of the online content and services we have all come to take for granted online. Microsoft first put its toe in the water of paid search with a small-scale partnership with Goto.com in 1999-2000. But this partnership failed because of internal resistance from the managers of Microsoft’s display-ad program. In 2000, Google launched Adwords and thus began its transformation from start-up into economic colossus. By 2002, Microsoft realized that it needed to catchup fast, and approached Goto.com (by then renamed Overture) about a takeover. But Microsoft ultimately chose in 2003 not to buy the startup because Bill Gates and Steve Ballmer “balked at Overture’s valuation of $1 billion to $2 billion, arguing that Microsoft could create the same service for less.”
Microsoft, meanwhile, spent the next 18 months deploying hundreds of programmers to build a search engine and a search-ad service, which it code-named Moonshot. The company launched its search engine in late 2004 and its search-ad system in May 2006.
But Microsoft’s ad system came too late:
Advertisers applauded Moonshot for its technical innovation. But Microsoft had trouble coaxing people to migrate to its search engine from Google; advertisers were unwilling to spend large sums on MSN’s search ads. By building a new system instead of buying Overture, Mr. Mehdi says, “we really delayed our time to market.”
What’s most fascinating about the piece is that it seems to suggest that Microsoft missed its opportunities to get into paid search not because it was “dumb,” “uninnovative” or a “bad” company, but for the same sorts of reasons that big, highly successful and even particularly
innovative companies fail. The reasons companies generally succeed in mastering “adaptive” innovation of the technologies behind their established business models are the very reasons why such great companies struggle to encourage or channel the “disruptive” innovation that renders their core technologies and business models obsolete. Continue reading →
The Internet Safety Technical Task Force (ISTTF), which was formed a year ago to study online safety concerns and technologies, today issued its final report to the U.S. Attorneys General who authorized its creation. It was a great honor for me to serve as a member of the ISTTF and I believe this Task Force and its report represent a major step forward in the discussion about online child safety in this country.
The ISTTF was very ably chaired by John Palfrey, co-director of Harvard University’s Berkman Center for Internet & Society, and I just want to express my profound thanks here to John and his team at Harvard for doing a great job herding cats and overseeing a very challenging process. I encourage everyone to examine the full ISTTF report and all the submissions, presentations, and academic literature that we collected. [It’s all here.] It was a comprehensive undertaking that left no stone unturned.
Importantly, the ISTTF convened (1) a Research Advisory Board (RAB),which brought together some of the best and brightest academic researchers in the field of child safety and child development and (2) a Technical Advisory Board (TAB), which included some of America’s leading technologists, who reviewed child safety technologies submitted to the ISTTF. I strongly recommend you closely examine the RAB literature review and TAB assessment of technologies because those reports provide very detailed assessments of the issues. They both represent amazing achievements in their respective arenas.
There are a couple of key takeaways from the ISTTF’s research and final 278-page report that I want to highlight here. Most importantly, like past blue-ribbon commissions that have studied this issue, the ISTTF has generally concluded
there is no silver-bullet technical solution to online child safety concerns. The better way forward is a “layered approach” to online child protection. Here’s how we put it on page 6 of the final report:
The Task Force remains optimistic about the development of technologies to enhance protections for minors online and to support institutions and individuals involved in protecting minors, but cautions against overreliance on technology in isolation or on a single technological approach. Technology can play a helpful role, but there is no one technological solution or specific combination of technological solutions to the problem of online safety for minors. Instead, a combination of technologies, in concert with parental oversight, education, social services, law enforcement, and sound policies by social network sites and service providers may assist in addressing specific problems that minors face online. All stakeholders must continue to work in a cooperative and collaborative manner, sharing information and ideas to achieve the common goal of making the Internet as safe as possible for minors.
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The NYT reports that Google has recently disclosed in an SEC filing that it had 1 million advertisers as of 2007. Some analysts suggest that Google’s growing scale will lead to higher ad prices:
Ben Schachter, an analyst with UBS, said he expects the current number is likely to be between 1.3 million and 1.5 million. Google declined to comment on the current size of its advertising base.
“It is a number that people have wanted to know for a long time,” Mr. Schachter said. More advertisers means more revenue — and more revenue, on average, for every search query — for a couple of reasons: a larger number of queries will have ads matched against them; and on popular queries, competition for placement will be more intense, and as a result, ad prices, which are set by auction, will be higher.
But is Google’s success really driving up ad prices? The same piece also notes that:
Interestingly, each advertiser, on average, spent a little more than $16,000 a year on Google. That figure changed little between 2003 and 2007.
As one of the commenters on the piece noted:
If average advertiser expenses hasn’t really changed in the last 5 years, maybe Google’s argument that it’s not a monopoly because prices are determined by ad auctions, not Google’s search share, holds some weight.
Meanwhile, Google Watch notes Microsoft’s recent success in signing up Verizon, Dell, Sun and Hewlett-Packard as partners for Microsoft’s Live Search engine and asks whether Google’s success is driving potential partners into Microsoft’s arms, as Microsoft appears to be working harder to gain market share for its own search and advertising products. So can Microsoft—and Yahoo!—regain momentum?
Perhaps 2009 will bring some answers to these questions—and more hard data about ad prices. But whatever happens, it’s a safe bet that speculation and fierce argument will abound with every new development in the search/advertising wars.
Microsoft’s share of the browser market across all versions of Internet Explorer has dropped, by one estimate, dropped from 78.58% in December 2007 to 68.15% in December 2008 (or by just under 8% in another estimate).
[IE’s] share dropped from 69.77% in November to 68.15% in December. [During the same period,] Firefox gained more than half a point and ended up at 21.34%, Safari approaches the [10%] hurdle with 7.93% and Chrome came in at 1.04%, the first time Google was able to cross the 1% mark.
This is particularly interesting:
Since IE6 is used primarily within corporations, its market share is much higher during the week than it is on weekends. As a result, all other browsers gain on weekends and especially during a holiday. Because of that circumstance, Net Applications noted that the December numbers should be taken with a grain of salt. However, it is worth the note that IE6 achieved … market share numbers of about 28% during the week and about 21% on weekends in early 2008. In December, these numbers were down to about 20% during the week and 15% on weekends.
So, Microsoft still has an established base among corporate users, where IT administrators generally prevent employees from installing new applications (including browsers) and the sysadmins often don’t roll out alternative browsers across a corporate network for any one of several possible reasons, including:
- They just don’t want to bother having to install, regularly upgrade and support another piece of software;
- They may overestimate the security vulnerability of such alternative browsers compared to Internet Explorer;
- The crustier sysadmins may not realize that today’s browsers are not only free for individual users, but also for corporate users–unlike the old Netscape Navigator; and
- Corporate intranets may be designed for IE, in which case rolling out an alternative browser might cause confusion among less tech-savvy employees.
Microsoft may still have an advantage that could be considered “unfair,” but so what? Continue reading →
Should U.S. businesses involved in Internet commerce do business in nations governed by oppressive regimes? This is a question that many libertarians—including some of us on TLF—have grappled with for some time.
Now Yahoo, Google, and Microsoft have signed on to a set of principles for conducting business in countries that disregard human rights. Today’s Wall Street Journal reports:
Under the new principles, which were crafted over two years, the technology titans promise to protect the personal information of their users wherever they do business and to “narrowly interpret and implement government demands that compromise privacy,” according to the code.
It’s welcome news for defenders of liberty that U.S. Web giants plan to play hardball with foreign governments who would use information gleaned from Internet firms to violate their citizens’ human rights.
Several troubling reports have surfac
ed in the past few years about American companies abetting egregious actions by oppressive governments. In January, Indian police beat a man whose arrest stemmed from Google’s cooperation with the Indian government. And in 2005, Yahoo gave information to the Chinese government that led to the arrest of a journalist accused of giving out state secrets (the case was later overturned).
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.