Tim Wu writes a good yarn, but it's intellectual mush:
1. Wu says: "Google's truest and most formidable foes are much older and more
powerful. Today we call them Verizon and AT&T, but their real name
is the Bell system." Actually, their real names are Verizon and AT&T, and they hate each other. They compete fiercely against each other in the wireless space and other markets as well, such as enterprise business accounts. It's silly to conflate them. One might as readily say: "Today we call them GM and Ford, but their real name is Detroit."
2. Wu says: "Over the coming years we can expect the Bell system to do everything in its power to destroy or subjugate Google. That's what history suggests; for since 1894 or so, the Bell system has
swallowed or eliminated almost all of its would-be rivals." In contrast, Wu adds, "Google is as much an ideology as a firm."
Corporations, though, are not like people, with hard-wired personality characteristics. Verizon and AT&T are protean economic creatures, and over the long run they will act to serve their shareholders' interests. Come to think of it, so will Google.
Is such corporate self-interest a good thing or a bad thing? The premise of our economic system is that it's usually, though not always, a good thing. Antitrust law does a pretty good job of identifying the narrow circumstances in which unbridled market forces disserve consumer interests. But one will search in vain through the Wu corpus for an economically rigorous analysis of what antitrust theory says about his "openness" rhetoric, This article is no exception.
3. Wu writes: "What gives AT&T and Verizon real power over the wireless world? It is their control over spectrum, retail, and government, three areas where Google, as of now, is very weak." Hmm, "very weak?" Let's see:
- As for "control over spectrum," AT&T and Verizon have most (not all) of their spectrum because they paid billions for it at auction. The same for Sprint and T-Mobile. Google can do it too, in the new spectrum auction the FCC has planned for next year.
- As for "control over retail," sure, the telcos have lots of customers, but Google has tens of millions more than either AT&T or Verizon, because it completely dominates the national search market, with a market share of 70-90%.
- Finally, as for "control over government," Google is the darling of the Democratic high-tech intelligentsia, which will be running regulatory policy in fifteen months. (Where did Barack Obama give his recent speech extolling the substance of Google's regulatory policy? At Google headquarters. Clinton visited a few months ago.) But Google needn't actually wait for a formal change of administration, because its side has formidable political clout already. Wu in particular is well known for his connections to the two incumbent Democratic commissioners at the FCC, and he was instrumental in formulating the Google-championed "open access" conditions the FCC imposed on the new spectrum up for auction next year as well as the "net neutrality" obligations imposed on AT&T as part of a recent merger. With influence like this, who needs formal lobbyists?
4. Wu writes: "The Bells are strong enough in Washington to try to use
government as a tool against Google. The exact mechanisms can be hard
for anyone but a seasoned telecommunications attorney to understand."
Actually, I can name the mechanism right now: Tim Wu's regulatory philosophy. What Google should fear most is a government that is temperamentally quick to impose new "neutrality" or "openness" obligations on large companies. Do you like the idea of "net neutrality?" You'll love "search neutrality." After all, Google, with its $200 billion market cap, controls the search market, and its proprietary algorithms ultimately pick the winners and losers on the Internet. Want to know how those algorithms work, and which websites they favor or disfavor? Want to create an FCC or FTC regulatory staff with responsibility for ensuring the Google treats Web participants openly and fairly? Follow the "neutrality" and "openness" rhetoric where it logically leads.
