june 16, 2011 regulating platform...

The Law and Economics of Search Engines and Online AdvertisingJune 16, 2011

Regulating Platform Boundaries

Randal C. PickerLeffmann Professor of Commercial Law

The Law School

The University of Chicago773.702.0864/[email protected]

Copyright © 2011 Randal C. Picker. All Rights Reserved.

August 28, 2012 Copyright © 2011 Randal C. Picker 2

“The fastest path to economic wealth is in

fact the construction of these digital

platforms where other people are dependent

upon you and you are part of an important

piece of the knowledge or commerce

economy.”

Eric Schmidt, e-G8 Forum, May 24-25, 2011


“If you look at the industry as a whole, there

are four companies that are exploiting

platform strategies very well. One of them is

Google; the other three being Apple, Amazon

and Facebook. We’ve never had four

companies growing at the scale that these

four are in aggregate … .”

Eric Schmidt, D9, 2 June 2011


Microsoft


“912 Microsoft contends, in substance, that

media functionality is not a separate product

from the Windows client PC operating system

but forms an integral part of that system. As a

result, what is at issue is a single product,

namely the Windows client PC operating

system, which is constantly evolving. In

Microsoft’s submission, customers expect

that any client PC operating system will have

the functionalities which they perceive as

essential, including audio and video

functionalities, and that those functionalities

will be constantly updated.”

Microsoft (CFI 2007)


926 In the first place, it must be borne in mind

that the Windows client PC operating system

is system software while Windows Media

Player is application software.

927 In the second place, there are distributors

who develop and supply streaming media

players on an autonomous basis,

independently of client PC operating systems.

Thus, Apple supplies its QuickTime player

separately from its client PC operating

systems.



928 … [I]n the third place, Microsoft …

develops and markets versions of Windows

Media Player which are designed to work with

its competitors’ client PC operating systems,

namely Apple’s Mac OS X and Sun’s Solaris.

929 In the fourth place, Windows Media Player

can be downloaded, independently of the

Windows client PC operating system, from

Microsoft’s Internet site. Likewise, Microsoft

releases upgrades of Windows Media Player,

independently of releases or upgrades of its

Windows client PC operating system.



1038 Thus, in the first place, it is clear that

owing to the bundling, Windows Media Player

enjoyed an unparalleled presence on client

PCs throughout the world, because it thereby

automatically achieved a level of market

penetration corresponding to that of the

Windows client PC operating system and did

so without having to compete on the merits

with competing products.



1167 It follows from all of the foregoing

considerations that Microsoft has not

demonstrated the existence of any objective

justification for the abusive bundling of

Windows Media Player with the Windows

client PC operating system. ***



XP N sales represent 0.005 percent

(1/20,000th of one percent) of overall XP sales

in Europe.

No PC manufacturers have ordered or

preinstalled Windows XP N on PCs.

Only 1,787 copies of Windows XP N have

been sold to retailers and distributors in

Europe.

Microsoft Factsheet, Apr 2006


The number of copies actually purchased by

consumers is not tracked; many may still be

sitting on store shelves. The French retailer

FNAC, the single largest retailer to order XP N

representing 46% of the orders, has stated

that it sees no consumer demand for

Windows XP N.

By comparison, 35.5 million copies of the

fully functional version of Windows XP were

sold in Europe during the same nine-month

period.

Microsoft Factsheet, Apr 2006)


Google Buzz


Organic Search Results Use of Identity

Adverti

sing

Use of

Identity

Anon Search

Anon Ads (Contextual Only)

Anon Search

Browser-Me Ads (Opt Out)

Personalized Search

(Bundled Opt In)

Anon Ads (Contextual Only)

Personalized Search

(Bundled Opt In)

Browser-Me Ads (Opt Out)

Identity Revelation and Google

Search

Picker, Online Advertising, Identity and Privacy, 1 July 2009

Searching for Knowledge: Zones of Identity and

Privacy


What

Strangers

Know

What

You

KnowWhat Your

Friends

Know

Technologies change

info distribution and

sharing: more

revealing, more access

Searching the social

graph (Facebook,

Twitter) vs. searching

strangers (Google)


“Google Buzz is a new way to start conversations

about the things you find interesting. It’s built right

into Gmail, so you don't have to peck out an

entirely new set of friends from scratch — it just

works. If you think about it, there’s always been a

big social network underlying Gmail. Buzz brings

this network to the surface by automatically

setting you up to follow the people you email and

chat with the most.”

Google Blog, 9 Feb 2010


6(a) Gmail stores, processes and maintains

your messages, contact lists and other data

related to your account in order to provide the

service to you.

6(b) When you sign up for a particular service

that requires registration, we ask you to

provide personal information. If we use this

information in a manner different than the

purpose for which it was collected, then we

will ask for your consent prior to such use.

FTC Google Buzz Complaint, 30 Mar 2011


13 As set forth in paragraph 6(a), respondent

has represented, expressly or by implication

that it used, and would use, information from

consumers signing up for Gmail only for the

purpose of providing them with a web-based

email service.



14 In truth and in fact, as described in

paragraphs 7-11, respondent did not use

information from consumers signing up for

Gmail only for the purpose of providing them

with a webbased email service. Instead,

Google used this information to populate its

new social networking service. Therefore, the

representations set forth in paragraph 13

were, and are, false or misleading and

constitute a deceptive act or practice.



IT IS FURTHER ORDERED that respondent,

prior to any new or additional sharing by

respondent of the Google user’s identified

information with any third party, that: 1) is a

change from stated sharing practices in effect

at the time respondent collected such

information, and 2) results from any change,

addition, or enhancement to a product or

service by respondent, in or affecting

commerce, shall:



A. Separate and apart from any final “end

user license agreement,” “privacy policy,”

“terms of use” page, or similar document,

clearly and prominently disclose: (1) that the

Google user’s information will be disclosed to

one or more third parties, (2) the identity or

specific categories of such third parties, and

(3) the purpose(s) for respondent’s sharing;

and

B. Obtain express affirmative consent from

the Google user to such sharing



IT IS FURTHER ORDERED that respondent, in

or affecting commerce, shall, no later than the

date of service of this order, establish and

implement, and thereafter maintain, a

comprehensive privacy program that is

reasonably designed to: (1) address privacy

risks related to the development and

management of new and existing products

and services for consumers, and (2) protect

the privacy and confidentiality of covered

information.



Privacy assessments every two years by

third-party approved by the FTC

Obligation runs 20 years.



With Social Search, when we search for [baby

sleep patterns], [swaddling] or [best cribs],

not only do we get the usual websites with

expert opinions, we also find relevant pages

from our friends and contacts. For example, if

one of my friends has written a blog where he

talks about a great baby shop he found in

Mountain View, this might appear in my social

results. I could probably find other reviews,

but my friend's blog is more relevant because

I know and trust the author.

Google Blog, 27 Jan 2010


Google ITA

August 28, 2012 Copyright © 2011 Randal C. Picker 39Google Blog, 8 Apr 2011

How cool would it be if you could type “flights

to somewhere sunny for under $500 in May”

into Google and get not just a set of links but

also flight times, fares and a link to sites

where you can actually buy tickets quickly

and easily?


Complaint ¶5. The proposed merger will give

Google the means and incentive to use its

ownership of QPX to foreclose or

disadvantage its prospective flight search

rivals by degrading their access to QPX, or

denying them access to QPX altogether.

US/Google/ITA FR, 14 Apr 2011


Section IV.A–G of the proposed Final

Judgment preserves competition for OTIs by

creating a legally enforceable commitment

that Defendants will continue to license and

improve QPX.

Finally, Google intends to introduce a new

travel search service that will include airfare

pricing and shopping functionality. Section

IV.G provides that Defendants are not

required to offer OTIs any product, service or

functionality that Google develops

exclusively for its new travel search service.



Access to airline seat and booking class

information is a critical input to a P&S

system. To ensure that Defendants do not

restrict access to this crucial information,

Section V.A prohibits Defendants from

entering into agreements with an airline that

restricts the airline’s right to share seat and

booking class information with Defendants’

competitors, unless one or more airlines

enter into exclusive agreements with a

competitor.



Subject to certain limitations, Sections V.B–C

require Google to make available to OTIs any

seat and booking class information

Defendants obtain for use in Google’s new

flight search service. Finally, Section V.D

prohibits Defendants from conditioning the

provision of QPX or InstaSearch on whether

or how much an OTI spends on other

products or services sold by Google.



As alleged in the Complaint, Defendants

could use information and data gained

through contracts with OTIs to then compete

with those OTIs. Section VI of the proposed

Final Judgment requires Defendants to

establish a firewall at the company to prevent

the misappropriation of competitively

sensitive information and data.



That section requires that Defendants only

use an OTI’s confidential information for the

provision of any product or service to that

specific OTI, for routine administrative or

financial purposes, or for the continued

development and improvement of QPX or

InstaSearch.



Google may use more limited query

information, which does not include data

regarding how OTIs configure the QPX

product, for the improvement of Defendants’

airfare pricing and shopping engines. Section

VI.A prohibits, subject to a small list of

exclusions, employees working on Google’s

travel search product from accessing

confidential OTI information.



Thank You

june 16, 2011 regulating platform...

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