Dear Chairman Majoras and Commissioners:
On behalf of the Center of the Digital Democracy, I respectfully urge you to impose
conditions designed to protect competition in the matter of Google and DoubleClick.
Since the planned acquisition was announced last spring, we have provided competition
bureau staff with information concerning both the overall competitive conditions of the
interactive advertising marketplace and specific materials related to the two companies
themselves. We have brought in a distinguished professor and one of the country's
leading experts on digital marketing—Professor Joseph Turow of the Annenberg School
at the University of Pennsylvania—to meet with competition staff. We also offered to
provide additional analysis and information, but the staff has not requested such data.
I am alarmed by reports that the commission is about to approve the merger without
imposing any of the conditions required to maintain a semblance of competition in the
interactive advertising market. Given the scale needed to compete with a combined
Google/DoubleClick, there will be insurmountable barriers to entry in the interactive ad
market.
[to read the entire document, download the PDF below]
Chairman Deborah Platt Majoras
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, D.C. 20580
Dear Chairman Majoras:
The attached "Supplemental Statement in Support of Complaint and Request for Inquiry and Injunctive Relief Concerning Unfair and Deceptive Online Marketing Practices," submitted in the "eHavioral Targeting" Town Hall docket on behalf of the Center for Digital Democracy (CDD) and the US Public Interest Research Group (USPIRG), reflects our concern that many of the issues that we raised in November 2006 ("Complaint and Request for Inquiry and Injunctive Relief Concerning Unfair and Deceptive Online Marketing Practices") remain unaddressed. The past year, moreover, has seen the continued growth of marketing technologies that have sharpened the precision with which Internet users are tracked and targeted, and these techniques are now being deployed in entirely new settings, including social networking sites.
Nor, unfortunately, did the discussions at the Town Hall itself suggest that the advertising industry is prepared to offer any more meaningful response to this issue than the vague promises of self-regulation that have proved insufficient in the past. On the contrary, in the few days since the Town Hall ended, a number of announcements have been made, including ambitious new targeted advertising schemes on the part of both Facebook and MySpace, that make clear the advertising industry's intentions to move full-speed ahead without regard to ensuring consumers are protected.
In reviewing the supplementary material that we are submitting (and also filed formally with the Secretary last week), we trust that the commission will pay particular attention to the impact of these new advertising practices on youth. Since both Facebook and MySpace are working with fast-food clients, for example (Coca-Cola on Facebook and Taco Bell on MySpace), the connection between targeted advertising and the commission's ongoing and statutorily required study of youth and unhealthy products needs to be explored. So, too, does the possibility that behavioral targeting firms are violating the terms of the Children's Online Privacy Protection Act, by including users under the age of 13 in their tracking/segmenting/targeting sweeps, warrant investigation.
As our supplemental filing makes clear, there are a number of other issues that warrant the immediate attention of the FTC--including the role behavioral targeting played in the current national tragedy involving sub-prime mortgage loans.
We await with interest the commission's response to this matter, and will be happy to furnish any additional information that the commission may need.
Respectfully submitted,
Jeffrey Chester
Center for Digital Democracy
Ed Mierswinski
USPIRG
cc: Commissioner Pamela Jones Harbour
Commissioner Jon Leibowitz
Commissioner William E. Kovacic
Commissioner J. Thomas Rosch
Second Filing of Supplemental Materials in Support of Pending Complaint and Request for Injunction, Request for Investigation and for Other Relief
Jeff Chester, executive director of the Center for Digital Democracy, a leading public interest group focused on technology, responded to a recent post on the Federal Trade Commission's ongoing review of Google Inc.'s acquisition of DoubleClick Inc.:
I just want to make clear our message (Center for Digital Democracy) to the FTC and the Congress is that the Google acquisition of DoubleClick must be rejected on competition [antitrust] grounds. (We also have serious concerns about consumer data privacy as well with the proposed merger.) CDD already petitioned the FTC to investigate the growing consolidation in the online ad marketplace in a filing last November (see our Web site, www.democraticmedia.org ). There has been a steady — and alarming — trend of acquisitions and buyouts in the field over the last two or so years. Certainly the developments in the last several months are stunning — anywhere between $12-15B in deals focused on the control of consumer data, primarily for interactive advertising (Google-DoubleClick; Micrsoft-aQuantive; Yahoo!-Right Media; WPP-24/7 Real Media and the proposed private takeover of Acxiom).
But Google-DoubleClick brings the online ad market beyond a dangerous concentrated tipping point (btw, even the Interactive Advertising Bureau notes in its 2006 online ad revenue review published last May that "Online advertising continues to remain concentrated with the 10 leading ad-selling companies, which accounted for 69% of total revenues in the fourth quarter of 2006. ...") Google dominates the search ad part of the online ad market. It could have competed in the one part of the market it doesn't control, but covets: display ads. But it's simply taking out what should have been a competitor, primarily so they can use the existing business relationships — and strategic information — with each of DoubleClick's deep-pocketed clients. Such a move will create a monopolistic market for Google in what is a critical part of the electronic communications economy. This is true in the U.S. and abroad (an aspect of the case that has been acknowledged by our EU-based consumer group allies).
The online ad market has evolved rapidly and has reached near-maturation in terms of practices, basic applications and distribution pathways. We need to preserve what little competition is still possible. That's why we have told FTC commissioners, merger review staff, the staffs of the Senate Judiciary Antitrust Subcommittee and the House Commerce Committee that the merger must be rejected. We have submitted documents, brought in academic experts and plan to further press for an outright rejection. We also have made it clear that the deal threatens consumer privacy in a very substantial way.
Jeff Chester
Executive Director
Center for Digital Democracy
As the nation’s consumer protection agency, the FTC endeavors to regularly update and expand its knowledge of emerging technologies and business practices to guide its law enforcement and policy objectives. In the area of online privacy, our goal is to help consumers benefit from commerce and the free flow of information online without encountering undue privacy or security tasks. For this reason, we place a high priority on learning more about ongoing developments with regard to online advertising technology and practices, and we appreciate you bringing your concerns to the Commission’s attention.
Since it would be practically impossible for users after the merger to avoid all web sites serving Google/DoubleClick ads, consumers would have no real ability to choose services other than those served by Google, or to simply opt-out of sharing personal data with Google. To put it in simple words, a website will have to be part of the Google network of content sites if they are to be viable and visible in the commercial market.
EPIC, CDD, and US PIRG today filed a supplement (pdf) to the groups' original complaint (pdf) with the Federal Trade Commission (FTC) concerning the Google/DoubleClick merger. The new complaint explains the need for the FTC to consider consumer privacy interests in the context of a merger review involving the Internet's largest search profiling company and the Internet's largest targeted advertising company. The complaint provides additional evidence about Google and DoubleClick's business practices that fail to comply with generally accepted privacy safeguards, and proposes further steps that the Commission should take if the merger is to be approved.
EU's Article 29 Working Group, who advises European Commission on data privacy matters, sends letter to Google regarding privacy standards.
The Article 29 Working Party is concerned that Google has so far not sufficiently specified the purposes for which server logs need to be kept, as required by Article 6 (1) (e) of Data Protection Directive 95/46/EC. Taking account of Google's market position and ever-growing importance, the Article 29 Working Party would like further clarification as to why this long storage period was chosen. The Working Party would also be keen to hear Google's legal justification for storage of server logs in general.
Google’s proposed acquisition of DoubleClick will give one company access to more information about the Internet activities of consumers than any other company in the world. Moreover, Google will operate with virtually no legal obligation to ensure the privacy, security, and accuracy of the personal data that it collects. At this time, there is simply no consumer privacy issue more pressing for the Commission to consider than Google’s plan to combine the search histories and web site visit records of Internet users.
Ms. Kerger probably already deserves a medal for taking a job that should either attract only masochists or those who enjoy working every day in a political minefield.
To succeed, Ms. Kerger has to ruffle feathers; not hide behind Big Bird's.
Ms. Kerger has to quickly articulate a serious public interest vision for noncommercial digital TV. She has to challenge the system--including the stations, independents and other producers--to create content that illustrates that public television is relevant and necessary in the broadband era. Kerger also has to fearlessly defend the mission of public television to produce serious, thought-provoking, and risk-taking programming--especially against the conservative cabal running CPB and much of Congress. She also has to develop a plan that will build financial support to keep public television in business. There's no question that she faces a near-impossible task--but one that must be done if PBS is to survive.
Kerger also has to reach out to the constituency of those who care about the quality of our media lives and who want to see greater expression of diversity on television. She has to ignore the ever-pressing demands of the producing stations--such as WNET--while reaching out to women, persons of color, independents. These groups are being left out of the media revolution. She needs to harness their energy and support to spearhead a movement to preserve noncommercial T.V. in the digital age.
Dear Editor:
A recent "Review & Outlook" piece ("The Soros Agenda," December 30, 2003) describing the relationship of George Soros to groups working on media ownership issues (including my own Center for Digital Democracy) illustrates one of our concerns about consolidation within the news industry. Journalism has suffered, in our view, from the tight grip (both managerial and financial) that the ever-declining number of media companies holds over broadcast, cable, and print newsgathering. While the Journal stands as one of the few remaining independent outlets, we are distressed by what appears in this instance to be ill informed reporting. However one feels about Mr. Soros's politics, the notion that he "is using his money to restrict everyone else's freedom" is hyperbolic at best, irresponsible at worst, and would seem to have no place in a publication of the Wall Street Journal's stature .
The editorial fails to acknowledge, moreover, that there is a legitimate public concern over the consolidation of the media industries, and especially over the impact of such consolidation on journalistic standards. The debate over this issue is not concerned with what "will happen if some market is deregulated," as you claim, but rather over how news and information are produced and distributed in a democratic society. Your editorial colleagues at the Washington Post --Len Downie and Robert Kaiser--recently documented the current crisis in journalism in their "News About the News." Many of the groups involved in the media ownership debate that support--yes--some regulatory safeguards, represent writers, editors, and creators, including the Newspaper Guild, the Writers Guild, and the American Federation of Television and Radio Artists. Concern over TV network consolidation has also been expressed by the National Association of Broadcasters, and online companies such as Earthlink are fighting cable's growing monopoly in broadband. Our goal is exactly the opposite of what we are accused. We are working to promote media competition and to enhance political speech by not permitting a few media giants to lobby and win from the Washington political establishment a host of policies that serve only their parochial corporate interests.
Second, the "crushing regulations" that we are accused of seeking to impose on the new broadband networks are nothing more than the same level playing field that has long governed the dial-up Internet--where open access and nondiscriminatory transport are ensured--which has been a boon rather than a hindrance to competition online.
The work that my group has conducted on media policy long preceded the establishment of Mr. Soros's foundation. Indeed, your editorial was simply incorrect in attributing money to us that was given to my former group, the Center for Media Education. A little investigation would have revealed that CME was given a grant to support its ongoing work on youth civic media, not media consolidation. Indeed, CDD has not received a dime from Mr. Soros's foundation for our two-year project on media ownership. Nor are the four public interest groups "closely coordinated," as you suggest. Yes, we work together on occasion, but not always and certainly not in a lock-step fashion. And we often approach these issues quite differently. Dismissing us as part of the "liberal wing" of the Democratic party might be ideologically convenient, but it overlooks our record as one of the biggest critics of the Clinton policy on media. Such material is still available on our website (www.democracticmedia.org).
As the advocate who coined the unfortunate term, "the Four Horseman of the Apocalypse," I might be accused of flippancy, and perhaps deserve to be hoisted on my own rhetorical petard. But your assertion that our success in generating a national debate on media ownership somehow refutes our critique of the growing political power of media conglomerates doesn't bear up under scrutiny. We succeeded despite the scant coverage by the TV networks of what their parent companies were (and are) lobbying for, and despite the similar failure of major newspaper companies such as Gannett, the New York Times, and the Tribune Company to explain their own political advocacy on media ownership. Such self-censorship by these influential American institutions is disgraceful. And that's why a few good horsemen are still necessary.
Respectfully,
Jeff ChesterThe press corps is finally giving billionaire George Soros the attention he deserves as the new Daddy Warbucks of the Democratic Party. Mr. Soros has responded that all he's doing is exercising his own Constitutional right to free speech. We'd agree, except for the detail that the world's 38th richest man (according to Forbes) is using his money to restrict everyone else's freedom.
In his political funding, Mr. Soros is exploiting the loophole in campaign finance laws that lets billionaires donate however much they want to private political lobbies. But more than that, he also turns out to be a leading cash cow for the Washington lobbies trying to restrict media competition and political speech. Mr. Soros is the personification of what deserves to be called the "public interest" conceit.
This is the idea that folks like Mr. Soros are merely selfless benefactors of truth and justice, but companies trying to protect their rights in Washington are greedy special interests. The hedge-fund operator made his money practicing capitalism but now he spends it trying to give himself and his ideological allies an advantage over other voices. Among his fundees in this case are four, closely coordinated groups. The men who founded or run them are known in the Beltway as "the Four Horsemen of the Apocalypse," after what they are always claiming will happen if some market is deregulated.
They are the Media Access Project, the Consumers Union, the Consumer Federation of America, and the Center for Media Education (which has morphed into the Center for Digital Democracy). Don't be fooled by their consumer-friendly names. All four organizations have long been mouthpieces of the liberal wing of the Democratic Party. In the past three years they have bashed or knotted up many of the Bush Administration's major communications proposals.
Take Andrew Schwartzman, head of the Media Access Project, and leader of a campaign to sink FCC Chairman Michael Powell's rules raising ownership caps for broadcasters. MAP's revenue for fiscal 2001 was $526,000, and according to the Soros foundation Web site the billionaire gave the group $600,000 from 2000 to 2002.
The Center for Digital Democracy, meanwhile, has sued to block the FCC's new broadband rules that would free fast Internet access from crushing regulations. The Center is run by Jeff Chester, who spun it off from the Center for Media Education. CME received a $90,000 donation from Mr. Soros in 2001-02.
Mark Cooper, research director at the Consumer Federation of America, has a talent for churning out studies about how Mr. Powell's deregulation would "undermine democracy." His group took $80,000 from Mr. Soros in 2000. And the Consumers Union, run by Gene Kimmelman, also dipped into the Soros pot for $175,000 from 1999 to 2001. The two groups teamed up last year to release a report blaming Mr. Bush and the FCC for widening the "digital divide."
Not that the Four Horsemen fight only to control the airwaves. A few also played roles in promoting the campaign finance laws that have given Mr. Soros and his cash such a big political advantage. Combine their funding with the $1.7 million that Mr. Soros gave the Center for Public Integrity, the $1.3 million he gave Public Campaign, the $300,000 to Democracy 21, the $625,000 to Common Cause, and the $275,000 to Public Citizen -- and you can be forgiven for believing Mr. Soros got campaign finance passed all by himself.
Like Mr. Soros, all of these groups share the view that the real arbiters of public policy should be elites like them. Their own political success refutes their contention that somehow Big Media dominate our public policy debates. And with the new limits on what other Americans can donate to political campaigns, and even on when they can run TV advertising, the Soroses of the world will wield even more influence. Which is of course their point.
As his clout grows, we hope the media pay even more attention to the views of Mr. Soros and his web of left-wing activists. Our readers can examine for themselves the nearly 1,900 payouts that Mr. Soros made to entities since 1999 at http://prs.soros.org/GrantsList/GrantSearch.asp. We'd say they reveal a billionaire who is himself a threat to what he likes to call an "open society."
November 10, 2003
Timothy Muris
Chairman
Federal Trade Commission
600 Pennsylvania Ave. NW
Washington, DC 20580
RE: The Merger of GE/NBC and Vivendi Universal
Dear Mr. Chairman,
The Caucus presents itself to the Commission, as a representative of the independent television production community, which finds itself seriously impacted by the media consolidation that has taken place over the last ten years.
The Caucus consists of 140 television producers, writers and directors who have been providing television programs for the viewing audience for 50 years. They create and produce all types of series, movies and documentaries.
However, the ability to provide diverse, quality television and to control and own the copyright in the programs they create and produce has been diminished by the horizontal and vertical integration in the entertainment industry.
Attached is our pleading in the matter of the GE/NBC and Vivendi Universal merger. We stand ready to testify and/or respond to any inquiries by the Commission.
Respectfully submitted,
Charles W. Fries
Caucus Chair
Leonard Hill
Chair Government Affairs
The Caucus for Television Producers, Writers and Directors (The Caucus) was founded in 1973 with the expressed purpose of advancing the quality and diversity of entertainment made for the American viewing public. Since its inception, The Caucus has sought to transcend the boundaries of the creative Guilds (SAG, DGA and WGA). Freed of the responsibilities of collective bargaining and health and pension administration, The Caucus has sought to raise both industry and public awareness of the issues that impact the programming that is offered to the American public.
The Caucus now wishes to implore the Federal Trade Commission to scrutinize the implications of the proposed merger of GE/NBC and Vivendi/Universal. It is our considered opinion that the proposed merger will have significant negative impact on both the economic marketplace for, and on the content and quality of, filmed entertainment.
Universal Television has a long and proud history of supporting the production of some of the best filmed entertainment ever presented to the American viewing audience. The company has an unrivaled history as an incubator of new talent. Such singularly important voices as Steven Spielberg, Stephen Cannell, Richard Levinson and Bill Link, Steve Bochco and Dick Wolf were able to create content of lasting value thanks in great measure to the support of Universal Television.
If the proposed merger is allowed to go through without significant regulatory restraints being imposed, the role of Universal as a vital competitor in the programming marketplace will be permanently crippled. The merger will shackle the production prowess of Universal to the distribution channels controlled by NBC. Autonomy will be sacrificed on the altar of vertical integration. The merger will undermine the buoyant balance of a competitive market and replace it with the predatory self-dealing of corporate convenience.
In support of these contentions, The Caucus cites the extensive testimony that was given by the President of NBC, Robert Wright, when he testified before the FCC (MM Docket No. 90-162, 14 December 1990). Mr. Wright warned the FCC that diversity in program production was “… on its deathbed…” because “…the program production marketplace has become dominated by large vertically-integrated studios”.
In 1990, Mr. Wright warned the FCC that “… the domination of program production by a few huge conglomerates is an issue that dwarfs any commission concern over the details of network-supplier relationships”. Mr. Wright now comes before the FTC as the CEO of one of the most humongous media conglomerates ever conceived and would have the Commission discount the market-numbing implications of his proposed merger.
Mr. Wright was correct in warning the FCC that “… the independent producer and syndicator are becoming endangered species”. He correctly warned the Commission that “… it will not be long before virtually all network programs are produced by a handful of MPAA studios”. Now Mr. Wright seeks to join NBC with one of the leading MPAA studios and in so doing move independent production and syndication from the list of endangered to the category labeled “extinct”.
Though Mr. Wright testified that “the networks themselves have the desire and the incentive to foster a vibrant and diverse independent production community”, the effort to manufacture the proposed merger belies his own pleadings. Moreover, the pattern and practice of NBC over the past ten years demonstrates a conspicuous effort to condition access and extract rights without market based competition. The once vital independent production community has been decimated by these predatory practices and the proposed merger would be a death blow.
The Caucus believes that Mr. Wright was accurate when he noted that “… highly creative, ‘breakthrough’ programs such as “All In The Family”, “Hill Street Blues” and “Twin Peaks” have been born of the direct dealings of a network and an independent producer, without the involvement of a major studio”. If there is, as Mr. Wright asserts, a correlation between creativity and independence, then the merger of Universal and NBC would numb both market forces and creative expression.
The Caucus dissented when Mr. Wright testified that “…the natural incentives of the networks are the best guarantee that independent producers will flourish.” In 1993 the FCC gave Mr. Wright his wish. The Financial Interest and Syndication Rules were abolished and independent producers were left at the mercy of the natural incentives of Mr. Wright and NBC. In the ensuing ten years, the independent production community has been obliterated. We urge the FTC to understand that the natural incentives of NBC will be to engage in systematic self-supply and autocratic control of creative content.
Without specific provisions designed to protect the independent producer, maintain market forces and in turn protect program source diversity, the proposed merger of GE/NBC with Vivendi/Universal will be a windfall for a few stockholders and a calamity for the country.
What makes the Internet a place of freedom, technology development, competition and business innovation? What makes the Internet a place that Americans, conservatives and liberals alike, point to as an example of how things ought to work? What regulation, deregulation, unregulation, whatever, made it so that this dynamic and open platform developed as it did? And as the Internet enters its adolescence -- as it matures from the first hesitant steps of its dial-up infancy to the exuberance and freedom of broadband -- how do we keep it this way?