Debunking Edge Competition Myth Predicate in FCC Title II Broadband Order – FCC Comments

Published August 23, 2017

In 2015, the FCC’s Title II Open Internet broadband order was predicated on a demonstrably false central competitive premise: that the Internet’s edge was competitive while the broadband Internet core was not competitive. The facts prove the opposite.

The 2015 FCC’s competition premise is myth.

While there is plenty of information in the record, and in the July 17 comments, that broadband is  competitive, until now there has been little data and research on the overall competitiveness of the Internet edge providers, save for NetCompetition’s July 17thcomments that showed how concentrated the Internet edge is using the Internet Association as a proxy.

To further rebut comments that were predicated on the demonstrably false central premise that the Internet’s edge is competitive, NetCompetition submits additional Internet competition research below.

In a nutshell, the substantial evidence catalogued below provides proof of the Internet edge’s strong tendencies towards cartelization, extreme concentration, winner-take-all, and mythical competition.

The public data shows that the tacit Internet cartel of Google, Amazon and Facebook is 7-8 times more concentrated than the top three offline companies, and that the top ten Internet economy companies are >10 times more concentrated than the top ten offline economy companies.

Public data that Google, Amazon, and Facebook have acquired ~350 potential competitors and the Internet Association overall has acquired ~900 potential competitors, indicates that the apparent cartelization of Internet companies’ investment, acquisition, and innovation processes ensure no innovative “garage startup” has a plausible competitive opportunity to seriously threaten the Internet cartel’s dominance.

Public data also ironically shows that almost all the Internet Association’s members are anti-competitively threatened by one or more of the Google, Amazon, or Facebook, winner-take-all online onslaughts.

The most recent data from second quarter 2017 earnings show that Google and Facebook have a digital advertising cartel that commands 96% of all digital advertising growth. The analysis shows that it isn’t broadband providers that content providers must fear will engage in anti-competitive or discriminatory behavior, it is the Google-Facebook ad cartel.

The second piece of research shows how the Google-Facebook ad cartel is crushing competitors and how Google and Facebook continue to collude and not compete directly with the other in their core businesses.

The third piece of enclosed research documents how the Google Facebook ad cartel harms advertisers, publishers and consumers.

Overall, these findings and evidence belie the 2015 FCC assumption that the “edge” was competitive and thriving, when in fact it is the home to the worst monopolization and cartelization behavior in the Internet ecosystem.

In short, the 2015 FCC’s Internet competition predicate — that undergirded its rationale to impose Title II utility regulation on broadband ISPs, while summarily exempting all edge providers from Title II requirements — was wrong on the core competitive facts.

The evidence below, that the 2015 FCC could have easily done themselves, shows that the most concentrated, most anti-competitive, and least neutral part of the Internet ecosystem is the winner-take-all online platforms at the Internet’s “edge” – Google, Facebook, and Amazon.

[Originally Published at Precursor]