Hazlett on Google's Detour into Public Policy

What net neutrality would presumably end is what helped launch Google argues Professor Thomas Hazlett in a Financial Times op-ed that looks at Google's press for rules favoring network neutrality. Hazlett argues that Google's "detour into public policy advocacy ought to be squared with its own business model," pointing out that innovation on the web requires market transactions and citing Google's recent acquisition of YouTube as an advantage over its rivals.

Google and the myth of an open net, Financial Times, October 11, 2006. By Thomas Hazlett.

"The innovation that Google pioneered brought order to the web's universe by craftily ranking search responses. This was achieved by linking a better software idea - PageRank - to a brutally powerful computer network, incorporating more than 100,000 personal computers and a global fibre optic grid. The combination, which Mr Vise dubs "Googleware", answers search requests with lightning speed and impressive utility. Google turned a noun into a verb, revolutionising the online experience.

"Then the entrepreneurs at Google took a stab at public policy. The company became the leading champion of the hottest topic in technology policy over the past year, asserting that if web innovation such as theirs was to be retained, new laws were warranted. The specific fear was that internet service providers delivering last-mile broadband would shift their pricing strategies, charging not only end users for their connections but application vendors (say, search engines) for access to their customers. Worse, they might move into content and then favour their own web products over those of competitors. 'Network neutrality' rules were needed, Google argued, because the architecture of the internet demanded it. That structure relies on traffic flowing freely over a network that is 'open, end to end'.

"Yet the capitalist engine that powers the internet demands something completely different, as Google's acquisition of YouTube makes clear. That strategy is to integrate Google's search and advertising sales with YouTube's users, which could potentially impede access to one of the hottest technologies by other service providers. Jeremy Schoemaker, a net economy expert, sees the deal as superb for Google, 'merging to form the biggest video network' and winning a 'land-grab for publisher space'. Perhaps even better, it boxes out a rival: 'This move is a total "in your face" to Microsoft,' which had made YouTube an offer for an advertising agreement.

"The internet lurches forward in spasms of business model discovery, as when Google figured out how to auction off search-targeted advertising slots, leaving banner advertisements behind. Today, Google's absorption of its little video cousin is part of this jockeying for positions of competitive superiority. The internet really is not open - if, as Google hopes, it is doing it right."