Open data leads to competition

When evaluating proposed mergers and breakups, control of data should be considered along with market impact.

In a previous post, I spoke of Amazon's use of customer and market data in restraint of trade, but they are not alone. For example, leaked internal documents show that plans to sell access to user data were discussed for years and received support from Facebook’s most senior executives. Facebook gave Amazon extended access to user data because Amazon was spending money on advertising and partnered with them on the launch of the Fire smartphone. In another case, Facebook discussed cutting off access to user data for a messaging app that had grown too popular and was viewed as a competitor.

As former FCC Chairman Tom Wheeler points out in a recent post, proprietary data is a source of market control and he cites two examples where opening data has led to competition. In the US, a law mandating open access to video content enabled satellite companies to compete with cable companies and in the UK, open access to customer banking data led about 200 organizations to offer new services in its first year.

Wheeler's position is elaborated in Unlocking Digital Competition, a report from the Digital Competition Expert Panel convened by the British Treasury Department. Their data-related recommended actions are:

• Establishing data mobility and open standards between services: overcoming network effects which cause markets to tip by requiring systems to ‘talk’ to each other using open, standardised formats. This will mean consumers can port their data between networks, interact with users on other, similar networks, and smaller firms can plug their services into those of bigger ones. New business opportunities will open up that use, manage, and combine data made available. Consumers, in turn, will have new choices of digital services, with switching made much easier.
• Securing access to non-personal and anonymised data: tackling the data barrier to entry for smaller and newer firms, while protecting privacy. The power of bulk data driving economies of scale and scope is a key reason new firms struggle to compete and bring innovative services to consumers. Overcoming this barrier will allow the digital economy to remain dynamic.

These are only two of the 20 recommended actions in the 140-page report. Those actions are grouped under six strategic recommendations for the government:

• Sustain and promote effective competition in digital markets, by establishing a pro-competition digital markets unit, tasked with securing competition, innovation, and beneficial outcomes for consumers and businesses.
• Take more frequent and firmer action to challenge mergers that could be detrimental to consumer welfare through reducing future levels of innovation and competition, supported by changes to legislation where necessary.
• Update and effectively use tools against anti-competitive conduct to help them play their important role in protecting and promoting competition in the digital economy.
• Continue to monitor how the use of machine learning algorithms and artificial intelligence evolves to ensure it does not lead to an anti-competitive activity or consumer detriment, in particular to vulnerable consumers.
• Conduct a market study into the digital advertising market encompassing the entire value chain, using its investigatory powers to examine whether competition is working effectively and whether consumer harms are arising.
• Engage internationally on the recommendations it chooses to adopt from this review, encouraging closer cross-border co-operation between competition authorities in sharing best practice and developing a common approach to issues across international digital markets.

The two open-data actions mentioned above fall under the first strategic recommendation of promoting competition, but control of data is involved in the others as well. When Amazon acquired Zappos and Whole Foods, they gained access to data on relatively affluent shoppers. Facebook's acquisition of Instagram and WhatsApp and Google's acquisition of Waze also yielded data in addition to eliminating competition. The machine learning recommendation involves training data. When evaluating proposed mergers and breakups, control of data should be considered along with market impact.

The last strategic recommendation -- international engagement -- recognizes the global nature of the Intenet. (Note that the Digital Competition Expert Panel was chaired by an American). Nations like China and the US have different goals with respect to competition, but democratic, capitalist nations should strive to adopt compatible institutions and policies. In the era of Brexit and MAGA, we need to work with other nations -- I'd rather end up with two Internets than fifty.

Google and Facebook report on developing world connectivity at Mobile World Congress

I've been studying and working on the Internet in developing nations since 1991 when only a few nations had any sort of Internet connection, as shown in Larry Landweber's 1991 connectivity map:

Every nation is connected today, but the digital divide remains as deep as it was in 1991. Both Facebook and Google are working to bring the 3-4 billion people who do not have Internet connectivity online and they described their efforts at the recent Mobile World Congress in Barcelona.

Google

Sundar Pichai, senior vice president of Android, Chrome and Apps at Google Inc., updated the audience on two projects -- Project Loon and Project Link.

Project Loon seeks to deploy a constellation of balloons at an altitude of around 20 kilometers -- above the mountains, air traffic and weather.

The balloons will be airborne routers able to communicate with end users, each other and Internet back-haul locations.

Pinchai said the balloons now average more than six months in the air and keep nearby smartphones operating at 4G or LTE speeds, around 10 megabits per second. “We are well on our way to a platform that, by the end of the decade, will touch 4 to 5 billion people.”

He also gave a progress report on Project Link in Kampala, Uganda where they have installed over 800km of fiber, creating an urban backbone.

As is often the case with municipal networks (as in Stockholm), Google is not a retail Internet service provider, but provides wholesale connectivity to retailers. Pichai said they would be expanding Project Link -- installing fiber backbones "many more" African cities this year.

For more on the Kampala deployment and a thoughtful analysis of the reason for its success, see this post by Steve Song.

Facebook

Facebook CEO Mark Zuckerberg spoke about Internet.org, which hopes to make basic internet services affordable, so everyone with a phone can join the knowledge economy.

While Google is working on long range projects (including an investment in Elon Musk's SpaceX project to provide Internet service using low-earth orbit satellites), Internet.org is already up and running in Ghana, Columia, Kenya, Tanzania, Indonesia and India.

Facebook and their Internet.org partners are focusing on improving traditional terrestrial cell phone technology by improving mobile infrastructure, mass producing cheap, powerful cell phones and caching and compressing data. Their partners reflect this orientation – phone manufacturers, Opera, a Web software company, and Mediatek, a fabless semiconductor company.

Note that they want to provide only “basic Internet services,” not access to the open Internet. For example, in India they offer access to Facebook and 37 other web sites.

Facebook also has a Connectivity Lab lab working on more exotic, long-range solutions.

Short videos on Project Loon and Internet.org

Project Loon:



Internet.org:



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Update 4/10/2015

Mark Zuckerberg spoke at a business conference being held in conjunction with the Summit of the Americas in Panama City yesterday. He announced that Internet.org would be available in Panama and stated that eventually expanding into Cuba “definitely fits within our mission.” (Recall that Internet.org provides “basic Internet services" -- access to leading Web sites -- not access to the open Internet).

Facebook Evil -- they invented my "interests"

As you see here, Facebook lists my interests as: PetVille, The Global Text Project, Wondershare, Quantum Wealth Management, and Celebrity Cruises

I have never told Facebook that I was interested in these things, in fact:

• I have no interest in PetVille -- my wife plays that game with our grandchildren.
• I am interested in the Global Text Project, but have never told that to Facebook or given them permission to tell others.
• I have never heard of Wondershare and have no idea what it is.
• My son-in-law owns Quantum Wealth Management, but I've never told Facebook about that.
• I have taken some cruises, but never with Celebrity Cruises.

When people compare Google Plus and Facebook, they usually focus on features and user interface. I hope Google stays away from Facebook's Evil practices.