Back in October, we wrote about a report that the FTC was preparing to file antitrust charges against Google. In trying to find out more, the story kept shifting. First, we heard it was all about "search manipulation" in putting Google-related info on top of search results (i.e., search for a location and a Google Map shows at the top of the page). Then, there was some talk about how it was going to focus on how recently-purchased-by-Google Motorola Mobility was abusing standards-essential patents. If it was the latter, that seemed like a weird way to go, since it was so unrelated to Google's main business. Similarly, the whole "search manipulation" claim seemed odd. What kind of "harm" is it when someone searching on Google for an address is shown a Google map. It seems like it actually benefits consumers.

Also, for all the talk of Google hurting others, I just don't see it. I'm constantly surprised at how rarely it seems that Google-related results top the list of searches on relevant things. Every time we bring this up, we see people claim that Google should be taken down for favoring its own services when people do searches, but we so rarely see that. Just as an example, I just did a Google search on "browser" and this is what I see: An ad for IE and then Firefox... and then Wikipedia. Chrome doesn't check in until fourth.

How about airplane travel, since that's a key one (Expedia is one of the companies driving the case against Google): Google stuff seems nowhere to be found. Instead you have Expedia up top. In second place you have Kayak... the company that powers Microsoft's travel search. So... I'm at a loss.

So too, it appears, are some folks at the FTC. Despite all the bluster, there are growing indications that the FTC may blink, as it's realizing that perhaps it really doesn't have enough evidence to make the case.

Talking to a number of folks in DC concerning this, I keep hearing the same story over and over again. They're all variations on the following: FTC boss Jon Leibowitz is getting set to leave the job (and go into the private sector, of course), but would like a "defining moment." Somewhere in the last year or two, he decided that going after Google for anti-trust violations would be such a crowning moment. As such, he brought on a number of folks to help him do that, including Tim Wu, who had just written an entire book basically saying that big companies are bad. While I respect Tim, and agree with him on lots of things, I've never understood his argument here. It just makes no sense. Earlier this year, the FTC also brought on outside litigator Beth Wilkinson, which seemed like a clear statement of plans to sue.

And ever since then they've been trying to come up with something. And, from the sound of things, generally turning up nothing. So, if you're Liebowitz and have effectively made a big bet on going after Google, what do you do? One strategy might be to leak a bunch of stories about how the FTC is all set to sue Google... and then tell Google that it better "settle."

Yes, the FTC may have taken the patent troll technique: threaten to sue, but agree to "settle" at a price that is less than it would cost Google to defend, such that the FTC can claim a "victory." Over the last month or so, it's appeared that the FTC was really just hoping Google would play its assigned role and cough up some cash and Liebowitz could claim victory and ride off into the sunset (or cushy corporate job, whichever pays more). In fact, I'd guess there are still decent odds that this happens. Google may well decide that it's cheaper to just pay up and get this behind it. But, from the articles coming out this week, it appears that (1) Google may be willing to call the FTC's bluff and (2) the FTC may be realizing that Google knows it doesn't have the goods to bring a successful anti-trust case to completion.

Either way, it's pretty sad that we're reduced to this. If there was a clear case of consumer harm via unassailable market control, then antitrust activity could make sense. But there seems to be no evidence that we've seen to support that. Consumers, for the most part, seem pretty happy with Google. If they didn't like Google Maps popping up when they searched on an address, they could use any number of other search engines. Personally, I'd find it a lot more annoying if I was forced to see other mapping offerings. Google Maps works for me, and when I search on an address, it's what I want.

So, really, who is the FTC protecting? Consumers? Doesn't seem like it. Google competitors? Is that really the FTC's job? Jon Liebowitz's legacy? Is that what's become of the FTC these days? Really?

A few weeks ago, we noted that the FTC was offering up $50,000 to anyone who could help stop "Rachel from cardholder services" robocalls. It appears they don't really need that much help, as the agency has filed complaints against five such operations based in Arizona and Florida (why is it that so many scammy operations seem to be based in Florida and Arizona?). FTC boss Jon Leibowitz overstates his organization's infatuation with robocalls:

“At the FTC, Rachel from Cardholder Services is public enemy number one,” said FTC Chairman Jon Leibowitz. “We’re cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem.”

Of course, I think that it's important not to get confused about what the real problem is here. While robocalls are both annoying and illegal, the real problem isn't the calling, but the scams behind the calls. They're basically trying to get people to fork over money for services that are never actually delivered.

In the robocall cases announced today, the FTC alleges that the defendants place automated calls to consumers, typically with a prerecorded message from “Rachel” or someone else from “Cardholder Services.” The calls purport to have an “important message” regarding an opportunity to reduce high credit card interest rates. Consumers are urged to “press 1” to connect with a live representative, or “press 2” to discontinue getting such calls. Consumers who press 1 are connected to live telemarketers. Most consumers have no way to screen the calls using Caller ID, as the incoming number allegedly is often “spoofed,” or displayed as a false number. In many cases, the name displayed on the Caller ID is so generic, such as “Card Services,” that it provides little information about who is calling.

According to the FTC, consumers who reach a live telemarketer are then pitched allegedly deceptive offers to have their credit card interest rates substantially reduced, sometimes to as low as 6.9 or even zero percent. The telemarketers allegedly guarantee that lowering card interest rates will save the consumers thousands of dollars in finance charges in a short period of time and will allow them to pay off the balances more quickly. Some telemarketers allegedly claim that consumers will save at least $2,500 in finance charges and will be able to pay off their balances two to three times faster, without increasing their monthly payments.

In some cases, according to the FTC, the telemarketers claim to be calling from the consumer’s credit card company. In other cases, they use “Cardholder Services” to suggest a relationship with a bank or credit card company. If the consumer expresses an interest in the rate reduction offer, the telemarketer sometimes conducts a purported “audit” to determine whether the consumer qualifies. Consumers provide their financial and personal information, and are then put on hold while the “audit” is completed. According to the FTC, the “audit” typically is used only to determine whether consumers have enough credit available on their credit cards to pay the company’s fee.

The charges filed against the operations include both charges for making false claims and also for violating telemarketing laws, but it seems that the false claims/fraud stuff is the much bigger deal. Instead, however, the FTC seems to focus the publicity aspect on its "fight against robocalls." I realize that may generate publicity, but isn't the fraud aspect the bigger deal?

The current administration has expressed interest in different kinds of "innovation prizes" for a while, so it's interesting to see the FTC offer up $50,000 to individuals or small companies if they can come up with a good solution to dealing with robocalls (automated telemarketing recordings that call tons of people). There are a few things that are interesting about this. First, the language on the FTC site about this really suggests that the FTC itself is exasperated by their own inability to stop the problem. They specifically call out "shady" practices, and highlight how "annoying" the calls are:

Current technology still allows shady telemarketers to cheaply autodial thousands of phone calls every minute and display false or misleading caller ID information. Among these are the famously annoying calls from “Rachel From Cardholder Services.”

The other interesting bit is that the prize is only available to small companies (less than 10 people) or individuals. If you're a big company, they'll give you an award... but no cash. Of course, the FTC also notes that anyone who solves this problem will receive some other benefits as well:

“We think this will be an effective approach in the case of robocalls because the winner of our challenge will become a national hero.”

That might be a slight exaggeration, but I do imagine a successful solution will lead to at least 15 minutes of press fame.

Colorado's Jared Polis is likely a familiar Congressman to our readers. He was one of the key voices in Congress against SOPA. He's also been one of the few members of government willing to speak out against all of the problems in the domain seizures that have occurred. Now we learn that his pro-tech stance over government-meddling continues with a strongly worded letter to the Federal Trade Commission over its investigation of Google for antitrust violations.

At a time when the national economy continues to stagnate, it's not clear to me why the FTC should be focusing on a product that consumers seem very happy with, search engines. While Google is surely a big company and an important service in peoples' lives, my constituents also use a variety of competing services, including Amazon.com for shopping, iTunes for music and movies, Facebook for social networking and recommendations, and mobile apps like Yelp for finding local businesses. Competition is only a click away and there are no barriers to competition; if I create a better search algorithm I could set up a server in my garage and compete globally with Google. To even discuss applying anti-trust in this kind of hyper-competitive environment defies all logic and the very underpinnigns of anti-trust law itself.

His admission, that Google is indeed a massive entity, likely is designed to push back against the FTC for targeting Google specifically in the search space, despite the relatively high level of competitive search engines on the market. Antitrust violations are not designed to punish really successful companies, and they're not supposed to just go after companies for being "big." Rather, they're designed to prevent anti-competitive practices for the benefit of a healthy marketplace and, most importantly, for the benefit of consumers. While the country is still waiting for the official charges against Google by the FTC over any kind of anti-competitive behavior, there can be little doubt that there is indeed a swath of competition and that the public is pleased with Google's product. It's not like Bing and Yahoo (or Blekko or DuckDuckGo) don't exist, after all, it's just that more people trust Google for their search results. None of this seems worth pursuing an antitrust suit over. As Polis notes:

I have never heard one of my constituents say that they don't feel like they have enough choices online, or that they feel locked in to using any one of these services. Competition among these services is leading to lots of great services for consumers -- and consumers aren't asking Congress or the FTC to protect them.

Indeed, it only seems to be Google competitors who are asking for help here. And that's not the purpose of antitrust law.

Having said all that, Polis went further in his letter, issuing a warning to the FTC that if screws this up, it risks being downsized.

The FTC should tread carefully when reviewing Google, Facebook, Twitter or any other tech company, given the dynamism of our tech industry and the potential for making things worse through regulation. Today's giants can be tomorrow's failures without any government intervention; market forces drive obsolescence at a break neck pace which should only further abrogated the need for government intervention. I believe that application of anti-trust against Google would be a woefully misguided step that would threaten the integrity of our anti-trust system, and could ultimately lead to Congressional action resulting in a reduction in the ability of the FTC to enforce critical anti-trust protections in industries where markets are being distorted by monopolies and oligopolies.

Critics of Google will point to this as some kind of hinted blackmail by Polis, but that isn't at all what he's saying. All he's saying in this instance is that if the FTC brings a poor case against Google and loses face over it, the representatives of the people (whom government is supposed to serve) will take action. It's a warning that the FTC had better have its ducks in a row when considering such a move against a huge member of the national business community.

In the end, we'll have to see if any actual anti-competitive practices by Google are really brought forth. Barring that, Google simply being really successful is no reason to bring an antitrust suit against them.

Reuters is reporting that 4 out of 5 FTC Commissioners have decided they have enough evidence to go after Google for violating antitrust laws to "hurt its rivals." Details remain sparse, but it will be interesting to see any specifics once they're out, and how they show any kind of consumer harm. From what's been said in the past, it really feels like this is yet another case of going after a company because it's big, rather than because of any demonstrable problem. Tim Wu, who's been advising the FTC, has argued in the past that all you have to be is big to be a monopolist, but I don't see how that makes any sense. As we've discussed before, no one has provided a reasonable suggestion as to why Google should need to promote other search engines. Especially in this day and age when different services are eating away at Google from a variety of angles (Apple and Facebook have been quite successful), and considering that if the search results are bad, it's easy to switch to another search engine (I regularly use DuckDuckGo myself these days), I'm really curious as to what the harm here is. It sounds like we may find out soon.

People are spying on you. All kinds of people. Law encorcement does it. The NSA does it. Schools are monitoring our children. But I'll tell you who is not spying on you: PC rental companies. Well, at least not anymore.

But they were spying on you before federal charges were brought against them. It turns out that seven rent to own PC companies were employing software that logged your keystrokes, retained your social media passwords, recorded your social security passwords, snapped photos of people having sex with web cams, and even allowed rental company employees to deploy a French tickler through the screen to rub people's naughty bits (fine, fine, I made that last one up).

The companies captured screenshots of confidential and personal information, logged keystrokes and took webcam pictures of people in their homes. Their aim was to track the computers belonging to costomers who were behind with their payments.

"An agreement to rent a computer doesn’t give a company license to access consumers’ private emails, bank account information, and medical records, or, even worse, webcam photos of people in the privacy of their own homes," says FTC chairman Jon Leibowitz. "The FTC orders today will put an end to their cyber spying."

Yes, thank God for the FTC, because if anyone is going to watch me have sex, it's going to be the neighbors (no, I will not close the window and draw the shades, damn it, I like the breeze!). My question is why the hell anyone, especially the company that made the spying software used, DesignerWare, thought this kind of intrusion was necessary to begin with. Hell, this isn't even the first time a rental company using this software has gotten into trouble over it. The rental companies said they needed the software to remotely shut down and wipe stolen machines, as well as to initiate a kill switch on customer's machines when they were behind in payments. Those both make sense to me. Where do we get the explanation for logging keystrokes and in any way using the web cam?

At least the FTC must have brought the hammer down for such a gross violation of privacy, right?

The rent-to-own companies are Aspen Way Enterprises, Watershed Development, Showplace, JAG Rents, Red Zone, B Stamper Enterprises and CALM Ventures. They've got off lightly, agreeing to stop using the data-collection software and to stop deceiving customers.

I'll have to keep this in mind the next time I break the law. Just agree not to do it again and everything is okay, apparently. In the meantime, anyone who is renting computers can avoid these companies.

We've written a few times about the Childrens Online Privacy Protection Act (COPPA) and how it was put in place without any data and without much concern for unintended consequences. As danah boyd has shown in her research, COPPA hasn't necessarily done much to protect children. Instead, it's made parents teach their kids it's okay to lie about their age. It's also why so many websites have seemingly arbitrary restrictions on kids under the age of 13. It's one of those "think of the children" laws that people want to like because it sounds good, and no one wants to support big businesses preying on children. But, the reality is that it has tremendous problems -- unintended consequences that limit various services -- and does little to actually protect children.

And, of course, the FTC wants to expand it even further.

They're asking for comments on the proposed changes in the rules, and if you develop websites or apps, you might want to speak up. CDT has put together a letter people can sign if they don't want to write up some comments themselves. They also have explained many of the problems with the new proposals. For example, it expands what COPPA applies to in very broad ways, potentially creating liability for developers without them even realizing it:

The FTC plans to put COPPA obligations on plugin developers if they “know or have reason to know” that their plugin has been installed on a children’s site. “Plugins” include analytics providers, advertising networks, social media plugins, embedded videos, or anyone else who provides third-party code for websites. Under the FTC's proposed change, if plugin developers receive a user’s IP address through a plugin that’s been installed on a children’s site, they could face legal liability for collecting children’s personal information.

It’s unclear how a plugin or platform like Twitter is supposed to “know or have reason to know” that someone has cut and pasted a line of their code into a children’s site. The FTC says that plugin developers “will not be free to ignore credible information brought to their attention.” But the FTC doesn’t say what counts as “credible.” Would developers have to assume every random e-mail is a credible tip that could saddle them with legal liability? Even if the FTC did provide clarity, though, it would still be extraordinarily burdensome to place legal obligations on plugin developers based on the actions of others.

The end result would almost certainly involve those companies putting a lot more limits on their apps, and create a huge cost (and potential liability) for all sorts of plugin and app writers. But there's an even bigger problem. While COPPA was clearly limited at sites directed at children, the FTC seems to think this wasn't enough, because other sites not directed at children might still attract children... and so they want this problematic rule to expand to sites who don't even cater to children:

Things get worse with the FTC’s second major proposal: expanding the scope of sites deemed “directed to children” from sites aimed primarily at a very young audience to include sites and services that are “likely to attract an audience that includes a disproportionately large percentage of children under 13 as compared to the percentage of such children in the general population.”

This convoluted standard raises a number of serious issues. Not only is it difficult for site operators to gauge what proportions of their audience fall into arbitrary age buckets, but the FTC also gives operators no sense of what it means for an audience to be “disproportionately” composed of children in comparison to the general population. If a site’s audience is 20 percent children, is it disproportionately composed of children? What about at 30 percent? It’s not clear from the language, and it won’t be clear to website operators trying to run their sites while staying within the bounds of the law.

In fact, as CDT notes, this change almost certainly will do the exact opposite of what the rule intends. That is, it will make sites feel they need to collect more data about who is accessing their sites to make sure that they know if their audience includes kids, in which case they'll have to take steps. But that means they'll be... collecting more data about kids -- which is exactly what COPPA is supposed to stop.

The FTC folks who support COPPA are certainly well meaning, but they seem to have little concern or interest about the real impact of the law and their specific rules around it, and how it not only fails to help protect children, but puts a serious damper on innovation as well.

Via Slashdot, we learn about how Joyent offered early customers a "lifetime account," (via TextDrive, a web hosting company it acquired) in which they promised the account would exist "as long as we exist." Well, the company still exists, but it's now sent notices to those lifetime customers telling them that their "lifetime" is apparently up on October 31:

We appreciate and value you as one of Joyent's lifetime Shared Hosting customers. As this service is one of our earliest offerings, and has now run its course, your lifetime service will end on October 31, 2012

One would imagine that the FTC might have some questions for Joyent's management on the nature of living up to the promises of what was offered. Jason Hoffman, who apparently co-founded both TextDrive and Joyent, seemed to make things worse with his defense of the decision, basically admitting that this is screwing over their earliest supporters and biggest advocates:

Having co-founded two companies that ultimately became Joyent, growing from a tiny startup to where we are today has had its ups and downs, and this is one of the toughest decisions I’ve made. In particular because I've always been the biggest advocate for pushing a shared hosting product forward, and then here I am, the only remaining "founder" that is active.

It's ironic that our biggest advocates are the ones most affected by this and I know many of you are disappointed in me. I’ve received many questions and comments about why the service is being discontinued and I'm listening and will continue to listen. And like the past, this response won't be my last.

Making the decision to discontinue the service was extremely difficult. It was driven by some simple things: the hardware is simply old (6-8 years old), it's failing, there isn't an upgrade path from it, there's more than many of you likely realize and oddly enough it's more expensive with time (while not being used much). The rest of the Joyent's business has been paying for that, and I can't make the argument as to why it can continue.

Yet, we're only here because of the initial community that trusted us, and I'm genuinely grateful for the support. I’m sorry that I've lost that trust and I've upset you. You have a right to be upset. This was a tough decision with some nuance to it and none of this is lost on me.

This seems to go back and forth. First off, it's not "ironic" that you're screwing over your early supporters and not giving them what was promised. It's a highly questionable business practice. As for not being able to make an argument for why the service can continue, one would think keeping Joyent's name and reputation from being dragged through the mud would be a potential argument. Also, avoiding possible smackdowns from government officials for selling one thing and delivering another.

I recognize that things change and businesses change over times. But the company did make the promise that these were lifetime accounts and that they'd stay up for as long as the company was around. It seems only reasonable that it should not just cut off those accounts without any sort of recompense.

I've actually been one of the few satisfied Sprint customers for many years. Over the past few years, they were the only mobile broadband provider who didn't limit mobile broadband to ridiculously low plans like 5 gigs per month, like other carriers. In fact, this was a key selling point, and one of the reasons why I happily stuck it out with Sprint. I know Wall St. analysts have been insisting that Sprint would need to cap such broadband usage at some point, but it seemed like a really short-sighted idea, since the unlimited broadband is really about the only facet of a Sprint account that makes it more appealing than its competitors. And so... of course... it appears to be going away. Here's the email I recently received concerning my "phone as modem" option, which I use often enough:
Basically, with no warning, effective immediately, Sprint has unilaterally changed our deal from one where I was paying for unlimited data via the phone as a modem -- to one where it's capped at a stupidly low 5GB. And, the company even has the gall to then happily tell me (below the screenshot cut off) that this change won't impact how much I pay -- as if I should have expected them to increase the fees while taking away a feature I like.

Considering that unlimited mobile broadband was not only part of the marketing pitch, but also a big part of the reason for why I signed up for the plan I did, this certainly seems like a bait-and-switch deal... and I'd thought that bait-and-switch deals like this were violations of FTC rules, but what do I know?

Of course, on a whim, I wondered if Sprint's marketing had changed... and I did a quick search on "Sprint unlimited broadband" and turned up the following advertisement:


If you can't see it clearly -- it appears Sprint is still advertising unlimited mobile broadband -- highlighting that you can "avoid the data dilemma" and "get truly Unlimited data." Except, um, that's clearly not the case. Changing your plans unilaterally for those who specifically signed up for unlimited broadband is one thing. But continuing to advertise such plans while limiting them and -- even worse, effectively mocking such limited plans -- is simply adding rather obnoxious insult to injury. Sorry Sprint, but you may have finally convinced me it's time to explore other options.

We've discussed many times that the main problem with privacy policies is that their very nature encourages companies to actually do less to care about your privacy. That is, the only way a company gets in trouble with their privacy policy is if they don't obey their own privacy policy. Thus, it's much smarter to create a privacy policy that effectively says that the company can do whatever it wants and doesn't have to respect users' privacy. In that way, it's much harder to actually violate someone's privacy. Considering that no one actually reads these privacy policies (and for the few who do, no one understands them) means that it's even easier to make that work. Still, however, some companies go beyond their own privacy policies, and the FTC has to step in and slap them around. The latest... is MySpace.

Yes, MySpace. That also-ran social networking site that no one uses any more has come to an agreement with the FTC over violating its own privacy policy. Specifically, it appears that MySpace made it possible for advertisers to associate identities with advertisements so that advertisers could build a direct profile of an individual. Of course, it doesn't appear that anyone actually did this. The settlement means that MySpace will undergo "regular privacy assessments" for the next 20 years. I have two thoughts on this: first, there is almost no chance that MySpace exists in 20 years. Second, I never understand this 20 year deadline on FTC deals. If, miraculously, there is still a MySpace in 2033, it can go back to skimping on its privacy protections?