Karmic Justice: EU Does to Google What Google Did To Others With Net Neutrality

Google was (and is) a big supporter of Net Neutrality.  Content providers like Google (Google owns Youtube, among other large content sites) want to make sure that other content providers are not somehow given special treatment by the ISP's that provide the bandwidth for consumers to view these sites.  In particular, sites like Youtube and Netflix, which consume a HUGE percentage of the bandwidth at many ISP's, don't want to somehow pay any extra costs that might be imposed on content sites that use a lot of bandwidth.   I wrote this on net neutrality a few years ago:

Net Neutrality is one of those Orwellian words that mean exactly the opposite of what they sound like.  There is a battle that goes on in the marketplace in virtually every communication medium between content creators and content deliverers.  We can certainly see this in cable TV, as media companies and the cable companies that deliver their product occasionally have battles that break out in public.   But one could argue similar things go on even in, say, shipping, where magazine publishers push for special postal rates and Amazon negotiates special bulk UPS rates.

In fact, this fight for rents across a vertical supply chain exists in virtually every industry.  Consumers will pay so much for a finished product.  Any vertical supply chain is constantly battling over how much each step in the chain gets of the final consumer price.

What "net neutrality" actually means is that certain people, including apparently the President, want to tip the balance in this negotiation towards the content creators (no surprise given Hollywood's support for Democrats).  Netflix, for example, takes a huge amount of bandwidth that costs ISP's a lot of money to provide.  But Netflix doesn't want the ISP's to be be able to charge for this extra bandwidth Netflix uses - Netflix wants to get all the benefit of taking up the lion's share of ISP bandwidth investments without having to pay for it.  Net Neutrality is corporate welfare for content creators.

A typical ISP would see this relative usage of its bandwidth.  You can be assured everyone on this list is a huge net neutrality supporter.

Essentially, Google wanted to force ISP's to be common carriers, to be legally required to carry all traffic equally, even if certain traffic (like Google's Youtube) is about a million times more expensive to serve than other people's content.

But the point of this story is not about my issues with Net Neutrality.   The point of this story is Karma, or as we used to say it in the South, what "goes around, comes around."

The European Union’s antitrust watchdog in the coming weeks is set to hit Alphabet Inc.’s Google with a record fine for manipulating its search results to favor its own comparison-shopping service, according to people familiar with the matter.

The penalty against Google is expected to top the EU’s previous record fine levied on a company allegedly abusing its dominance: €1.06 billion (about $1.18 billion) against Intel Corp.in 2009.

The fine could reach as high as 10% of the company’s yearly revenue, which stood at $90.27 billion last year.

But more painful to Google than a sizable fine could be other consequences that come with the European Commission’s decision, including changes not only to the tech giant’s business practices with its shopping service but with other services as well. The EU’s decision could also embolden private litigants to seek compensation for damages at national courts.

The EU is likely to demand Google treat its own comparison shopping service equally with those of its competitors, such as Foundem.co.uk and Kelkoo.com Ltd., possibly requiring the search giant to make rival services more visible on its own platform than they are at present. Such companies rely on traffic to their site from search engines like Google’s.

Hah!  I think this is a terrible decision that has nothing to do with economic sanity or even right and wrong -- it has to do with the EU's frequent historic use of anti-trust law as a way to bash foreign competition of its domestic providers, to the detriment of its consumers.  But it certainly is Karma for Google.  The EU is demanding that Google's search engine become a common carrier, showing content from shopping sites equally and without favor or preference.  The EU is demanding of Google exactly what Google is demanding of ISP's, and wouldn't you know it, I don't think they are going to like it.

  • ErikTheRed

    There seem to be two camps on Net Neutrality, and both are wrong. The pro-Net Neutrality people are correctly concerned that ISPs will use their monopoly or duopoly status (for roughly 2/3 of Americans, there can be only two companies with physical wires / fiber going into each building *by law* - these are sold as "franchises") to favor certain data senders over others. And they are absolutely right. If you had any idea how much your ISP already does things like spy on which sites you visit and sell that data to marketing companies you would probably lose your mind. Those of us with libertarian leanings would point out - correctly - that free and open markets would solve this problem, the terrible speed problems in the US, and whatever other stupid bullshit the ISPs come up with. I loved how Bernie Sanders was making a big deal about how cheap and plentiful bandwidth is in Romania and it was quickly pointed out that they have more or less no regulations at all in that area - purely markets at work, with the average consumer having around three dozen options to choose from.

    That being said, running a neutral network is extremely inefficient because some traffic (real-time data like voice, video, gaming, etc.) is very latency and jitter (deviations in latency) sensitive. Most traffic like recorded video, bittorrent, web browsing, and email delivery is indifferent to a few hundred or even thousand milliseconds of difference in delay. The only way to make everything work on a neutral platform is to massively over-provision each link. Over-provisioning is obviously expensive. Being able to give high-priority traffic precedence is far more cost-effective.

    The anti-Net Neutrality people are the Chamber of Commerce Republican types: crony capitalists. They want to preserver the bandwidth cartels, eliminate or minimize free markets, and allow outsized profits for shitty service. No need to belabor that point any further.

  • ReallyOldOne

    Good post old Coyoty. Karma is a b*tch. I thought the what goes around saying originated in Chicago. I bet there is a similar saying in many languages.
    One serious thought. Don't shippers (common carriers) charge by weight? How is bandwidth/bits transmitted any different than weight in shipping?

  • Cardin Drake

    Great post. Should be required reading for net neutrality supporters.

  • Dan Wendlick

    A little more clarification on the charts. pretty much everything that you would think of as web surfing, from commenting on Coyoteblog to shopping on Amazon comes under the HTTP and SSL categories, accounting for about 12% of Internet traffic. This is what us purists and administrators are talking about when we insist on differentiating between the Internet and the World Wide Web (The Web is only one of many applications that use the Internet). MPEG (other) is a nice way of saying dirty movies not hosted on Netflix, Hulu, or Amazon.

  • Matthew Phillips

    I it odd how the argument is always YouTube should pay to give away their free content. Why shouldn't ISPs pay for their consumers to be able to view YouTube's content? I Would assume cable company a pays channel x for their content, not the other way around

  • Heresiarch

    It's not free content. It contains ads, for which YouTube is paid well, and frequently, using content that people created and provided to YouTube for free. The ISPs shouldn't pay because they aren't like cable companies. They exist to provide a simple service-- providing access to the Internet-- for a fee.