"Government” is a bad word in the United States, the lackeys of the corporations have branded it so. As a result, most corporate behavior proceeds unchecked, no matter how nefarious. But not in Europe." --Bob Lefsetz (Lefsetz Letter, infra)
European Commission - Press release - Antitrust: Commission sends Statement of Objections to Google on comparison shopping service; opens separate formal investigation on Android: "Brussels, 15 April 2015 -- The European Commission has sent a Statement of Objections to Google alleging the company has abused its dominant position in the markets for general internet search services in the European Economic Area (EEA) by systematically favouring its own comparison shopping product in its general search results pages. The Commission's preliminary view is that such conduct infringes EU antitrust rules because it stifles competition and harms consumers. Sending a Statement of Objections does not prejudge the outcome of the investigation.
"The Commission has also formally opened a separate antitrust investigation into Google's conduct as regards the mobile operating system Android. The investigation will focus on whether Google has entered into anti-competitive agreements or abused a possible dominant position in the field of operating systems, applications and services for smart mobile devices.
"EU Commissioner in charge of competition policy Margrethe Vestager said: "The Commission's objective is to apply EU antitrust rules to ensure that companies operating in Europe, wherever they may be based, do not artificially deny European consumers as wide a choice as possible or stifle innovation".
"In the case of Google I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules. Google now has the opportunity to convince the Commission to the contrary. However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe."
"I have also launched a formal antitrust investigation of Google’s conduct concerning mobile operating systems, apps and services. Smartphones, tablets and similar devices play an increasing role in many people's daily lives and I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company...."
You can read the Google response here: Official Google Blog: The Search for Harm: ".... we respectfully but strongly disagree with the need to issue a Statement of Objections and look forward to making our case over the weeks ahead. "-- Amit Singhal, Senior Vice President, Google Search
Best commentary on all this so far? Blogger Bob Lefsetz: Google Antitrust Case - Lefsetz Letter:
"It’s the beginning of the end. Once someone starts investigating you for the sins of the past, your future is screwed. Google is in trouble... Google’s money machine depends on desktop search, it doesn’t work on mobile, on mobile the app rules, Facebook is the king of mobile search, that’s why their stock is going up. Google got greedy... Google isn’t content with all that AdWords money. It’s got to mess with the results themselves... this is why the European Commission is coming down on Google... And now Google is caught up in this rearguard skirmish that is preventing them from moving forward into mobile. But mobile is next. The European Commission is investigating Android, to see if licensees are forced to install Google apps.... (read more at link above)
Showing posts with label market dominance. Show all posts
Showing posts with label market dominance. Show all posts
2015-04-02
Verisign, .COM Monopoly, High-Single Digit FCF Yield, Double-Digit Growth
Interesting Seeking Alpha article on Verisign (domain name registry operator for .COM and .NET and other TLDs), published March 31, 2015, by Oligopoly Investor, who, according to the author profile, is "a private and public-equity value investor in durable monopolies, oligopolies and/or industry leaders with a differentiated business model or technology ..." The article, summary below, gives a bullish outlook on Verisign stock, symbol VRSN, trading on the NASDAQ.
Verisign: .Com & .Net Monopolies Offer High-Single Digit FCF Yield And Double-Digit Growth - VeriSign, Inc. (NASDAQ:VRSN) | Seeking Alpha: "Summary -
- Durable .com and .net monopolies.
- Continued revenue growth drivers with high variable contribution.
- FCF greater than earnings.
- Efficient capital management.
- Potential CPI inflator upon .com renewal ...." (read more at link above)
The author deals with new gTLDs, social media and apps, and also points out that unlike .COM pricing, .NET pricing increases of 10% per year will contractually continue through 2017. The author also cites and quotes extensively from a US Department of Justice Antitrust Division letter (pdf) analyzing the market dominance of the .COM brand among all top-level domains, and the impact, if any, of new gTLDs:
"... registrants frequently purchase domains in TLDs other than .com as complements to .com domains, not as substitutes for them. In other words, registrants of a particular .com domain (e.g., google.com) will frequently also perceive a need to register the same domain in all or most available TLDs (e.g., google.info and google.biz) because of a desire to expand their presence on the Internet and to protect their brands from being exploited by others... the network effects that make .com registrations so valuable to consumers will be difficult for other TLDs to overcome. Due to first-mover advantage and high brand awareness, .com registrations account for the overwhelming majority of gTLD registrations. As a result, when users do not know the TLD in which a domain is registered, they most often simply append ".com" to a product or company name when attempting to find the desired website. This phenomenon creates a strong preference for .com… Further, the introduction of new gTLDs is not likely to constrain the exercise of market power by existing gTLDs or ameliorate the continuing need for restraints to prevent Verisign from exercising market power in the sale of .com domains." (source: US Department of Justice, Antitrust Division; emphasis added)
Background:
"…the .COM Registry Agreement ... [Verisign] has a presumptive right of renewal provided that we perform on our obligations, which are basically SLAs performance requirements, and the only way that the contract would be in jeopardy is if we had a breach without a cure. And so that is the sole relationship between VeriSign and ICANN in terms of the .COM Registry Agreement, everything else is completely unrelated, ICANN has no role in that. Would never have any additional methods or consent to renew or not renew that agreement." --Verisign Chairman D. James Bidzos at JPM Global TMT Conference, May 19, 2014
Finally, Oligopoly Investor takes a real swipe at Google--
"... while direct navigation share of traffic may be declining, $7.85 is a relatively low price point to have attractive .COM domain. Thus, Google search revenue may be more impacted than Verisign registration revenue by the growth in social media and apps..." (source: Oligopoly Investor, supra, emphasis added)Caveat Emptor! (Note disclaimer at the bottom of this web page.)
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