February 16, 2010

A little more than a year ago, I predicted that President Obama would find it hard to turn the United States into a real democracy. Stephanie Kirchgaessner's article offers a sober assessment (*). "Corporations spent more money than ever lobbying members of Congress in 2009". Together with other interest groups, they "spent a total of $3.47bn on federal lobbyists [...], a 5 per cent increase from 2008".

As Stephanie Kirchgaessner acknowledges, trying to pass healthcare reform was a contributing factor. But the numbers she got from the Center for Responsive Politics (1) reflect another perspective, equally alarming. While the "the pharmaceutical and health products industry broke all records by spending $267m last year", this explains less than 10% of the total. Take it away, the United States remains a pronoacracy to the core.

Needless to say, this sorry situation is bound to endure. In our Information Age, individual citizens and legal entities can express their opinions at no cost. But such freedom of speech is illusory. As they have but a limited amount of time to listen to such opinions, Congressmen can and do auction off their attention to the highest bidder. How else could they raise the ever increasing sums necessary to win their own constituents' attention?

Such apparent immobility can be deceptive. Plus c'est la même chose, plus ça change.

Reviewing The Rule of the Law, by Tom Bingham (**), Chris Patten underlines that "democracy should not be regarded as simply the use of the ballot box. The rule of the law and the freedoms associated with it were essential, too" and one of its tenets is that "no one is above the law and all are subject to the same law applied in the same way". Yet how long can the reverence due to the rule of the law resist the corrosive knowledge that the law is but a pronaocratic quid pro quo, the ever changing result of competing moneyed interests?

Two hundred and fifty years ago, Great Britain and France were at war as usual, their kings well secure in all their subjects' loyalty. Still, steadily if stealthily undermining the status quo, the political philosophers of the day would unceasingly question their right to rule. We know what happened.

Google may very well provide us with a similar case. To dispute the predominance of this company would be preposterous. It has defeated Microsoft to become today's paramount IT company. It recent moves reveal how consistent and self-conscious its winning strategy truly is.

As reported by Miguel Helft (***), its latest move is a plan "to build and test a high-speed fiber optic broadband network capable of allowing people to surf the Web at a gigabit per second". The reactions of telecommunication companies leave one in no doubt that Google has served them notice it will not let them use bandwith limitations to create a bottleneck and thus threaten Google's own diabolo effect from below.

And yet Google should sleep uneasy. I have already shown how its hegemony could be broken by a new business model which would respect user privacy for good. In this context, it is ominous that ordinary users have started to complain about what advocates have long claimed to be its total disregard for eprivacy. While I would not advise investors to rush and short Google's shares yet, it is worthwhile to ponder the introduction of "Buzz, its answer to Facebook and Twitter" to quote Miguel Helft (****).

On the one hand, Buzz is but another application of Google's diabolo strategy, this time to fight off a potential threat from above. Should Facebook for instance finally find a lucrative business model, this popular source of personal information could well become the preferred recommendation mechanism, the main need of our Information Age. Better act like Microsoft against Netscape than wake up one day like Microsoft facing Google.

Buzz however did not escape the conundrum of social networks. Their value rests of violating their users' privacy but users have little patience when they plainly see how their privacy is being violated and social networks tend to be far too transparent in this regard. Having automatically populated its users' so-called friend list from the records of its mail service, Google "now finds itself being pilloried as a clumsy violator of privacy".

Sweet schadefreunde, Marc Zuckerberg! Your own missteps were no accident. Naturally your own backtracking has been promptly mimicked. Again according to Miguel Helft (*****), "Todd Jackson, product manager for Gmail and Google Buzz" quickly acknowledged to be "very sorry for the concern [he] caused" and have "turn[ed] off the auto-follow" feature.

Marc Zuckerberg's strategic weakness remains intact however. Contrary to Facebook, Google can do without properly monetizing its social network in view of its ad-supported search engine. In fact, however bitter it may taste to Mark Zuckerberg, the best policy is for him to sell Google both the data Facebook gathers on its users and the advertising space on its site, letting Google extract a premium from its recommendation factory.

For Google's behavioral advertising network hides well its own egregious privacy violations from naive users. That is, as long as the FTC does not compel targeted advertisements to let users access their profiles, warts and all, on the spot and for free.

Given his invoking Orwell, the head of the FTC Bureau of Consumer Protection, David Vladeck, may be tempted to follow my advice (2) and open the "little i" further, this icon proposed for flagging targeted ads. In a well managed pronaocracy, nothing of the sort will happen of course.

George III, rest content! All is well. George Washington is quite busy fighting those pesky French for Your Majesty.

Philippe Coueignoux

• (*) .......... Obama fails to turn back lobbying cash tide, by Stephanie Kirchgaessner (Financial Times) - February 13, 2010
• (**) ........ Legally Binding, by Chris Patten (Financial Times) - February 13, 2010
• (***) ..... Google Set to Offer Superfast Net Service, by Miguel Helft (New York Times) - February 11, 2010
• (****) ... Critics Say Google Invades Privacy With New Service, by Miguel Helft (New York Times) - February 13, 2010
• (*****) . Anger Leads To Apology From Google About Buzz, by Miguel Helft (New York Times) - February 15, 2010
• (1) see the mission statement of the Center for Responsive Politics on its Open Secrets web site
• (2) Comments relative to the FTC November '07 Workshop on Ehavioral Advertising: Tracking, Targeting, Technology, November 2007