The Dawn of the Age of Disposable Video

The Silicon Hutong Room, Wynn Las Vegas Hotel
Looking out over the lights of the insomnia capital of the world
0037 hrs.

I know it sounds like a really bad Kodak commercial, but there really are moments in your life that you wish you could capture and just hold. This is one of them.

My wife and son are sleeping – quietly for the most part, but occasionally the room resounds to the sound of rhinological rhythm – and the lights are out, but the room is lit by the screen of my MacBook Pro and the ambient light filtering in through windows that make up an entire wall of our generously-sized room at Wynn Las Vegas. My vista over southern Nevada looks to the northeast, which at this hour is covered by a carpet of mostly orange streetlights, punctuated by the bulk of the Las Vegas Hilton about a half mile away, and the nearer mass of Encore at Wynn, still under construction. The midnight sky is punctuated by occasional flights in and out of McCarran International Airport.

We’re leaving here tomorrow morning, which is not an entirely unpleasant thought: after four days in a city dedicated to serving the baser needs of its guests, all but the most devotedly amoral are in need of an escape and a very long shower. But I love a great cityscape at night – it is one of the things that makes business travel wonderful – and for the moment my 60-degree panorama gives this city a patina of beauty.

As I said, an amazing moment.

Speaking of Moments…

Before we drove out here from LA on Monday, leaving half our luggage at our hotel there to await our return tomorrow, we attended on Sunday night what can without pretense be termed a Hollywood wedding. At an exclusive club perched above the sea in Malibu, with ocean breezes cutting though the heat of an LA summer afternoon, the bride, groom, and most of the attendees were of that class of people who never show up in front of a camera, but who are the invisible generals of the film and television industries. It was an amazing wedding, filled with people who were warm, unpretentious, and who gave lie to the stereotypes and caricatures that for most of us forms our jaundiced view of the entertainment business. With the possible exception of my own nuptials, it was the most fun I can remember having at a wedding.

it was a memorable evening, and the bride and groom (the latter my cousin) had decided to help remember it by placing at each of the dozen tables something few of us had yet seen – a disposable video camera, capable of filming up to 20 minutes of whatever we decided to put on it.

Without instructions, each of us took turns recording greetings to the bride and groom, narrating the event, recording whatever struck our fancy before passing it on to somebody else at the table.

Fire the Videographer

It took me until much later to realize that beyond the novelty value of getting to play with Pure Digital’s new Flip Video disposable camera (out just six weeks), we all had an opportunity to give them something they could not get from the best photographer or videographer: six total hours of footage of their wedding shot by their guests, allowing them to see their own wedding from our eyes, and join each of us at our tables.

They will be able to enjoy their own wedding from our viewpoint. Forever.

Talk about completing an experience – your wedding as viewed and experienced by your guests. All for the price of a $30 camera on each table.

Laying aside for a moment the reality that even at the best wedding, not everything is sweetness and light, this to me is another example of how technology – elegantly applied – can create, enhance, and deepen the experiences we have in our lives.

If nothing else, it will tempt you to take video where you haven’t wanted to take it before out of fear of damaging or destroying an expensive camcorder.

Why the FTC Should Care about Global Competitiveness

The Silicon Hutong Room, Wynn Las Vegas Hotel
Watching the construction cranes and feeling homesick
2043 hrs

Sergey posed an excellent comeback to my post on the Googleopoly, where I suggested that the FTC should take into account the global economy when making its call on Google and DoubleClick getting together:

“There is a “Federal” in the the name FTC, so please explain why they should consider the world market? After all, if a company puts a monopoly on U.S. ad market, it will still be a monopoly no matter how many players are outside–I’m not going to trade my dollar ad revenue for /8 Chinese Yuan…”

Why indeed. Chartered with the twin missions of protecting the consumer and ending anti-competitive business practices, why should the FTC consider anything outside the borders of the U.S. when ruling whether a merger is anti-competitive or not?

For the sake of argument, I’m going to assume that Sergey is genuinely interested in an answer to the question, and is not approaching this with an ulterior motive. And my response is simple: it is the very existence of a world market – and the very nature of globalization generally and the Internet and advertising industries in particular – that make considering the world market essential in this case.

Because it is the Law

First, let’s address a misconception. Just because an agency is ‘Federal” doesn’t mean that it cannot – or should not – take international commerce into account when going about their business. Indeed, in the case of the FTC, the Commission’s very charter – the Federal Trade Commission Act of 1914, as amended (15 U.S.C. 2 Subchapter I) – specifically defines the commerce that it regulates as:

“commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation.” (15 U.S.C. 2, Subchapter I §44)

The FTC is also required to investigate foreign trade conditions (§46(h),) and to advise Congress of those conditions. Now, admittedly I’m no lawyer, so I’ll grant that I might be way off base here, but a layman’s reading of the law suggests that not only should the FTC consider the world market, they are the designated global market monitor for the U.S. government.

It defies common sense, therefore, that the commissioners would monitor the global market on the one hand and ignore it on the other. Indeed, in an age of globalization, acting in willful ignorance of the growing role of foreign competition in any industry (especially an industry as young and fungible as the Internet) would border on negligence.

Because it is about more than Trust-busting

Even if it were outside of the legal purview of the FTC to consider a global economy, there are other reasons it should assess the international market when deciding whether a business activity is anti-competitive or not.

Through its legal power to challenge a merger, the FTC also has to take into account the wider effects of its actions. If in the face of an evolving global industry a ruling would hobble a company – or indeed the United States – in competing in a global business, what is to be gained in the United States by such a ruling? Certainly we don’t want monopolies – real or functional – but the FTC in the end has a custodial duty to the U.S. economy as a whole and in a global context.

Actually, the FTC considers global markets all the time. In approving the merger of the last two remaining manufacturers of civil airliners in the United States (Boeing and McDonnell Douglas), for example, the FTC voted 4 to 1 to approve the merger despite the fact that the combined company would end up with around 70% of the global market and nearly the entire installed base of users in the U.S. As long as there were competitors offshore and no structural barriers preventing those competitors from selling onshore, there was no issue. And remember – that was an industry with barriers to entry far more daunting than that of Google and DoubleClick.

Sic Transit Gloria Mundi

Americans have a natural suspicion and dislike of monopolies dominant market players, and more than almost any other people on the planet we value choice as a good in and of itself. The more choice, we seem to say, the better. For that reason, our Monopoly Alarms go off at the slightest hint of market dominance, a conditioned reflex that often belies our emotions and our preferences rather than our rational contemplation of a given situation.

Google, with its high stock price, massive market capitalization, and growing share of our web experience, naturally concerns us. But we forget that at one time Yahoo looked set to dominate search and portals, AOL was ready to own media, when Microsoft looked invincible, when Dell looked unstoppable, when first Apple then IBM dominated the market for the personal computer and, even further back, when General Motors utterly dominated the automobile industry.

Each of these companies have, under the stresses of time and change, fallen from their once-dominating aeries, many of them succumbing to the ravages of global competition that at one point was so tiny as to appear laughable. Executives – the smart ones – are students of history, and at no other time has it been more painfully obvious to business leaders that in order to stay ahead of change one must often act in a way that risks awakening the American distaste for quasi-Napoleonic business practices.

Industries that are living through a period of innovation driven change – especially those that are creative or technological in nature – are not industries where competitive advantage – much less market dominance, much less market control – is truly sustainable. Google is a technology-based company in an industry tossed by constant innovation that relies for its revenue on an industry that is fundamentally creative. Controlling innovation, technology, and creativity is harder to conceive than controlling oil reserves, tankers, refineries, and gas stations.

From the outside, the Googleplex looks like a huge new-age ziggurat, an Orwellian monolith of corporate power. But walk the hallways trod by the men and women responsible for the future of that company and what I would bet you would find is not a group of fat cats overcome by hubris, but smart men and women who look around the world and know that in ten thousand tiny offices, garages, dorm rooms, and coffee-houses around the world, people are gunning for Google, and enough capital to finance a medium-sized country stands ready to fund these potential challengers.

Behind all of the accouterments of their success, Google’s leaders know that they wake up every day a few good ideas away from ignominy, most likely at the hands of someone who is not American. Now what they must do is make that clear to the FTC.

The M Word

One last thought about monopolies.

The FTC and the act that created it were both animals of their time, born of a world where the nature of industrialization had concentrated capital in critical industries in an uncomfortably small number of hands, and where innovation did not look ready to break the nation’s dependence on the non-substitutable goods whose production was controlled by functional monopolies.

The world has changed, the FTC must change with it, and the very question of what is “competitive” must be asked in a very different way. Which also means that the definition of a monopoly must change.

The difficulty of proving a monopoly in industries where product life cycle is measured in months and where the means of production lie between the ears of labor is huge, and it is getting tougher. Indeed, in the realm of intellectual endeavor the line between “patent holder” and “monopolist” is becoming awfully blurry, as is the line between “transitory dominant market leader” and “monopolist.”

Recognizing this new reality means engaging in a public debate about what constitutes a monopoly, what does not, and whether or not there are situations where monopolies are not only tolerable, but desirable. The Sherman Antitrust Act remains a critical part of our national law, but it is possible that the time has come to revisit that august code with a view to updating it a bit.

Googleopoly Not Played in China

The Silicon Hutong Suite
Marriott Residence Inn
Los Angeles
1722 hrs.

As Google prepares to shoot the rapids of regulatory approval for its proposed acquisition of DoubleClick, the analysts are taking sides, including the exhaustive white paper Googleopoly that is making its rounds on the net.

The Federal Trade Commission, which is the regulator in this case, needs to view this from a global perspective. Viewed in the context of the worldwide online advertising business, the entire matter takes on a different tint. As strong as the Google-DoubleClick team may look from New York or San Francisco, they look like weaklings. In China, for example, Google is a second-place player even in its core market of search, and DoubleClick is a non-presence.

If the FTC were genuinely attuned to the needs of global business – and, indeed, America’s competitive position in it – they would pass this merger with nary more than a murmur. In China, if anything, Google and DoubleClick need all the help they can get, and the situation varies only by degree in the most rapidly growing Internet markets in the world.