[governance] CEO of Axel Springer: An open letter to Eric Schmidt Why we fear Google

[michael gurstein]

I must say I'm astonished to have seen no reference to this extremely
important article by the CEO of Axel Springer Corp. in any of the accounts
of NetMundial amidst all of the uncritical celebrations of
multistakeholderism.

M

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An open letter to Eric Schmidt Why we fear Google

17.04.2014  ·  Here for the first time, a German manager confesses his
company’s total dependence on Google. What publishers are experiencing today
is a sign of things to come: We will soon all belong to Google. An open
letter to Eric Schmidt.
Von Mathias Döpfner CEO of Axel Springer Corp.

Mathias Döpfner, CEO of Axel Springer SE, explains to Eric Schmidt, why the
fear of Google is qualified

Dear Eric Schmidt,

In your text “Die Chancen des Wachstums” (English Version: “A Chance for
Growth”) in the Frankfurter Allgemeine Zeitung, you reply to an article
which this newspaper had published a few days earlier under the title “Angst
vor Google” (“Fear of Google”). You repeatedly mention the Axel Springer
publishing house. In the spirit of transparency I would like to reply with
an open letter to highlight a couple of things from our point of view.

(Deutsche Fassung: „Warum wir Google fürchten“ - Mathias Döpfners offener
Brief an Eric Schmidt)

We have known each other for many years, and have, as you state, had lengthy
and frequent discussions on the relationship between European publishers and
Google. As you know, I am a great admirer of Google’s entrepreneurial
success. In just a few short years, starting in 1998, this company has grown
to employ almost 50,000 people worldwide, generated sixty billion dollars in
revenue last year, and has a current market capitalization of more than 350
billion dollars. Google is not only the biggest search engine in the world,
but along with Youtube (the second biggest search engine in the world) it
also has the largest video platform, with Chrome the biggest browser, with
Gmail the most widely used e-mail provider, and with Android the biggest
operating system for mobile devices. Your article rightly points out what
fabulous impetus Google has given to growth of the digital economy. In 2013,
Google made a profit of fourteen billion dollars. I take my hat off to this
outstanding entrepreneurial performance.
Google doesn’t need us. But we need Google

In your text you refer to the marketing cooperation between Google and Axel
Springer. We were also happy with it. But some of our readers have now
interpreted this to mean that Axel Springer is evidently schizophrenic. On
the one hand, Axel Springer is part of a European antitrust action against
Google, and is in dispute with them regarding the issue of enforcement of
German ancillary copyright prohibiting the stealing of content; on the other
hand, Axel Springer not only benefits from the traffic it receives via
Google but from Google’s algorithm for marketing the remaining space in its
online advertising. You can call it schizophrenic – or liberal. Or, to use
one of our Federal Chancellor’s favorite phrases: there is no alternative.

We know of no alternative which could offer even partially comparable
technological prerequisites for the automated marketing of advertising. And
we cannot afford to give up this source of revenue because we desperately
need the money for technological investments in the future. Which is why
other publishers are increasingly doing the same. We also know of no
alternative search engine which could maintain or increase our online reach.
A large proportion of high quality journalistic media receives its traffic
primarily via Google. In other areas, especially of a non-journalistic
nature, customers find their way to suppliers almost exclusively though
Google. This means, in plain language, that we – and many others – are
dependent on Google. At the moment Google has a 91.2 percent search-engine
market share in Germany. In this case, the statement “if you don’t like
Google, you can remove yourself from their listings and go elsewhere” is
about as realistic as recommending to an opponent of nuclear power that he
just stop using electricity. He simply cannot do this in real life – unless
he wants to join the Amish.

Google’s employees are always extremely friendly to us and to other
publishing houses, but we are not communicating with each other on equal
terms. How could we? Google doesn’t need us. But we need Google. And we are
also worlds apart economically. At fourteen billion dollars, Google’s annual
profit is about twenty times that of Axel Springer. The one generates more
profit per quarter than the revenues of the other in a whole year. Our
business relationship is that of the Goliath of Google to the David of Axel
Springer. When Google changed an algorithm, one of our subsidiaries lost 70
percent of its traffic within a few days. The fact that this subsidiary is a
competitor of Google’s is certainly a coincidence.
Not only economic, but also political

We are afraid of Google. I must state this very clearly and frankly, because
few of my colleagues dare do so publicly. And as the biggest among the
small, perhaps it is also up to us to be the first to speak out in this
debate. You wrote it yourself in your book: “We believe that modern
technology platforms, such as Google, Facebook, Amazon and Apple, are even
more powerful than most people realize (...), and what gives them power is
their ability to grow – specifically, their speed to scale. Almost nothing,
short of a biological virus, can scale as quickly, efficiently or
aggressively as these technology platforms and this makes the people who
build, control, and use them powerful too.”

The discussion about Google’s power is therefore not a conspiracy theory
propagated by old-school diehards. You yourself speak of the new power of
the creators, owners, and users. In the long term I’m not so sure about the
users. Power is soon followed by powerlessness. And this is precisely the
reason why we now need to have this discussion in the interests of the
long-term integrity of the digital economy’s ecosystem. This applies to
competition, not only economic, but also political. It concerns our values,
our understanding of the nature of humanity, our worldwide social order and,
from our own perspective, the future of Europe.
The greatest opportunity in the last few decades

As the situation stands, your company will play a leading role in the
various areas of our professional and private lives – in the house, in the
car, in healthcare, in robotronics. This is a huge opportunity and a no less
serious threat. I am afraid that it is simply not enough to state, as you
do, that you want to make the world a “better place.” The Internet critic
Evgeny Morozov has clearly described the position that modern societies need
to take here: This is not a debate about technology and the fascinating
opportunities it presents. This is a political debate. Android devices and
Google algorithms are not a government program. Or at least they shouldn’t
be. It is we the people who have to decide whether or not we want what you
are asking of us – and what price we are willing to pay for it.

Publishers gained their experience here early – as the vanguard for other
sectors and industries. But as long as it was simply a question of the
expropriation of content (which search engines and aggregators use but don’t
want to pay for), only a few were interested. But that changes when the same
thing applies to people’s personal data. The question of who this data
belongs to will be one of the key policy issues of the future.

You say in your article that those who criticize Google are “ultimately
criticizing the Internet as such and the opportunity for everyone to be able
to access information from wherever they happen to be.” The opposite is
true. Those who criticize Google are not criticizing the Internet. Those who
are interested in having an intact Internet – these are the ones who need to
criticize Google. From the perspective of a publishing house, the Internet
is not a threat, but rather the greatest opportunity in the last few
decades. 62 percent of our corporate profit today comes from our digital
business. This means that we are not talking about the Internet here, but
only about the role that Google plays within it.
The „fair criteria“ are not in place

It is in this context that of the utmost importance are competition
complaints submitted four years ago by various European publishers’
associations and Internet companies against Google at the European
Commission in Brussels. Google is a prime example of a market-dominating
company. With a seventy-percent global market share, Google defines the
infrastructure on the Internet. The next largest search engine is Baidu in
China with 16.4 per cent – and that’s because China is a dictatorship which
prohibits free access to Google. Then there are search engines with market
shares of up to 6 percent. These are pseudo-competitors. The market belongs
to a single company. Google’s share of the online-advertising market in
Germany is increasing from year to year and is currently around 60 percent.
For comparison: The Bild newspaper, which has been considered as
market-dominating by the German Federal Cartel Office for decades (which is
why Axel Springer was not allowed to buy the TV company Pro Sieben Sat.1 or
regional newspapers), has a 9 percent market share of printed advertisements
in Germany. By comparison Google is not only market-dominating but super
market-dominating.

Google is to the Internet what the Deutsche Post was to mail delivery or
Deutsche Telekom to telephone calls. In those days there were national state
monopolies. Today there is a global network monopoly. This is why it is of
paramount importance that there be transparent and fair criteria for
Google’s search results.

However, these fair criteria are not in place. Google lists its own
products, from e-commerce to pages from its own Google+ network, higher than
those of its competitors, even if these are sometimes of less value for
consumers and should not be displayed in accordance with the Google
algorithm. It is not even clearly pointed out to the user that these search
results are the result of self-advertising. Even when a Google service has
fewer visitors than that of a competitor, it appears higher up the page
until it eventually also receives more visitors. This is called the abuse of
a market-dominating position. And everyone expected the European antitrust
authorities to prohibit this practice. It does not look like it will. The
Commissioner has instead proposed a “settlement” that has left anyone with
any understanding of the issue speechless. Eric, in your article you talk
about a compromise which you had attempted to reach with the EU Commission.
What you have found, if the Commission does decide on the present proposal,
is an additional model for Google of advertising revenue procurement. There
will not be any “painful concessions” but rather additional earnings.
A betrayal of the basic idea behind Google

The Commission is seriously proposing that the infrastructure-dominating
search engine Google be allowed to continue to discriminate against its
competitors in the placement of search results critical to success. As
“compensation,” however, a new advertising window will be set up at the
beginning of the search list, in which those companies who are discriminated
against will be able to buy a place on the list. This is not a compromise.
This is an officially EU-sanctioned introduction of the business model that
in less honorable circles is referred to as protection money – i.e. if you
don’t want me to kill you, you have to pay me.

Dear Eric Schmidt,
You know very well that this would result in long-term discrimination
against and weakening of any competition.

Meaning that Google would be able to develop its superior market position
still further. And that this would further weaken the European digital
economy in particular. I honestly cannot imagine that this is what you meant
by compromise. But I do not want to reproach you and Google for this. You,
as the representative of the company, can and must look after its interests.
My criticism is directed at the European Competition Commission.
Commissioner Almunia ought to reflect once again on whether it is wise, as a
kind of final official act, to create a situation that will go down in
history as a nail in the coffin of the already sclerotic European Internet
economy. But it would above all be a betrayal of the consumer, who will no
longer be able to find what is most important and best for him but what is
most profitable for Google – at the end a betrayal of the basic idea behind
Google.
A remarkably honest sentence

This also applies to the large and even more problematic set of issues
concerning data security and data utilization. Ever since Snowden triggered
the NSA affair, ever since the close relations between major American online
companies and the American secret services became public, the social climate
– at least in Europe – has fundamentally changed. People have become more
sensitive about what happens to their user data. Nobody knows as much about
its customers as Google. Even private or business emails are read by Gmail
and, if necessary, can be evaluated. You yourself said in 2010: “We know
where you are. We know where you’ve been. We can more or less know what
you’re thinking about.” This is a remarkably honest sentence. The question
is: Are users happy with the fact that this information is used not only for
commercial purposes – which may have many advantages, yet a number of spooky
negative aspects as well – but could end up in the hands of the intelligence
services and to a certain extent already has?

In Patrick Tucker’s book The Naked Future:  What Happens in a World that
Anticipates Your Every Move?, whose vision of the future was considered to
be “inescapable” by Google’s master thinker Vint Cerf, there is a scene
which sounds like science fiction, but isn’t. Just imagine, the author
writes, you wake up one morning and read the following on your phone: “Good
morning! Today, as you leave work, you will run into your old girlfriend
Vanessa (you dated her eleven years ago), and she is going to tell you that
she is getting married. Do try to act surprised!” Because Vanessa has not
told anyone yet. You of course are wondering just how your phone knew that
or whether it’s a joke, and so you ignore the message. Then in the evening
you actually pass Vanessa on the sidewalk.
Can competition generally still function in the digital age?

Vaguely remembering the text from the phone, you congratulate her on her
engagement. Vanessa is alarmed: “‘How did you know I was engaged?’ she asks.
You’re about to say, ‘My phone sent me the text,’ but you stop yourself just
in time. ‘Didn’t you post something to your Facebook profile?’ you ask. ‘Not
yet,’ she answers and walks hurriedly away.  You should have paid attention
to your phone and just acted surprised.”

Google searches more than half a billion web addresses. Google knows more
about every digitally active citizen than George Orwell dared to imagine in
his wildest dreams in 1984. Google is sitting on the entire current data
trove of humanity like the giant Fafner in The Ring of the Nibelung: “Here I
lie and here I hold.” I hope you are aware of your company’s special
responsibility. If fossil fuels were the fuels of the 20th century, then
those of the 21st century are surely data and user profiles. We need to ask
ourselves whether competition can generally still function in the digital
age if data are so extensively concentrated in the hands of one party.
There will be a winner

There is a quote from you in this context that concerns me. In 2009 you
said: “If you have something that you don’t want anyone to know, maybe you
shouldn’t be doing it in the first place.” The only sentence that is even
more worrying comes from Mark Zuckerberg when he was on the podium of a
conference with you and I in the audience. Someone asked what Facebook
thinks of the storage of data and the protection of privacy. And Zuckerberg
said: “I don’t understand your question. If you have nothing to hide you
have nothing to fear.”

Ever since then I have thought about this sentence again and again. I find
it terrible. I know that it was certainly not meant that way. Behind this
statement there is a state of mind and an image of humanity that is
typically cultivated in totalitarian regimes – not in liberal societies.
Such a statement could also have come from the head of East Germany’s Stasi
or other secret police in service of a dictatorship. The essence of freedom
is precisely the fact that I am not obliged to disclose everything that I am
doing, that I have a right to confidentiality and, yes, even to secrets;
that I am able to determine for myself what I wish to disclose about myself.
The individual right to this is what makes a democracy. Only dictatorships
want transparent citizens instead of a free press.

Officials in Brussels are now thinking about how the total transparency of
users can be avoided by restricting the setting and storage of cookies on
the Internet (with which it is still possible today to find out which
website you clicked on at 10.10 a.m. on 16. April 2006), in order to
strengthen consumer rights. We do not yet know exactly how this regulation
will turn out, any more than we know whether it will do more good than bad.
But one thing is already certain – if it comes to pass, there will be a
winner: Google. Because Google is considered by experts to be the absolute
leader in the development of technologies which document the movements and
habits of users without setting cookies.
Something the EU has so sorely missed in the past

Google has also made provisions as far as the antitrust proceedings in
Brussels on fair search are concerned. It is expected that the whole
procedure will be decided in Google’s favor. But if not, it would also be
safeguarded. Concessions and restrictions that have been wrung out in
lengthy proceedings, limited to Google’s European domains, would be
ineffective in an agreement because Google is able, using Android or Chrome,
to arbitrarily determine that the search will no longer be carried out from
a web address but by using an app. This means that Google will be able to
withdraw from all the commitments it has given, which to this day are still
bound to the Google domains such as google.de.

Will European politics cave in or wake up? The institutions in Brussels have
never been so important. An archaic question of power is to be decided. Is
there a chance for an autonomous European digital infrastructure or not? It
is a question of competitiveness and viability for the future. Voluntary
self-subjugation cannot be the last word from the Old World. On the
contrary, the desire of the European digital economy to succeed could
finally become something for European policy, which the EU has so sorely
missed in the past few decades: an emotional narrative.
You don’t have to be a conspiracy theorist

16 years of data storage and 16 years experience by tens of thousands of IT
developers has established a competitive edge which can no longer be offset
with economic resources alone. Since Google bought “Nest” it knows in even
more detail what people do within their own four walls. And now Google is
also planning driverless cars, in order to compete in the long term with the
car industry from Toyota to VW. Google will then not only know where we
drive our cars but how we are occupying ourselves when we are in the car.
Forget Big Brother – Google is better!

Against this background it greatly concerns me that Google – which has just
announced the acquisition of drone manufacturer “Titan Aerospace” – has been
seen for some time as being behind a number of planned enormous ships and
floating working environments that can cruise and operate in the open ocean.
What is the reason for this development? You don’t have to be a conspiracy
theorist to find this alarming, especially if you listen to the words of
Google founder and major shareholder Larry Page.
What impact does it have on our society?

He dreams of a place without data-protection laws and without democratic
accountability. „There’s many, many exciting and important things you could
do that you just can’t do because they’re illegal“, Page said back in 2013,
continuing „ ...we should have some safe places where we can try out some
new things and figure out what is the effect on society, what’s the effect
on people, without having to deploy kind of into the normal world.“

Does this mean that Google is planning to operate in a legal vacuum, without
troublesome antitrust authorities and data protection? A kind of superstate
that can navigate its floating kingdom undisturbed by any and all
nation-states and their laws?

Until now the concerns were the following: What will happen if Google
continues to expand its absolutely dominant market power? Will there be even
less competition? Will the European digital economy be thrown back even
further compared to the few American super corporations? Will consumers
become even more transparent, more heteronomous and further manipulated by
third parties – be it for economic or political interests? And what impact
do these factors have on our society?
It is not the fear of old analog dinosaurs

After this disturbing news you need to ask yourself: Is Google in all
seriousness planning for the digital supra-state in which one corporation is
naturally only good to its citizens and of course “is not evil”? Please,
dear Eric, explain to us why our interpretation of what Larry Page says and
does is a misunderstanding.

I am aware that the problems which are caused by new digital
super-authorities such as Amazon and Facebook cannot be solved by Google
alone. But Google could – for its own long-term benefit – set a good
example. The company could create transparency, not only by providing search
results according to clear quantitative criteria, but also by disclosing all
the changes to algorithms. By not saving IP addresses, automatically
deleting cookies after each session, and only saving customer behavior when
specifically requested to do so by customers. And by explaining and
demonstrating what it intends to do with its floating group headquarters and
development labs.

Because the fear of growing heteronomy by the all-determining spider in the
web is not being driven by any old analog dinosaurs, who have not understood
the Internet and are therefore afraid of everything new. It is rather the
digital natives, and among them the most recent and best-informed, who have
a growing problem with the increasingly comprehensive control by Google.
Impressive and dangerous

This also includes the fiction of the culture of free services. On the
Internet, in the beautiful colorful Google world, so much seems to be free
of charge: from search services up to journalistic offerings. In truth we
are paying with our behavior –  with the predictability and commercial
exploitation of our behavior. Anyone who has a car accident today, and
mentions it in an e-mail, can receive an offer for a new car from a
manufacturer on his mobile phone tomorrow. Terribly convenient. Today,
someone surfing high-blood-pressure web sites, who automatically betrays his
notorious sedentary lifestyle through his Jawbone fitness wristband, can
expect a higher health insurance premium the day after tomorrow. Not at all
convenient. Simply terrible. It is possible that it will not take much
longer before more and more people realize that the currency of his or her
own behavior exacts a high price: the freedom of self-determination. And
that is why it is better and cheaper to pay with something very old
fashioned – namely  money.

Google is the world’s most powerful bank – but dealing only in behavioral
currency. Nobody capitalizes on their knowledge about us as effectively as
Google. This is impressive and dangerous.
Is it really smart to wait?

Dear Eric Schmidt, you do not need my advice, and of course I am writing
here from the perspective of those concerned. As a profiteer from Google’s
traffic. As a profiteer from Google’s automated marketing of advertising.
And as a potential victim of Google’s data and market power. Nevertheless –
less is sometimes more. And you can also win yourself to death.
Historically, monopolies have never survived in the long term. Either they
have failed as a result of their complacency, which breeds its own success,
or they have been weakened by competition – both unlikely scenarios in
Google’s case. Or they have been restricted by political initiatives. IBM
and Microsoft are the most recent examples.

Weitere Artikel

    Warum wir Google fürchten: Mathias Döpfner antwortet Eric Schmidt 
    Eric Schmidt about the good Google does: A chance for growth 
    Die Chancen des Wachstums: Eric Schmidt über das Gute an Google 
    Von der Suchmaschine zur Weltmacht: Angst vor Google  
    Ein Goliath macht sich ganz klein: Reaktionen auf Matthias Döpfners
Google-Kritik 

Another way would be voluntary self-restraint on the part of the winner. Is
it really smart to wait until the first serious politician demands the
breakup of Google? Or even worse – until the people refuse to follow? While
they still can? We most definitely no longer can.

Sincerely Yours
Mathias Döpfner


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