Poor Chris Dodd — he just got the top media lobbying job in Washington, D.C., at the very moment that the strong-arming-pols, scare-the-children, Jack Valenti era in media lobbying is now decidedly over.

It’s obviously a very confusing time for big media these days, on a lot of fronts. But any of the consummate insider moves once used by the legendarily pugnacious Valenti (pictured here onstage at our first D: All Things Digital conference in 2003) had a hard time this past week, as Internet players went very public in protesting two Congressional bills aimed at combating piracy online.

Not that Dodd didn’t try to cope.

The former Senator — who is now the chief lobbyist for the once much more powerful Motion Picture Association of America — gave a can’t-we-all-get-along interview to the New York Times on Thursday, in which he called for a meeting with techies to come to some acceptable compromise.

Wrote the Times:

“In an interview Thursday, Mr. Dodd said he would welcome a summit meeting between Internet companies and content companies, perhaps convened by the White House, that could lead to a compromise … ‘The perfect place to do it is a block away from here,’ said Mr. Dodd, who pointed from his office on I Street toward 1600 Pennsylvania Avenue.”

But on Friday, after politicians quickly moved to delay both the House’s Stop Online Piracy Act (SOPA) and the Senate’s PROTECT I.P. Act (PIPA) — after successful protests pointing out that the legislation could lead to censorship — Dodd went to the full Valenti again:

“We applaud those leaders in Washington who have chosen to stand with the millions of hard working Americans all across this nation whose livelihoods are threatened by foreign criminal websites designed to steal. As a consequence of failing to act, there will continue to be a safe haven for foreign thieves; American jobs will continue to be lost; and consumers will continue to be exposed to fraudulent and dangerous products peddled by foreign criminals.”

Foreign criminals! Foreign thieves! Is it just me, or does Dodd sounds like Cher, singing, “Gypsies, tramps and thieves”?

(Let’s be clear, that utterance could never top Valenti’s most infamous quote: “I say to you that the VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone.”)

To be fair, Dodd is hindered by strict restrictions on his lobbying Congress until next year. That said, this is not an old-timey, private Capitol Hill fight, but a modern-era, social-media-charged one.

And it’s pretty clear that the old scare tactics used by big media will no longer work as well, as consumers — as much as they like their movies — seem to love their Internet more.

Thus, what has happened is that — at least for now — the MPAA and media companies have lost and lost big, after the typically fractious Web powers decided to lock arms for once and cooperate with a creative, take-it-to-the-people approach of showing a disabled Internet.

Dramatic? Yes. Effective? Certainly. (That Facebook and Google agree on anything? Astonishing!)

Where it goes from here is unclear — the MPAA and its constituents could certainly rally and put forth their own protest. Ironically, the most effective way to do that is not via the airwaves or other former means of broadcast to the public, but on the Web.

Which is controlled by Dodd’s foes. (You see the problem here.)

The answer, in the end, might have to be the cooperation he first suggested.

As he told the Times:

“The companies, Mr. Dodd said, are ‘rethinking everything,’ not just about the bills, but about their relationship with an estranged Silicon Valley. That need for rapprochement, he said, ‘has come home in a way that no rhetoric of mine could express.’”

Much more to come, obvi.

Yesterday, the Obama administration dribbled out the news that it was going to nominate current Commerce Secretary Gary Locke as the next ambassador to China.

If approved, Locke will surely have his hands full on a wide range of issues, many of them impacting the tech sector, including piracy, privacy and government-sponsored censorship.

Perhaps more interestingly, the move leaves open a post–which the Obama administration actually had a hard time filling initially–that could get a true turbocharge if it were filled by an exec from the fast-growing digital arena.

It’s not a bad idea, since tech is probably now the most critical business arena in the U.S. and one of the only markets in which this country innovates and excels at.

While the Commerce Department has a huge and disparate domain, from international trade to the census to promoting American businesses, its digital footprint has been much less profound than the industry’s increasing importance to the U.S. economy.

After all, despite some interesting international efforts, most of the current crop of tech stars are U.S. born and bred and leading the way in digital innovation.

In fact, every big trend right now in value creation are all coming out of tech.

Gaming? Zynga.

Social networking? Facebook and Twitter.

Retail? Groupon.

Mobile? Google and Apple.

So, why not pick a business person from the area to lead the government agency dedicated to business?

But that’s where it gets dicey.

One more obvious candidate would be outgoing Google CEO–and Obama favorite–Eric Schmidt.

I would assume he might welcome such a prominent post, although putting him in place at Commerce would be a tough road.

Issue one and only: The investigations of Google’s aggressive business practices by federal regulators make this an awkward decision for Obama, given Schmidt would be open to a lot of scrutiny going through confirmation.

But there is a long list of others who could be considered to serve, especially if you think well outside the box.

What about former Xerox CEO Anne Mulcahy, who certainly has the management cred?

Or mega-VC John Doerr, who–despite his recent social fever–might finally get to push his beloved clean-tech agenda onto a larger stage?

What about Facebook COO Sheryl Sandberg, who recently showed she could deliver a boffo speech and who might lend some Silicon Valley magic to her former Washington, D.C. rep?

And while Amazon’s Jeff Bezos’ laugh would have a hard time getting Congressional approval, why not consider someone who has profoundly changed the way an entire business sector does business?

In that vein, Reed Hastings of Netflix also fits the bill.

Except these three execs are pretty busy these days. So, what about former eBay CEO Meg Whitman, whose failed bid to be California’s governor as the Republican candidate leaves her without a post.

President Barack Obama had picked a GOP pol as his second choice for Commerce head, in fact, so Whitman or even Cisco CEO John Chambers are not out of the question.

The point is to perhaps move outside the Beltway’s comfort zone and pick a Commerce Secretary who represents the future rather than the past.

Yesterday, A group of House members from rural districts called on the Federal Communications Commission to investigate Google’s practice of blocking calls to numbers that use rural exchanges to charge inflated prices–something regulation prevents traditional telecom carriers from doing.

In their letter to the FCC, the lawmakers–among them Reps. Steve Buyer (R., Ind.), Charlie Melancon (D., La.), Michele Bachmann (R., Minn.) and John Barrow (D., Ga.)–claim that rural consumers will be harmed if Google is allowed to “evade compliance with important principles of access and competition.”

“We understand Google has asserted Google Voice is not a ‘traditional’ telephone service–despite its use of 10-digit telephone numbers and its ability to connect calls between telephones through a local exchange carrier,” the lawmakers wrote in the letter. “Instead, Google maintains it ought to be allowed to block calls to rural telephone exchanges–a position we find ill conceived and unfair to our rural constituents.”

This, of course, is pretty much what AT&T (T) said in September when it slagged Google (GOOG) as “one of the most noisome trumpeters of so-called net-neutrality” and asked the FCC to order it to “play by the same rules as its competitors.” Google, however, insists those rules don’t apply in its case.

“The FCC’s open Internet principles apply only to the behavior of broadband carriers–not the creators of Web-based software applications,” Google telecom counsel Richard Whitt wrote in response to AT&T’s complaint. “Even though the FCC does not have jurisdiction over how software applications function, AT&T apparently wants to use the regulatory process to undermine Web-based competition and innovation.”

Unlike the gripping back and forth of the fight over Yahoogle last year, the approval process for the search and online advertising partnership of Microsoft and Yahoo is chugging along slowly but surely as the Justice Department has deepened its investigation by reaching out to a broad range of publishers, advertisers, public interest groups and rivals for comment recently.

A month ago, the government agency lobbed in a “second request” for information about the deal the pair struck earlier this summer.

This kind of regulatory review is typical in deals of this magnitude.

But so far, there is no significant external challenge to the MicroHoo deal, even–according to many sources BoomTown has interviewed over the last week–from Google, the likeliest company to try to scuttle or, at the very least, slow down the deal.

“Is it worth fighting a big fight over?” asked one person close to the thinking of Google (GOOG). “Not really.”

Said another source, surveying the state of play: “It’s eh, kind of inevitable and not that interesting on a lot of levels.”

While none of the key constituencies wanted to comment or make predictions about the outcome of the regulatory scrutiny, most seem to agree that MicroHoo is more likely to be approved than not.

At the time the partnership was announced in July, execs at both Microsoft (MSFT) and Yahoo (YHOO) said a lot of investigation was likely from Justice, although they said they were also confident that it would be allowed go through by year’s end.

So far, several sources said, the key issue raised by the Justice Department has been whether the argument Microsoft and Yahoo are making–that they need scale to compete with Google–is valid or not.

Currently, Google has just under 70 percent of the search market in the U.S., while Microsoft and Yahoo together have about 28 percent.

Google has been arguing that huge scale is not necessary to be successful in the search ad market, although its execs have often said bigger is better when it comes to natural search and in spurring more clicks on ads.

Meanwhile, Microsoft and Yahoo have said they need all the firepower they can muster together to battle Google’s hegemony.

In a related concern, some regulators are worried–as they were when Google and Yahoo were trying to get approval for a similar deal last year–that any hookup of big players in the market will effectively take Yahoo out of the search business.

“With only three big players, going to two is not desirable to the government,” said one source. “Yahoo has to reassure everyone that it is focused on a sustainable business model beyond search.”

In a blog post yesterday, in fact, Yahoo said it was committed to search innovation.

In any case, most expect another month of investigation at least, although the lack of any loud voice in opposition could shorten that time frame.

And, added some sources, unlike with Yahoogle, there is not likely to be any kind of Congressional hearing on the deal.

Nonetheless, Microsoft, Yahoo and Google remain concerned that deals like this will lead to more focus on privacy issues, specifically around behavioral targeting.

That would be more a matter for legislators or the Federal Trade Commission and would probably come well after the deal is cleared and as part of a bigger topic.

Rep. Rick Boucher (D., Va.), who chairs the Subcommittee on Communications, Technology and the Internet, said he will consider consumer privacy legislation this fall.

Boucher led hearings on the subject this summer, and there might be more, especially as Web companies garner a lot of personal information from consumers with little oversight of what they do with those data.

If Boucher does call for hearings, he might want to replay this particularly boneheaded (but funny!) video from Yahoo’s U.K. ad staff, which classifies various Yahoo customer types–such as “disco-dancing heart surgeons from Nantwich”–as farm animals:

Please see this disclosure related to me and Google.

After all the investor hubbub over the oh-no-they-didn’t deal between Yahoo and Microsoft starts to die down a bit, the pair are now embarking on the path that is the only way toward proving the efficacy of them joining together.

That would be getting a variety of state, federal and international regulators to say yes to the wide-ranging online advertising and search arrangement they announced last week so they can start making it work.

According to sources at both companies, a variety of filings will be made this week, including one to the Securities and Exchange Commission that should provide more details of the partnership.

When it was unveiled last Wednesday, the companies said Microsoft (MSFT) will run search technology for the two, while Yahoo (YHOO) will sell the premium search advertising.

That SEC filing could answer a number of questions some still have about the deal, such as whether there is a large break-up fee that Microsoft would pay Yahoo in case the deal is scuttled.

That’s just the outcome that Microsoft and Yahoo are trying to avoid.

“We think of it as an outreach effort to explain how we are creating a strong No. 2 to Google,” said one source close to the situation. “The main goal will be to show that a better competitor in the marketplace is a good thing.”

While the companies are prepping for opposition from Google (GOOG), sources close to the thinking at the dominant search company said it is more likely to be muted and indirect.

That’s especially true since a MicroHoo makes Google–currently under a lot more government scrutiny than ever before–look like less of a bully.

Thus, Google’s tactics would entail less direct statements and more pointing out the discrepancies between what Microsoft said when Google tried to get approval for a search deal with Yahoo last year and what it argues now.

“They will probably not be that obvious, but they will be there still,” said Microsoft CEO Steve Ballmer to me, in an off-hand remark at the software giant’s Financial Analyst Meeting last week.

It’s a game of legal chicken that Ballmer knows well.

Already, for example, Microsoft and Yahoo execs have been aggressively reaching out to major publishers and advertisers to get their staunch support.

That included calls immediately after the deal was announced last Wednesday to such execs as Martin Sorrell of the WPP Group (WPPGY) and Jeff Zucker, CEO of NBC Universal, a unit of GE (GE).

In Washington, D.C., both companies have legions of lawyers to try to make sure the Justice Department, which will review the case due to its antitrust implications, has all the information it might need.

And, more to the point, they want to avoid the debacle that took place when Yahoo and Google tried to get approval for their failed deal last year.

That deal was ended by Google after it became clear that Justice was going to fight it by arguing that top search companies hooking up hurt competition and stifled innovation.

In addition, there might be Congressional scrutiny, with possible hearings, similar to those held when the Yahoogle deal was pending, such as in the Senate Judiciary Antitrust Subcommittee.

And, of course, there are actually independent groups concerned and they have also been in contact with regulators.

“There are questions that must be answered regarding the collection and sharing of consumer data by the two companies,” said Jeff Chester, executive director of the Center for Digital Democracy, a D.C.-based group that works to promote consumer privacy and protection online, in a statement last week. “While the rationale for the deal is to provide some much needed competition to Google (and income for Yahoo), the further consolidation of the global digital advertising system should be a concern to Internet users, privacy advocates, online marketers, and competition regulators.”

Sources said Microsoft and Yahoo also plan to petition regulators in the European Union this week, which is likely to be most concerned about privacy issues involved in their union.

They will also be doing the same in other key countries worldwide, such as Korea, Taiwan and Brazil.

And, finally, given how involved state attorneys general became in beaching the Yahoo deal to partner with Google, they also will be starting outreach to key states, such as California, where Silicon Valley-based Yahoo is headquartered.

“Once again, it will be the Lawyer Employment Act of 2009,” joked one person close to the deal. “At least, that shows there is some economic benefit to this deal already.”

While we all wait in breathless regulatory anticipation, here are interviews I did at last year’s Senate hearings on Yahoogle, with lawyers from Google (David Drummond), Microsoft (Brad Smith) and Yahoo (Mike Callahan).

Incredibly, they are the very same lawyers who will be pretzeling themselves in entirely different shapes than they pretzeled themselves a year ago.

I would expect nothing less!

Here’s the video:

]]> http://allthingsd.com/20090804/yahoo-microsoft-regulatory-filings-begin-this-week-let-the-legal-game-playing-begin/feed/ 0 http://allthingsd.com/20090623/congress-readies-an-opt-in-privacy-bill-and-the-web-industry-cringes/ http://allthingsd.com/20090623/congress-readies-an-opt-in-privacy-bill-and-the-web-industry-cringes/#comments Tue, 23 Jun 2009 20:41:30 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=8522 Here comes the battle the online ad business has been dreading: Congress is drawing up a bill that would require users to sign up to let advertisers track their online behavior–and, if you believe online publishers, more or less destroy the online ad business.

Simulmedia founder and CEO Dave Morgan told an industry conference today that Rep. Rick Boucher, the Virginia Democrat who has become the loudest voice in Congress in the advertising/privacy fight, is prepping a bill that will force publishers to let Web surfers “opt in” before they’re served with any third-party tracking cookies.

Not a huge surprise: Boucher laid out the case for the bill last week at a Congressional hearing. It’s unclear just exactly what that would mean for the business: Could Google (GOOG) not send cookies out if you, say, played a YouTube video embedded on a third-party site (like the one the White House runs)?

But right now the details of the proposed bill don’t matter: The industry has already started arguing against it via promotions that explain just how valuable Web advertising is to the country (and by extension, the targeting/tracking that cookies enable it). From MediaFlect’s Dorian Benkoil:

“Congress’ position is that consumers are not appropriately aware of what is being done on their machines, and the use of cookies delivered by a third party is something consumers have not been appropriately informed of,” said Morgan, who oversees privacy initiatives for the Internet Advertising Bureau [and who] was in Washington last week talking to FTC officials and congressional staff, he said. “Congress’ default position is that that will require an opt-in,” to serve a third-party cookie.

That’s a perfectly sensible position from a consumer’s perspective: Why should advertisers and their proxies track what you’re doing on the Web without your consent? But from the advertising/publisher perspective, an opt-in plan means a plan no one will ever agree to, which means no more cookies/tracking, period, which means Web advertising becomes as imprecise and clumsy as good-old TV and print ads.

Which is why the Web guys prefer a bill that allows surfers to opt out–or preferably, no bill at all.

I still like my Solomon-like solution, which I’ve thrown out before: Let consumers opt in, but give them a reward for doing so.

It doesn’t have to be much–consumers say they care about privacy, but in reality, they’re very happy to trade personal info for trinkets and geegaws. Maybe you get “privacy points” every time you visit a site for the first time and sign away your right to complain about tracking. And if you earn enough you get a bag of Cheetos, etc. Sure we can work something out.

[Image credit: rpongsaj]

]]> http://allthingsd.com/20090623/congress-readies-an-opt-in-privacy-bill-and-the-web-industry-cringes/feed/ 0