Fred Vogelstein writes in Wired that Google is drawing increasing attention from anti-trusters link here. He notes that it has gotten too big to ignore and perhaps to tolerate but continues to provide excellent software and services, presenting the government with a dilemma. Break it up or regulate. Definitely worth reading.

I do not think we can reach a reasonable conclusion on a single all-or-nothing position. In many respects both Microsoft and Google are natural monopolies, given the advantages to consumers of having a dominant standard and of being first to market.

In operating systems, Windows is what most people used first when they started computing. Most of us are familiar with it and it works quite well. Apple's operating system is not really relevant, an expensive niche product without the large number of add-ons, many free. Google has now offered an alternative in the form of cloud computing and the Chrome OS. This follows up on its relationship with Mozilla and the Firefox browser and opens an alternative to computer makers, a market for cheap simple computers like the netbook whose sales have been surprisingly good. (HP announced today that its Compaq division will soon offer a basic full size laptop for $298.) Chrome will prosper or not depending on the software that becomes available. By giving the software away, Google really puts pressure on Microsoft. Whether Microsoft can come up with an equally good, fast, down-sized modification of Windows and free software will determine its position in this market. Even if it does, the home computer market will become a duopoly but the advantages of being the standard OS are very high. I tend to go with Google.

The second big competitive area is search. Google's has come to dominate, its quality having stayed consistently ahead of the competition. Microsoft is trying, as well as a number of other search services. Microsoft has worked out a 10-year partnership with Yahoo on search, but for the time being, Google effectively has a monopoly based on quality, tempered by the fact that innovative competition continues to put pressure on Google.

Book scanning is unique in that Google is all by itself for now, although others would like to enter the business. The proposed settlement with copyright holders is problematic. It looks as if others will have difficulty entering, if they have to negotiate licensing arrangements with the copyright holders or buy into a deal similar to what Google has worked out. In other words, the Google deal will be a monopoly with no visible alternative, unless the court forces a major change in terms.

A business we don't normally think of as separate is the server farms that Google has developed. They make possible much of what Google does--indeed, it becomes the cloud in cloud computing. Its technology appears to be leading-edge. When it owns the infrastructure, it is tough to compete with.

Vogelstein begins his article, alluding to the speech of Christine Varney several years ago in which she says that "For me, Microsoft is so last century.... They are not the problem. I think we are going to continually see a problem, potentially, with Google." Varney has now been appointed head of the Justice Department's antitrust division, making her the government's most powerful anti-monopoly prosecutor and in a position to do something about Google. Google will need to watch its behavior to avoid retribution. Watchful waiting may not be a bad solution in a market with two large and highly competitive players, as well as a lot of small ones. It still seems to be producing a rapid stream of innovation.

IP owners show no shame in seeking out additional advantages from their monopolies and what they can get away with. The self-styled English newspaper (anywhere else in the world it is called a magazine), Economist (no The), informs us that patent owners in the 27 members of the EU are after a single patent grant to cover all the members link here. They plead that the extra costs make it too expensive for small companies to register their patents, thus stifling innovation. They also object to the differing interpretations that the various patent granting authorities make. Good points only if one accepts that patents are a good thing, rather than a means to extract monopoly profits and impede innovation. Anybody want to bet that they won't get their way?

The Korea Herald writes that Korea is now imposing its own version of the "three strikes and you are out of the internet." link here It will become effective this week, having been approved by the National Assembly in April. It requires web sites to ban for six months providers of copyrighted work. Sites that fail to enforce the law can be fined up to $8000 and also face possible civil suits. Current president Lee Myung-bak supported tougher enforcement after years of "loose enforcement of anti-piracy laws".

No trial? No facing your accuser? The copyright police win again.

A few years ago, I had the chance to go back to Viet Nam to teach. I was struck by the vibrant market in pirated material--books, software, art, and movies. Much of the stuff was in English and the market was mainly the young students, the largest group that knows English. The copyright police are striking back now, afraid that the materials will leak out into the world market and as reported here the growing domestic market will be lost link here.

The article suggests that the copyright police have learned from their experience elsewhere. Then local authorities were not sympathetic to arguments that they were depriving rich foreign copyright owners of their rights. In Vietnam the copyright owners have set up a local firm to print and distribute books, the HCM City Books Distribution Corp (FAHASA) and are seeking cooperation from the universities. They can now argue that piracy is hurting a local boy.

It's still a tough sale.

ROBERT X. CRINGELY opinionates that the competition between Google and Microsoft is real but is mainly in defense of existing positions and won't change the industry link here. I think he ignores the competition Google offers Microsoft in several dimensions. Its competition based on the web--the cloud--won't drive Microsoft from the field, but will constrain it, giving consumers an alternative. I have several friends and my wife who only want a computer for access to the web and I expect that will grow with technical improvement. That makes a market for netbooks that will be perfectly useful using open source operating system software and that will change the market place for computers and for operating system software. Microsoft's Bing web search program appears to be offering Google search a run as well, though it may mainly damage other search providers. Still, I sense that these competitors are driving technological change and that consumers will benefit in both better software and lower costs.

Eric Pfanner writes that European newspaper publishers are petitioning the European media and telecommunications commission for "stricter enforcement of existing legislation," link here that is, to further limit "fair use." The target of this is online news aggregators and other Web sites... [like Google Search which are] ...undermining their efforts to develop ... online business models at a time when readers and advertisers are defecting from newspapers and magazines."

The proposed change comes wrapped in a cocoon of syrupy assurance that it wants a "a simple, consumer-friendly legal framework for accessing digital content in Europe's single market, while ensuring at the same time fair remuneration of creators." Since when are the publishers the creators--but I nitpick.

It always seems easier to get intellectual property rights expanded than to find a viable new business model in the face of technological change. It has worked for movies, books, music, and recordings, so why not for the newspaper publishers?

The big news this week is the introduction of Microsoft's Bing, a search program that is competitive with Google's and the announcement that Google will produce Chrome, a free open source operating system which will be up against Microsoft Windows. Those innovations change the long stagnant competitive landscape for two of the overwhelmingly dominant software packages link here, here, and here.

Some of this may turn out to be vapor ware in that replacing established software with new is widely resisted. Even when the advantages are obvious, there are costs in having to learn new programs. Thus, aside from the experimental user, getting the new adopted is a long process.

But for both Google and Microsoft, the game has changed. It will be interesting to see how Google improves its search program and how Microsoft prices the latest operating system, Windows 7, when it actually goes on sale in the coming months, facing a major competitor in the wings that will be free.

Who wins? The consumer.

Stephen Mihm writes an illuminating review of a book called The Industrial Revolutionaries; the Making of the Modern World by Gavin Weightman link here. He quotes the book, "Abraham Gesner, a country-doctor-turned-geologist in Nova Scotia was the first person to figure out how to transform the raw sludge of fossil remains into kerosene and other fuels. He effectively laid the foundation for the modern petroleum industry but steadfastly refused to take full credit for his discoveries, writing in 1861 that 'the progress of discovery in this case, as in others, has been slow and gradual. It has been carried on by the labors, not of one mind, but of many, so as to render it difficult to discover to whom the greatest credit is due.'"

Weightman's book seems to be a riff on that point, writing a history of industrial innovation around the world in the 19th Century. He fails, however, to draw the conclusion that we here would: that no single innovation stands alone or justifies patents which actually end up impeding innovation rather than their constitutionally mandated justification, promoting it.

Google is in the news again. The government has now informed the court reviewing the settlement with publishers and other copyright owners that it is formally investigating whether the terms violate the antitrust act. A court hearing on the settlement is set for Oct. 7, at which the Justice Department can present "its views orally at that time."

The New York Times says, "The settlement would give Google the right to display the books online, and to profit from them by selling access to individual titles and by selling subscriptions to its entire collection to libraries and other institutions. Revenue would be shared among Google, authors and publishers."

The agreement is a good bit more complex than that. Google has established a website for the first time reader link here and another with all the questions you would ever want to ask and explaining what it is doing and how that will change in the future here. Separately, just the portion of interest to copyright holders, 40 pages long but now one page, entitled "If You Are A Book Author, Book Publisher Or Other Person Who Owns A Copyright In Books Or Other Writings," is link here. Finally, the whole agreement and the 16 PDF's attached, is here.

The Electronic Frontier Foundation gives a good short analysis of the issues as it sees them link here. Google Search itself lists more than 12 million websites. Anybody expect a quick outcome?

When you read this story, it is hard not to throw up your hands in total disgust at the court and copyright law link here. J D Salinger of Holden Caulfield fame has sued for infringement because a Swedish author's book writes about a thinly-disguised 76 year-old Holden character. The court agreed.

Here we are threading needles and splitting hairs as the judge doesn't seem to have thought about whether there is a real problem, trying instead to decide if the parody is successful or adds anything to the character portrayal. Sure, the new book deliberately treads on the fame of the Salinger character. Since most fiction is derivative in some sense--plot, characters, setting, you name it--drawing a line between what is or is not permissible seems a waste of the court's time. If the book appeals, it will sell. Here is a case where letting the market decide the book's fate would have been a great idea. Instead, the suit will be appealed.