Google breakup? Wrong target again

Consumer Watchdog misses the biggest threat

The Consumer Watchdog April 21 asked the US Department of Justice (DOJ) to launch an antitrust action against Google. In its request it suggested that Google might be broken up.

While there is the potential for Google to develop into something that needs to be broken up, right now there is a candidate that is way higher in priority. And that is Paypal.

In a previous post I pointed out that the attacks on bankers’ bonuses missed the point (see Bankers’ bonuses – wrong target). The Consumer Watchdog has performed a similar trick here.

So why should Paypal be at the front of the queue?

  1. It has become a monopoly – it demonstrates Metcalfe’s Law beautifully – and, if the allegations repeated below are true, is now abusing its status. Without Paypal you are unable to send money to or receive money from a very large proportion of Internet users. For sure there are competitors such as Google Checkout and 2CO. But if you can use only these, whilst most people are using Paypal, you are extremely restricted in your ability to engage in web-based financial transactions.
  2. Paypal provides a service for which there is no viable alternative. You can’t realistically barter online, you need to use some form of electronic payment system.
  3. Allegedly Paypal has repeatedly misunderstood how dangerous false positives are to a person’s financial position. The web is full of stories of people who claim that Paypal has frozen their account without warning, usually on the basis of “suspicious transactions,” only to discover that the transactions are valid. Now this also happens a lot offline – personally I find my erratic credit card usage results in a new card approximately once every three months. But I can own 2 or 3 credit cards, and if one is cancelled I can use another. It is not so easy to have multiple Paypal accounts, and even if you do have more than one account, switching is not as easy as taking a different credit card out of your pocket. You need to modify your email address associations, so that Paypal transactions linked to the email address associated with the frozen account do not fail. If you are using Paypal buttons to sell, you need to recreate buttons to associate to your new account and update your website. For some people who make their living selling online, a frozen Paypal account can put them out of business in days – and for those working as sole traders or with personal guarantees to a separate incorporated business, the result can be much worse when supplier contracts cannot be immediately terminated.
  4. Allegedly Paypal is also reticient to reinstate accounts, potentially leaving people permanently excluded from the growing online economy.
  5. Your online Paypal activities can impact your offline financial status too. Many people almost see Paypal as “play money” – especially if they are sending friends, say, 99 cents. What they don’t realize is that Paypal is linked into many of the credit reference agencies, and your offline creditworthiness can be decreased by your online activities. So your application for a mortgage might get refused, or the interest rate increase by a couple percentage points, because Paypal has reported “suspicious transactions.” For sure this is not all Paypal’s fault, but Paypal could do a better job of teaching people that they need to be as responsible with their Paypal account as they do with their bank account.

So what should be done about the situation?

  1. Fungibility is required between Paypal and other online payment providers. I can setup an automated payment from a bank account in one country to deliver funds into a bank accounts in another country (with a few exceptions) – I am not restricted to depositing into accounts in foreign branches of my own bank. I should be able to send money between online payment providers.
  2. Paypal needs better regulatory oversight. In particular, the issue of alleged indiscriminate account freezing must be investigated and addressed. This will require international coordination between regulators.

And if Paypal does not agree?

It should be split into three or four separate companies, each with the same international coverage as Paypal provides now, thereby giving consumers a choice of online payments provider. And by starting from a common position, IT system inter-connectivity will be simple, and therefore fungibility can be built in from the beginning.

A condition of the licence to trade should be that fungibility should be maintained, even in the event that one of the baby-Paypals is bought by, for example, a commercial bank.

My personal expectation is that, under this scenario, one of the first buyers would be Google, which would merge the baby-Paypal with Google Checkout to take advantage of the fungibility with the other baby-Paypals – this might then provide grounds to investigate Google if it were to use the inaccessibility of Google Checkout-only functionality in an anti-competitive manner.

9 comments

  1. piscinas poliester barcelona says:

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  2. Smart Alex says:

    Paypal is bad but Coca Cola is worse. Why has Coca Cola registered the domain name rememberingmandela.com ?? It smells bad.

    Whois Server Version 2.0

    Domain names in the .com and .net domains can now be registered
    with many different competing registrars. Go to http://www.internic.net
    for detailed information.

    Domain Name: REMEMBERINGMANDELA.COM
    Registrar: CSC CORPORATE DOMAINS, INC.
    Whois Server: whois.corporatedomains.com
    Referral URL: http://www.cscglobal.com
    Name Server: NS2.KO.COM
    Name Server: NS3.KO.COM
    Name Server: NS4.KO.COM
    Status: clientTransferProhibited
    Updated Date: 22-mar-2013
    Creation Date: 22-mar-2013
    Expiration Date: 22-mar-2015

    >>> Last update of whois database: Fri, 16 Aug 2013 07:36:02 UTC < << NOTICE: The expiration date displayed in this record is the date the registrar's sponsorship of the domain name registration in the registry is currently set to expire. This date does not necessarily reflect the expiration date of the domain name registrant's agreement with the sponsoring registrar. Users may consult the sponsoring registrar's Whois database to view the registrar's reported date of expiration for this registration. TERMS OF USE: You are not authorized to access or query our Whois database through the use of electronic processes that are high-volume and automated except as reasonably necessary to register domain names or modify existing registrations; the Data in VeriSign Global Registry Services' ("VeriSign") Whois database is provided by VeriSign for information purposes only, and to assist persons in obtaining information about or related to a domain name registration record. VeriSign does not guarantee its accuracy. By submitting a Whois query, you agree to abide by the following terms of use: You agree that you may use this Data only for lawful purposes and that under no circumstances will you use this Data to: (1) allow, enable, or otherwise support the transmission of mass unsolicited, commercial advertising or solicitations via e-mail, telephone, or facsimile; or (2) enable high volume, automated, electronic processes that apply to VeriSign (or its computer systems). The compilation, repackaging, dissemination or other use of this Data is expressly prohibited without the prior written consent of VeriSign. You agree not to use electronic processes that are automated and high-volume to access or query the Whois database except as reasonably necessary to register domain names or modify existing registrations. VeriSign reserves the right to restrict your access to the Whois database in its sole discretion to ensure operational stability. VeriSign may restrict or terminate your access to the Whois database for failure to abide by these terms of use. VeriSign reserves the right to modify these terms at any time. The Registry database contains ONLY .COM, .NET, .EDU domains and Registrars. Looking up information in whois.corporatedomains.com Corporation Service Company(c) (CSC) The Trusted Partner of More than 50% of the 100 Best Global Brands. Contact us to learn more about our enterprise solutions for Global Domain Name Registration and Management, Trademark Research and Watching, Brand, Logo and Auction Monitoring, as well SSL Certificate Services and DNS Hosting. NOTICE: You are not authorized to access or query our WHOIS database through the use of high-volume, automated, electronic processes or for the purpose or purposes of using the data in any manner that violates these terms of use. The Data in the CSC WHOIS database is provided by CSC for information purposes only, and to assist persons in obtaining information about or related to a domain name registration record. CSC does not guarantee its accuracy. By submitting a WHOIS query, you agree to abide by the following terms of use: you agree that you may use this Data only for lawful purposes and that under no circumstances will you use this Data to: (1) allow, enable, or otherwise support the transmission of mass unsolicited, commercial advertising or solicitations via direct mail, e-mail, telephone, or facsimile; or (2) enable high volume, automated, electronic processes that apply to CSC (or its computer systems). CSC reserves the right to terminate your access to the WHOIS database in its sole discretion for any violations by you of these terms of use. CSC reserves the right to modify these terms at any time. Registrant: The Coca-Cola Company Domain Administrator One Coca-Cola Plaza Atlanta, GA 30313 US Email: Registrar Name....: CORPORATE DOMAINS, INC. Registrar Whois...: whois.corporatedomains.com Registrar Homepage: http://www.cscprotectsbrands.com

    Domain Name: rememberingmandela.com

    Created on…………..: Fri, Mar 22, 2013
    Expires on…………..: Sun, Mar 22, 2015
    Record last updated on..: Fri, Mar 22, 2013

    Administrative Contact:
    The Coca-Cola Company
    Domain Administrator
    One Coca-Cola Plaza
    Atlanta, GA 30313
    US
    Phone: +1.4046768774
    Email:

    Technical Contact:
    The Coca-Cola Company
    Technical Administrator
    One Coca-Cola Plaza
    Atlanta, GA 30313
    US
    Phone: +1.4046768774
    Email:

    DNS Servers:

    ns4.ko.com
    ns2.ko.com
    ns3.ko.com

    Register your domain name at http://www.cscglobal.com

  3. TheVoice says:

    Paybox.me has been renamed – see http://www.virtapay.com/r/signuppage

  4. […] This blog is not usually concerned with warning people about websites that show similarities with scams. But this post breaks with tradition because the website in question has been mentioned in the comments to a previous post: Google breakup? Wrong target again. […]

  5. al says:

    Looks like competition might be on the way. A new service called paybox has recently started up. It is currently in a pre-launch phase and early adopters are testing it. You can signup here: http://www.paybox.me/r/signuppage … Al

  6. It is not so easy to have multiple Paypal accounts, and even if you do have more than one account, switching is not as easy as taking a different credit card out of your pocket.

  7. […] This post was mentioned on Twitter by Vox Sapiens. Vox Sapiens said: Consumer watchdog asks DOJ to breakup Google? Wrong target !! See http://blog.voxsapiens.com/2010/04/26/google-breakup-wrong-target-again/ […]

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