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FTC’s Settlement With Google Fails To End Key Abuse

3:22 pm in Uncategorized by Consumer Watchdog

FTC-Google

Department of Justice, State Attorneys General Must Press To End Search Bias

The Federal Trade Commission’s settlement with Google fails to end its most anticompetitive practice, Consumer Watchdog said today and the public interest group called on the Department of Justice and state attorneys general to press forward to end the Internet giant’s monopolistic behavior in search results.

“Google clearly skews search results to favor its own products and services while portraying the results as unbiased. That undermines competition and hurts consumers,” said John M. Simpson, director of the group’s Privacy Project. “The FTC rolled over for Google. They’ve accepted Google executives’ promises that they will change two practices without even requiring a consent agreement, but Google has a track record of broken promises. Don’t forget, this fall the FTC fined Google $22.5 million for violating its most recent consent agreement. Why would the FTC take Google at its word?”

The new Assistant Attorney General for the Department of Justice Antitrust Division, William J. Baer, should make Google’s abuse of search a top priority, Consumer Watchdog said.

The FTC’s settlement does require a consent agreement regarding so-called Standards Essential Patents held by Google’s Motorola subsidiary. Google is now required to license these patents to any company on “fair, reasonable and non-discriminatory” terms – known as FRAND terms.

“This will help ensure competition in the manufacture of smartphones and tablets,” said Simpson, “but that was never the heart of the issue. Biased search and Google’s favoring its own properties do real consumer harm. Google is the gateway to the Internet for most people. When Google rigs the game, we all suffer. They need to be stopped.”

Consumer Watchdog expressed concern that FTC Chairman Jon Leibowitz, who is expected to step down from the commission soon, may have rushed to finish the investigation so it could be concluded under his chairmanship.

The nonpartisan, nonprofit public interest group noted that Google’s monopolistic business practices are under investigation by a number of state attorneys general including Texas, California, New York and Ohio. European Union competition officials are also investigating Google.

Keep The Internet Free

1:07 pm in Uncategorized by Consumer Watchdog

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Should one company be able to control how you use the Internet and what you see?

Google — with 70% of online search and 90% of mobile search markets — is increasingly doing this. Evidence before the Federal Trade Commission (FTC) shows that Google skews its results towards its own services and commercial priorities, when consumers believe they are getting the most “popular” organic result.

After a year’s probe the FTC’s staff has recommended antitrust prosecution, but politics may be stopping the suit. Please send an email today asking the Commission to approve that antitrust suit.

Consumer Watchdog cheered when the FTC took up its antitrust investigation, which we began calling for more than two years ago. Recently there have been reports that the Commissioners are wavering and may not act against the Internet giant. You can help us make sure the five commissioners don’t cave.

Google uses its monopoly on the Internet and in the mobile space to bias searches in favor of its own products and services, harming consumers and competitors alike. The time for action is now. Ask the Commission to adopt its staff’s recommendation and approve an an antitrust suit against Google.

For more information on our support for the FTC’s antitrust investigation read our letter to the Commission here.
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Posted by John M. Simpson. John is a leading voice on technological privacy and stem cell research issues. His investigations this year of Google’s online privacy practices and book publishing agreements triggered intense media scrutiny and federal interest in the online giant’s business practices. His critique of patents on human embryonic stem cells has been key to expanding the ability of American scientists to conduct stem cell research. He has ensured that California’s taxpayer-funded stem cell research will lead to broadly accessible and affordable medicine and not just government-subsidized profiteering. Prior to joining Consumer Watchdog in 2005, he was executive editor of Tribune Media Services International, a syndication company. Before that, he was deputy editor of USA Today and editor of its international edition. Simpson taught journalism a Dublin City University in Ireland, and consulted for The Irish Times and The Gleaner in Jamaica. He served as president of the World Editors Forum. He holds a B.A. in philosophy from Harpur College of SUNY Binghamton and was a Gannett Fellow at the Center for Asian and Pacific Studies at the University of Hawaii. He has an M.A. in Communication Management from USC’s Annenberg School for Communication.

Senators Add Fire to Scandal Over Phony California Fuel Crisis

6:55 pm in Uncategorized by Consumer Watchdog

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Today, senators from California, Washington and Oregon joined our call to investigate refineries, asking the Department of Justice to comb through California refineries one by one to see whether market manipulation or false reporting by oil refineries had something to do with record $5 a gallon prices at some California gas stations last month and near record prices earlier in the year.

Read our letter to California Attorney General Kamala Harris here.

“We are requesting a Department of Justice investigation of possible market manipulation and false reporting by oil refineries which may have created the perception of a supply shortage, when in fact refineries were still producing,” wrote six Senators, including California Senators Dianne Feinstein and Barbara Boxer.

The Senators cited the same report we did by McCullough Research concluding that price spikes in May and October happened while crude oil prices were declining, and inventories were increasing, possibly in conjunction with misleading market-making information.

The Senators called on Attorney General Eric Holder to use existing authority to prevent and prosecute fraud and collusion, and to draw upon the Federal Trade Commission to prohibit fraud or deceit in wholesale petroleum markets, and on the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Federal Energy Regulatory Commission to exercise their power to prevent the use of any “manipulative or deceptive device or contrivance.”

Read the Senators’ entire letter here.

Consumer Watchdog wrote California Attorney General Kamala Harris on November 15 calling for a criminal investigation of possible market manipulation or false reporting by refineries to drive up the price of gas to the highest in the nation, based on the McCullough report.

Between the Justice Department and its collaboration with other agencies in Washington and the California Attorney General on the West Coast, consumers should be getting some answers about why wild gyrations in the price of gas cost them $1 billion dollars extra in a short span of time in October, adding up to a 66-cent-per-gallon windfall for oil companies, or about $25 million a day, according to the McCullough report.

Refueling California

1:17 pm in Uncategorized by Consumer Watchdog

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$5-a-gallon gas is a wake-up call. Let’s change the way oil companies operate here.

How can a power outage at a refinery spark $5-a-gallon gasoline at some L.A. stations? Why would the fact that California had to switch to the winter-blend fuel at the end of October — a fact known all year — raise gasoline prices to record levels?

This price surge is not a freak phenomenon or the result of a convergence of refinery problems, as the oil industry has argued. It’s happened before (only the $5 level is new) and will happen again and again because California oil companies can make more money by making less gasoline.

California’s under-regulated gasoline market resembles our briefly deregulated electricity grid during 2000-01, when energy pirates such as Enron manipulated prices. Why? The market is geared to shortages and scarcity. So when an inevitable problem occurs to shock the system, such as a refinery outage or pipeline problem, gasoline prices and company profits go through the roof in tandem.

The state’s gasoline, the lifeblood of our economy, is priced by an under-regulated commodities market largely controlled by a handful of companies. Over the last decade, Californians have consistently paid prices that are 10 to 20 cents a gallon higher than the rest of the nation, and we have lower inventories. The rest of the continental U.S. has about 24 days of gasoline on hand; California’s average is 10 to 13 days. Not surprisingly, over the last 10 years, refineries on the West Coast consistently have been among the most profitable in the continental U.S.

Memos from West Coast oil refiners from the 1990s and released years ago by Sen. Ron Wyden (D-Ore.) suggest that this is a deliberate business strategy. An internal Chevron memo, for example, stated: “A senior energy analyst at the recent API [American Petroleum Institute] convention warned that if the U.S. petroleum industry doesn’t reduce its refining capacity, it will never see any substantial increase in refinery margins.” It then discussed how major refiners were closing down refineries. Oil company profit reports show each dramatic gasoline price spike over the last decade has been mirrored by a corresponding corporate profit spike.

This situation is well known to policymakers in California. About a decade ago, after some sharp, unexpected price hikes, then-Atty. Gen. Bill Lockyer formed a gas pricing task force that included industry experts and me. We viewed industry documents and cross-examined industry representatives. Among the conclusions: “Supply disruptions that contributed to major price spikes of 1999 are likely to continue … because (1) California refiners have little spare capacity to cover outages; (2) California refiners maintain relatively low inventory levels.” The report also noted: “Refiners have significant market control.”

The task force recommended a series of measures, including building a strategic gasoline reserve that could flood the market when supply is most scarce. But the Legislature didn’t listen. And now we are near 5 bucks a gallon.

There’s a simple policy fix to the gasoline woes in California: more regulation and less consolidation.

If the state doesn’t have the wherewithal to build a strategic gasoline reserve, a simple requirement that refiners keep at least three weeks of inventory on hand will do.

Rapid oil company consolidation has also been a driver of high gas prices. A handful of refiners control 14 state refineries. It had gotten so ludicrous that in 2005, my consumer group teamed up with Sen. Barbara Boxer (D-Calif.) and Lockyer and succeeded in getting Shell Oil to reverse its decision to bulldoze its Bakersfield refinery, and to instead sell it. Internal documents showed that the refinery was making among the highest profits of all Shell refineries. That indicated the company wanted to make supplies even tighter, driving prices artificially higher.

The greatest challenge for competition may be ahead. Tesoro is seeking to buy the low-cost Arco brand and its California assets from BP. More than 800 stations carry the Arco brand. If state Atty. Gen. Kamala Harris and federal regulators approve the merger, two refiners — Chevron and Tesoro — will control 51% of the refining capacity in the state. That would be like writing a blank check from California drivers to the oil industry.

Let’s hope that $5-a-gallon gasoline is a wake-up call that came in time to head off greater refinery consolidation and higher prices. Fourteen refineries now power the world’s ninth-largest economy. It’s time Sacramento stepped in to keep them running at full speed, producing enough inventory to fuel the state, and from falling into even fewer corporate hands.

Jamie Court is the president of Consumer Watchdog and author of “The Progressive’s Guide to Raising Hell: How to Win Grassroots Campaigns, Pass Ballot Box Laws and Get the Change We Voted For.”

First printed in the October 12, 2012 edition of the Los Angeles Times

Consumer Watchdog Mimes Invade Mountain View Before Google Shareholders Meeting

7:00 pm in Uncategorized by Consumer Watchdog

Group Plans To Ask Google Executives What They Knew About Wi-Spy

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Consumer Watchdog today sent its “Google Track Team” comprised of mimes dressed in white track suits to follow shareholders as they gathered for the company’s annual meeting in a bid to focus attention on the Internet giant’s online tracking activity.

A shareholder representing the public interest group will ask Google CEO Larry Page and Executive Chairman Eric Schmidt during the shareholders meeting what they knew about Google’s Wi-Spy privacy violations and when they knew it.

The planned action before the meeting was meant to focus attention on Google’s online tracking activity and dramatize the need for the implementation of a Do Not Track mechanism so consumers can tell websites that don’t want their online activity tracked as they surf the web.

The mimes dressed as the “Google Track Team” in white tracksuits with the “Don’t Be Evil” motto and wore Google “Wi-Spy” glasses. They planned to track (follow) Google employees and shareholders as they checked in for the meeting and waited to be transferred by shuttle bus to Google headquarters.

“Tracking people in the real world is stalking. It’s creepy,” said John M. Simpson, Consumer Watchdog Privacy Project director. “When Google and other Internet companies follow your every move online, it’s just as creepy, but most people don’t realize it’s happening. In fact, it’s Google’s business model. That’s why consumers need a way to stop being tracked when they surf the web.”

Consumer Watchdog will live-stream video of the mimes in action here.

Google will videocast the annual meeting here.

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Consumer Watchdog called on Google to fulfill its pledge to implement Do Not Track on its Chrome browser and to honor the Do Not Track message on its websites. The group said Do No Track means do not collect data, not simply do not target ads. It called on Google to honor the do not collect approach.

The Wi-Spy scandal erupted two years ago when it was revealed that Google’s Street View cars were sucking “payload data” – emails, passwords, health information, banking information and other data – from millions of private Wi-Fi networks in 30 countries around the world. Google first said it didn’t gather payload data, then it said it had done so by mistake and then it said it was the work of rogue engineer. Recently a Federal Communications Commission investigation revealed that design documents for the Street View project discussed plans for “war driving” and gathering data from Wi-Fi networks. The FCC fined Google $25,000 for obstructing it investigation.

“It’s imperative that we know what role Page and Schmidt played in this massive invasion of privacy. What did they know and when they know it?” said Simpson. “I plan to ask them.”

‘Flush Tax-Evader Toilet Paper,’ Group Says to California Governor, Mayors

2:37 pm in Uncategorized by Consumer Watchdog

Toilet Paper Money

SACRAMENTO, CA – Consumer Watchdog today called on state and local governments to quit spending taxpayer millions on Scott toilet paper, Kleenex tissues and other products from Kimberly-Clark Corporation. The global company is part of a corporate coalition battling to keep a tax loophole that benefits only out-of-state corporations—to the detriment of California schools, local governments and state services.

In letters to Gov. Jerry Brown and the mayors and executives of 21 cities and some large counties, Consumer Watchdog also urged governments to avoid Chrysler and GM auto and truck purchases. The automakers are also in the coalition of out-of-state corporations eager to evade corporate taxes in California.

The letter to Gov. Brown said in part:

Every dollar of taxes evaded by large corporations is another dollar taken from our schools, fire and police protection and support for the impoverished and disabled. We ask you to set an example by avoiding taxpayer-funded purchases from out-of-state companies lobbying to protect a state loophole that lets them pay less than in-state companies.

Read the rest of this entry →

State Contract awarded to Ford for Police Vehicles, Shutting Out Tax-Evading Automakers

2:55 pm in Uncategorized by Consumer Watchdog

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State, Cities Urged to Bar All Taxpayer Purchases From Chrysler, GM, Other Tax Dodgers While They Refuse to Pay Fair Share

The state’s award of a contract for up to 1,900 Ford vehicles for the California Highway Patrol and other state agencies is a snub to GM and Chrysler, which eagerly sought the prestigious contract.

Consumer Watchdog applauded the tentative award, noting that of the Big 3 U.S. automakers, only Ford is not in a coalition battling to keep a California tax loophole that benefits large out-of-state corporations to the tune of at least $1 billion a year.

The nonprofit, nonpartisan Consumer Watchdog calls on the state and major cities, which it will be contacting, to bar all non-safety-related purchases of Chrysler and GM products until they cease their campaign and pledge willingness to pay the same tax rate that in-state corporations pay.

“Taxpayers shouldn’t be paying millions to automakers that are happy to starve California schools, police departments and disabled people of funding,” said Judy Dugan, research director for Consumer Watchdog. “What’s good for the CHP should be fine for other police departments and government agencies.”

Even with substantial state discounts, the contract for up to 1,800 Taurus-based police patrol cars and 100 Explorer-based police utility vehicles would likely be worth more than $50 million over time. Dealer prices listed online for the civilian models of the patrol car range from about $30,000 to $32,500, without costly additions like bulletproof doors.

The state is sharply cutting back its civilian auto fleet and the CHP has scaled back as well, but wear and tear force the CHP and other public safety agencies to replace vehicles at about 100,000 miles.

The state’s current tax loophole allows many out-of state companies with major sales in California to pay a lower tax rate than in-state companies, depriving the state of $1 billion or more a year, according to the state legislative analyst. Closing the loophole would help restore essential services axed in the current budget crisis, said Consumer Watchdog.

Two other major corporations, Kimberly-Clark (Scott, Kleenex, Huggies products) and International Paper have joined GM and Chrysler in the deceptively titled “California Employers Against Higher Taxes.”

Chrysler more than doubled its state lobbying expenses in the first quarter of this year, to $32,500, as it added two corporate tax reform bills, AB1500 and AB1501, to its lobbying list reported to the Secretary of State. The larger General Motors spent more than $86,000 on state lobbying in the first quarter, and added the same legislation to its lobbying list. If a separately proposed ballot initiative to close the tax loophole qualifies for the ballot, the four companies are expected to up the ante on spending.

“The state and cities of California owe taxpayers the respect of shunning companies that are driving the state further into a hole of debt,” said Dugan. “The CHP contract is a great start. Other agencies should quickly and publicly pledge to stay away from the tax dodgers at Chrysler and GM.”

Resources:

State announcement of tentative award (no other bidders protested the award during the protest period)

Bid pricing list from the state’s request for proposals

Consumer Watchdog’s previous press release on the tax evasion history of the corporate coalition (from which founding member Proctor and Gamble has since departed)

Oil Will Grease a Debt-Limit Recession

2:39 pm in Uncategorized by Consumer Watchdog

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If the U.S. ends the coming weekend without national debt limit deal, it won’t just be bond defaults sending the nation back into a deep, ugly recession. A hint came Tuesday as the price of oil rose a little, nearing $100 a barrel once again even as stocks did a mini-tank, with the Dow down 91 points.

So who’s still grinning as most of us curse the absolutists in Congress who see “balance” as treason? Yep, oil companies.

BP jumped back to a $5.6 billion quarterly profit Tuesday after a $17 billion loss a year ago, post-spill. Smaller Occidental Oil was up 71% over last year’s 2nd quarter, to $1.8 billion. And analysts think the party will continue.

From Reuters:

Analysts said it would likely be the oil industry’s biggest second quarter since 2008, when oil prices hit record highs. “We expect almost all the oil and gas companies we cover to report higher earnings than in [2009 and 2010]. The earnings improvements from a year ago reflect higher oil prices of 32% for West Texas Intermediate crude and and 50% for Brent North Sea crude,” said Fadel Gheit, senior energy analyst for Oppenheimer and Co.

Getting oil speculation under control has slipped far from the top of the agenda in Washington. But no matter how the debt crisis turns out, federal regulators have to recognize that the economy can’t ever really recover while Main Street pays for the energy binges on Wall Street and in Houston.

The oil price increase came as the value of the dollar dropped, and speculators hunted for a place to put money coming out of stocks. If the U.S. economy crashed after a debt default, oil would crash partway, because a dead U.S. economy means so much less gasoline and oil consumed. But in a lesser scenario, oil could just keep creeping up, until speculative energy and food prices really do crash the consumer economy again.

No matter what happens, oil will rise long before consumers get out from under their job and other losses–just as happened in the recent recession, putting a drag on any hope of quick recovery.

What to watch? The price of gasoline. Economists see $4.00 gasoline in the U.S. as the tipping point where drivers start feeling pinched and cut back on other expenses. Gasoline is now hovering around a national average of $3.70 a gallon, up 15 cents from a month ago. That’s not much of a cushion; it’s already more than job-hunters can afford. Too bad no one in the Capitol has lost his job and can feel the pain firsthand.
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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.