New Google Coupon Service Will Challenge Groupon (NewsFactor)

Having been rebuffed in its nearly $6 billion offer to buy Groupon, Google has decided to set up its own social-coupon site. According to web reports, the new Google Offers service is gearing up for launch.

The service will closely resemble Groupon or Living Social. An e-mail goes to users who have signed up, offering the local deal of the day for a limited time. Once a sufficient numbers of users have signed onto that deal, it becomes available. There will also be options for sharing the offer through Facebook, Twitter, Google Buzz, and Reader.

Early Payment Is 80 Percent

According to the reports, the search giant is signing up businesses and has put together an operational and editorial team. Google is expected to pay 80 percent of the revenue to participating businesses within three days after an offer is posted, and the remaining 20 percent within 60 days, in order to cover any refunds.

A Google Offers fact sheet, posted on the Mashable site, notes that businesses only pay to spread the word about their business when the offer is purchased.

Other benefits cited in the fact sheet include getting the word out to more potential local customers, bringing in new customers, exposure across the Google ad network at no additional cost, easy management of offers and ROI, and quick payment with no out-of-pocket expenses.

Mashable has also posted a statement from Google that confirmed it is "communicating with small businesses to enlist their support and participation in a test of a prepaid offers/vouchers program." The statement added that this is part of Google's ongoing effort to connect businesses with customers in new ways.

Google's entry into coupons is only the next stage of the emerging coupon wars. Amazon.com has invested $175 million in Groupon -- and now Google Offers -- competitor Living Social.

'A No-Brainer'

Such social-coupon ventures, said Current Analysis' Brad Shimmin, are "a no-brainer." He added that "everybody wins" and there's no risk for any of the parties -- the customer, the business, or the social-coupon service. Shimmin pointed out that businesses can set a threshold for a coupon's activation, so they're not just "casting ad dollars" to see what they catch.

Instead, he said, businesses are "inviting the fish into the net." Shimmin added that "Google has always been very good at creating ways for ad dollars to be directed at customers interested in that product or service."

Since Google obviously has the resources to set up its own social-coupon service, the question is why it was so eager to acquire Groupon. Shimmin said it's because Groupon "already has a large number of business relationships set up," and the software giant would have been buying "a head start."

Shimmin said he expects Google Offers to be tied into location-based services so when enough people are physically near the same location, a special deal is triggered -- a kind of "flash mob" bargain.

Verizon Challenges Applying Net Neutrality Two Wireless (NewsFactor published)

Verizon Communications announced Thursday that it has filed a legal challenge to the Net-neutrality plan adopted by the Federal Communications Commission. The company said it is "deeply concerned by the FCC's assertion of broad authority for sweeping new regulation of broadband networks and the Internet itself."

Approved last month, the FCC plan requires network providers to treat all content the same, without favoring some kinds of content which could, for example, compete with the provider's own offerings. Despite the legal move, the company said it is still "committed to preserving an open Internet," adding that it has worked extensively with "all players in the Internet and communications space to shape policies that ensure an open Internet."

Same Court as Comcast Ruling

Verizon's suit was filed in the U.S. Court of Appeals for the District of Columbia. This is the same court that ruled last spring against the FCC order that Comcast refrain from blocking a file-sharing application that could offer movies competing with Comcast's. At the time, the court said the FCC didn't have the authority it cited, and the recently approved Net-neutrality plan was intended, at least in part, to address that ruling.

Verizon's argument in its lawsuit similarly rests on the idea that the FCC doesn't have the authority. Michael E. Glover, the company's senior vice president and deputy general counsel, told news media that the FCC's "assertion of authority goes well beyond any authority provided by Congress." In fact, Verizon has asked for the same panel of judges that decided the Comcast case.

FCC Chairman Julius Genachowski has said that he expected one or more court challenges, and that the Telecommunications Act of 1996 gave the FCC the authority to carry out the new plan.

The FCC's argument for its legal authority appears to rest on instructions in the 1996 law that the FCC should expand broadband Internet, should make sure the public has access to Net-delivered media and communications, and should ensure that wireless networks are used for the benefit of the public.

Not Enough 'To Appease'

A key question is what Verizon's position actually is on Net neutrality. Some observers have noted that the FCC's new plan, which has been criticized by consumer groups and neutrality advocates as too weak, is similar in some respects to the proposal that Verizon and Google jointly offered last the summer.

On the surface, many of the approaches of the FCC plan, and those in the proposal offered by Verizon/Google, seem similar. One difference is that the FCC's plan will prevent wireless providers from blocking access to sites or services that compete with the providers' own, while the Google/Verizon proposal doesn't explicitly do so.

Free Press counsel Aparna Sridhar said Verizon's lawsuit "demonstrates that even the most weak and watered-down rules aren't enough to appease giant phone companies."

The wireless provision appears to be Verizon's key interest, as one might expect. Some consumer groups, including Free Press, have attacked Verizon for venue-shopping to get the most favorable court for its wireless licenses. Issues on regulations affecting wireless licenses are handled by the D.C. court, while the court that will hear lawsuits against general FCC policy is supposed to be determined by lottery.