June 24, 2011

"J" is for Jealousy: FTC Investigating Google

Blog Update (June 26, 2011): Google Ads, Antitrust, and Sour Grapes

In a move anticipated for quite sometime, the U.S. Federal Trade Commission (FTC) has opened an "antitrust" investigation of Google, as noted on the Official Google Blog this morning.

Media coverage of this event has been fascinating, especially since text along the lines of "what Google's opponents and competitors have been hoping for" seems to be featured prominently in many reports.

Which yields a question. What is driving antitrust concerns in this case?

Comparisons with major technology antitrust actions of the past don't seem to provide many useful answers.

When AT&T was broken up decades ago (today now rapidly recreating its old power, but that's another story) Ma Bell was clearly a monopolist, and engaged in various unsavory behaviors in an attempt to preserve its position. AT&T owned the phones, the lines, the conduits, the tunnels, the buildings, the whole shebang. Alternatives for most people were simply nonexistent, and when alternatives did exist, they were extraordinarily expensive to access.

Antitrust actions against Microsoft many years later -- the firm most mentioned now in comparison to Google when discussing such investigations -- were focused on clearly anticompetitive behaviors by Microsoft, who used Windows' integration with PC hardware by manufacturers, and a tight coupling with its Internet Explorer browser, to almost totally dominate the PC marketplace in a manner that was both technically difficult and economically impractical for most users to escape.

These examples demonstrate a key aspect of traditional antitrust targets -- you need to be both big and bad. Organic growth alone, in the absence of anticompetitive behaviors, should not be enough to trigger serious antitrust penalties.

Of course, if you're a competitor who has failed to innovate fast enough to keep up with the market leader in the eyes of consumers, you may grasp at any excuse to try drag down your perceived corporate foe.

It's impossible to ignore the fact that such jealousies by Google competitors and other adversaries appear to have played major roles, directly or indirectly, in the FTC's newly announced action.

For years now, we've seen both direct and "astroturfed" attacks on Google that have been noticeable for their exaggerations and outright misrepresentations more than anything else. Some have just been lies, plain and simple.

A fundamental problem with attacking Google in this way (outside of poor ethics on the part of many attackers) is the ease with which Internet users can switch to Google competitors at any time.

In the heyday of Ma Bell, even if competitors had existed, the expense of changing hardware, new cabling and lines, and so forth, would have been extreme.

The vast majority of Microsoft's Windows users were not in a position to rip the Microsoft OS or Internet Explorer browser out of their PCs and install an entirely new OS, even if they had realized that alternatives existed. And since they had usually already paid for Windows -- either directly or as an amount "hidden" in the overall cost of their computers, they'd be flushing money down the john as well.

In contrast, most Google users pay nothing to use Google services. If they don't want to use Google Search, access to Microsoft's Bing is just a URL and click away. Don't like Gmail? You can easily switch to Yahoo. Looking for an alternative to Google Street View? You can be viewing Bing Maps in virtually less time than it takes to read this sentence. And Google has "data liberation" teams that work specifically to make it easy to export your data from Google if you want to take it elsewhere.

The anticompetitive, "lock in" characteristics that we normally associated with antitrust investigations and actions simply aren't present with Google.

So we end up back with "J" is for Jealousy -- with competitors who have been pushing the government to help them make up for their own inabilities to build systems and satisfy Internet users to the degree that Google has accomplished.

There are many people and organizations in this country that need and deserve the government's help right now -- for food, housing, health care, you name it.

But in an age when so many genuinely need help, it's difficult to reconcile attempts by Google's competitors to obtain what amounts to "corporate welfare" from the federal government in the guise of an antitrust investigation -- it just doesn't seem right.

Hopefully, the FTC will ultimately realize this as well.


Blog Update (June 26, 2011): Google Ads, Antitrust, and Sour Grapes

Posted by Lauren at June 24, 2011 01:53 PM | Permalink
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