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6 Reasons Trump DOJ Will Take Lead from FTC in Google Antitrust Enforcement
Submitted by Scott Cleland on Thu, 2017-04-13 18:42
The evidence is compelling that the DOJ will replace the FTC as the lead Sherman Act antitrust enforcer on the biggest Google antitrust matters during the Trump Administration.
A huge action forcing event for the Trump DOJ Antitrust Division is coming, most likely this June/July, when EU antitrust authorities most likely will conclude the first of three antitrust cases against Alphabet-Google, and officially rule Google is a 90+% search monopoly that has anticompetitively abused its monopoly position in search, and impose a traditional monopoly nondiscrimination principle remedy that Google treat its shopping comparison competitors as it treats itself.
While conventional wisdom assumes the FTC will continue as the Google antitrust lead, that is very unlikely to continue, because of two Google antitrust gamechangers, the replacement of President Obama with President Trump, and the EU’s coming official antitrust conclusion that Google is in fact a monopoly that acts anticompetitively in over 30% of the world.
Since so much flows from the baseline assumption of which U.S. entity will be the Google antitrust lead, the DOJ or FTC, it warrants closest examination.
Summary of six reasons DOJ will take the Google antitrust lead from FTC
(1) Institutionally, DOJ is the United States’ antitrust lawyer and the official liaison with other countries.
(2) Politically, President Trump’s nominee for DOJ Antitrust Chief, Makan Delrahim, is the Administration’s clear lead antitrust official.
(3) Cartel-wise, only the DOJ, not the FTC, has criminal and international coordination jurisdiction over cartel enforcement.
(4) Track-record-wise, the DOJ owns a very tough antitrust enforcement record concerning Google, versus the FTC’s very weak antitrust enforcement record concerning Google.
(5) Authority-wise, in the Google case, the FTC’s unique Section 5 unfair competition authority has proven to be more liability than institutional advantage.
(6) Officially, the DOJ has had more recent, pertinent, and official antitrust oversight of Google than the FTC.
Six reasons DOJ will take the Google antitrust lead from FTC
(1) Institutional: While both the DOJ and FTC share antitrust authority domestically, only the DOJ is the U.S. government’s official lawyer that can determine the United States legal position in courts and can officially liaise with foreign governments.
Given these extraordinary situations -- that a) the EU is now the de facto world lead on Google antitrust enforcement; b) the EU action will set a powerful precedent for other countries, and private actions to follow; and c) the reality that Google’s dominance and behavior affect more users, industries, products, services, and countries than any antitrust problem ever -- practically means the DOJ will become the international and domestic antitrust enforcement lead for Google by default.
In this exceptional global Google-antitrust context, the FTC is no co-equal to the U.S. DOJ Antitrust Division.
(2) Leadership: To date, President Trump’s only antitrust nomination is Makan Delrahim, for DOJ Assistant Attorney General for Antitrust. In the W. Bush Administration, he was Deputy Assistant Attorney General for Antitrust responsible for global coordination of antitrust/cartel enforcement and intellectual property related antitrust issues.
As I concluded in an earlier analysis, as the Trump Administration’s lead in shepherding the selection and confirmation processes of now Associate Supreme Court Justice Neil Gorsuch, and given his outstanding antitrust background and experience, Mr. Delrahim has the institutional trust, clout, and authority to take the lead on Google antitrust enforcement.
(3) Cartel Enforcement: Only the DOJ, not the FTC, has criminal jurisdiction over cartel enforcement, which has long been a top antitrust enforcement priority, because certain cartel behaviors are considered per se illegal and especially harmful to competition and consumers.
To the extent there is actual fire where there is evident billowing smoke from when Google and Facebook abruptly and coincidently stopped competing directly with each other in both the search and social media markets in 2014, this would be a Google antitrust investigation that only the DOJ could do.
It is relevant here that DOJ antitrust chief nominee Mr. Delrahim, gave a 2004 speech in Seoul as Deputy Assistant Attorney General for Antitrust, entitled: “The Basics of a Successful Anti-Cartel Enforcement Program.”
(4) DOJ v. FTC Google Enforcement Track Records: The evidence shows a very tough DOJ antitrust enforcement record with Google, versus a very weak FTC antitrust enforcement record with Google.
DOJ: In 2008, DOJ threatened a Sherman anti-monopolization antitrust case against Google to block the proposed Google-Yahoo Ad Agreement.
In 2009, and again in 2010, the DOJ opposed the Google Book Settlement as anti-competitive, providing the evidence and analysis for Federal Judge Chin to block it.
In 2010, DOJ affirmed Google’s continued dominance in search and search advertising in allowing the normally unallowable merger of #2 Microsoft and #3 Yahoo’s search operations to create scale for them to compete against Google’s search dominance. In 2010, DOJ sanctioned Google and five other companies for broadly colluding to limit their employees’ compensation.
In 2011, DOJ required a five-year, court-supervised consent decree to mitigate the Sherman Act section 2 monopolization effects of Google’s acquisition of ITA Software. In 2012, in coordination with the EU, the DOJ sternly warned Google to not anti-competitively abuse standards essential patents as part of its approval of Google-Motorola.
FTC: In 2007, the FTC approved Google-DoubleClick (4-1) with no conditions, effectively tipping Google to a search advertising monopoly by allowing Google to buy most all of the advertiser, publisher, and user relationships that it did not already have.
In 2010, the FTC approved Google’s acquisition of Admob, the #1 mobile advertising company, without conditions despite “serious antitrust issues,” helping create Google’s current mobile search advertising monopoly.
In 2013, the FTC’s closure of all FTC investigations into Google antitrust matters was much more chaotic than the media reported, as the many contradicting official comments of key officials below show.
At the time, Republican FTC Commissioner Tom Rosch told Bloomberg that the FTC agreement “creates very bad precedent and may lead to the impression that well-heeled firms such as Google will receive special treatment at the commission. Instead of following standard commission procedure and entering into a binding consent agreement to resolve the majority’s concerns, Google has instead made non-binding commitments with respect to its search practices.”
At the time, Democrat FTC Commissioner Edith Ramirez also stated officially in a footnote she “objects to the form of the commitments made by Google.” Three months later in testimony to the Senate Antitrust Subcommittee FTC Chairwoman Ramirez stated: “That matter [the voluntary Google search settlement] should not be considered precedent. When there is a majority of commissioners who find there is a violation, any remedy should be in a formal commitment order. That’s what happened before the Google matter and that’s what’s going to happen after the Google matter.”
Most chaotic was the FTC Chairman’s statement at the time that “all of its competition-related investigations of Google were settled,” without a vote on any public comment on the closing its Google-Android tying investigation, that was referenced in the FTC staff report and which stated: “Staff continues to investigate Google's conduct in the mobile [Android] arena and will address these issues in a supplemental memorandum;” (fn. 51, p120) and noted that “Since Google's release of the first commercially available mobile device running Android OS in October 2008, Android's market share has grown exponentially.” (fn. 51, p120)
(5) DOJ Authority vs. FTC Authority: What does the FTC have that the DOJ does not have?
The FTC has one big potential advantage; it has its own unique supplemental Section 5 unfair competition authority, in addition to its Sherman and Clayton antitrust authorities. This Section 5 authority has the relative benefit of a much lower legal standard of proof than the other antitrust enforcement authorities, and it comes with the option of a quicker internal administrative law procedure than going to Federal court for an injunction.
However, in practice, and in the Google context specifically, Section 5 apparently has proven to be more liability than institutional advantage.
In addition to Commissioners Rosch’ and Ramirez’ Section 5 criticisms above, when FTC Chairman Jon Leibowitz shut down all Google investigations under the FTC’s Section 5 authority, in January 2013, he was also critical of the FTC’s Section 5 effectiveness in the context of Google in explaining “Our Section 5 authority reaches beyond the antitrust laws to prohibit “unfair methods of competition,” but as a counter-balance, Congress also restricted the remedies the Commission could seek. We can’t impose fines and we don’t put malefactors in jail. Just as important, in cases like this one, Section 5 violations that are not also violations of the antitrust laws are not a basis for subsequent follow-on private lawsuits for treble damages in federal court.”
Official Reality vs. Unofficial Reports: Interestingly, while the FTC has been reportedly investigating the matters the EU has been charging Google with its Statements of Objections, the DOJ officially has been overseeing an actual Sherman Act court decree required by the DOJ and a Federal judge to monitor Google’s acquisition of ITA Software (flight information software) to ensure no anti-competitive behavior by Google, from October 5, 2011 through October 5, 2016.
DOJ has plenty of deep and current expertise concerning Google search and search advertising given this Google-ITA oversight -- as much or more than the FTC’s unknown Google investigative efforts since 2013.
The evidence above is compelling that DOJ most likely will take the lead on any big Sherman Act Google antitrust matters, not the FTC as conventional wisdom suggests.
If this analysis turns out to be incorrect and the FTC somehow in the months ahead is given the antitrust lead on the major Google investigation matters that it closed in January 2013, it would be a very positive and welcome development for Google indeed.
Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and before the relevant House oversight subcommittee on Google’s privacy problems.