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Google Takeaways from Trump Antitrust Chief’s Senate Confirmation Hearing

What did the Senate confirmation hearing for President Trump’s nominee to head up the DOJ Antitrust Division, Makan Delrahim, tell us that’s relevant to the biggest pending global antitrust issue -- Google?

A lot.

Google is no longer politically protected from antitrust investigation in the U.S.

Let’s learn why.

It has gone from likely to clear that Makan Delrahim, will be the antitrust lead in handling the most consequential U.S and international antitrust matters, like Google, in the Trump Administration.

The hearing affirmed Mr. Delrahim is very well-known, highly-respected, and enjoys bipartisan support on the Senate Judiciary Committee. He received bipartisan letters of endorsement from 12 previous DOJ Antitrust Chiefs and all the Commissioners he served with on the Antitrust Modernization Commission.

In addition, as Deputy White House Counsel for nominations, who also shepherded Supreme Court Nominee, Judge Neil Gorsuch, through the Senate confirmation process, he obviously enjoys the strongest trust, respect, and support from President Trump and Attorney General Sessions.

Tellingly, it is mid-May and we don’t have a nominee for FTC Chairperson.

As the EU’s Antitrust Chief, Margrethe Vestager, is expected to finalize the first of her three antitrust cases against Google’s abuses of dominance in June-July, practically that means Mr. Delrahim will be confirmed by then, and an FTC Chairperson will not. Thus Mr. Delrahim de facto will begin as the Google antitrust lead in the U.S.

In response to a question from Senate Antitrust Subcommittee Chairman Lee, Mr. Delrahim made it clear he enjoyed his previous international antitrust responsibilities and experience when he was the DOJ Deputy Assistant Attorney General for International in the W. Bush Administration. He indicated he would stay involved in international antitrust coordination, given that “antitrust law has been one of America’s greatest exports,” having been adopted by 130 countries.

In a question from Ranking Antitrust Subcommittee Member Klobuchar, about politics and antitrust, Mr. Delrahim gave his most emphatic answer, promising “politics will have no role in antitrust enforcement, if I am confirmed.”

If we take Mr. Delrahim at his word, and all the respect and testimonies to his integrity that we heard at his Senate confirmation hearing, indicate that he has been, and is indeed, a man of his word; so his promise under oath that “politics will have no role in antitrust enforcement” means that antitrust enforcement on his watch will be done by the book, based on cartel and monopolization law/precedent, and the facts/evidence collected in a fair investigation, that can be proven in a court of law and survive appeal.

That is not good news for Google.

Google depends most heavily on politics and political influence to kill U.S. antitrust enforcement against its anti-competitive behaviors, in the crib.

Anyone who has followed Google antitrust matters closely, or just reviews the chronology and the record can see how Google has massively politicized U.S.-Google antitrust enforcement since November 2012.

Some background context is important here, because it wasn’t always this way during the Obama Administration. In the first Obama Administration term, Google antitrust enforcement was rigorous and serious; in the second term it abruptly became non-existent -- for four long years.

In 2008, Bush DOJ Antitrust Chief Tom Barnett blocked the proposed Google-Yahoo Ad Agreement by threatening a Sherman Act Section 1 & 2 case for monopolizing search advertising and Internet search syndication.

In the first term of the Obama Administration, DOJ Antitrust Chief, Christine Varney, continued very tough Google antitrust enforcement.

The DOJ successfully opposed the Google Books Settlement in court as anti-competitive; found Google, with five other companies, guilty of colluding via no-poaching agreements that limited employees’ compensation, that required a court-supervised consent decree; and threatened to block Google’s acquisition of ITA Software without a five-year court supervised consent decree.

In 2012, the Leibowitz-FTC investigated Google and publicly threatened antitrust action, in late 2012.

However, after President Obama’s election, all the FTC-Google antitrust investigations covering five different Google antitrust problems were abruptly and chaotically dropped in the first week of 2013. The FTC Staff report that recommended an antitrust case against Google was closed along with its Android investigation, and its concerns about Google abusing SEP patent licensing contracts.

For the last four years of the Obama Administration, the U.S. was a de facto Google antitrust non-enforcement zone.

All complainants effectively learned that their concerns were politically unwelcome in the U.S., so they went to the EU for hearing and redress.

Nothing has been done with the Google-Android tying case since the FTC dropped its Android investigation quietly and without a vote of the FTC commissioners in January 2013, despite obvious contractual evidence, successful Android cases prosecutions overseas, and the case being surprisingly analogous to the successful DOJ prosecution of Microsoft for illegal contractual tying.

Thus Mr. Delrahim’s promise that “politics will have no role in antitrust enforcement” comes in the context of the last four years, which have proved to be the most politicized U.S. antitrust environment in decades.

Unfortunately, it was President Obama that publicly politicized Google antitrust matters from the White House in February of 2015 just when the EU antitrust investigations of Google turned into formal antitrust charges, i.e. Statements of Objections.

In an interview with ReCode’s Kara Swisher -- the spouse of President Obama’s Chief Technology Officer, Megan Smith, who previously was a long-time Google executive -- President Obama said this:

“In defense of Google and Facebook, sometimes the European response here is more commercially driven than anything else. …their vendors — their service providers who, you know, can’t compete with ours — are essentially trying to set up some roadblocks for our companies to operate effectively there.

"We have owned the Internet. Our companies have created it, expanded it, perfected it in ways that they can’t compete. And oftentimes what is portrayed as high-minded positions on issues sometims is just designed to carve out some of their commercial interests.”

A month after the President’s comments above, the FTC mistakenly released as part of a FOIA request, its 2012 FTC Staff Report of conclusions of its antitrust investigation of Google recommending prosecution. The report totally contradicted the FTC’s public story that staff found nothing worthy of prosecution.

Two months later, the closure of the FTC-Google antitrust investigations was publicly exposed as highly political when Buzzfeed caught the FTC Chairman putting out a press release defending Google that was largely written by the Google lobbyist who requested it from the FTC.

For those who need more evidence of Google using politics to prevent investigation of its many anticompetitive commercial practices by U.S. antitrust authorities, please see the following evidence that is bolstered with several dozens of linked sources: here, here, here, here and here.

Conclusion

The overall takeaway from this hearing is that Mr. Delrahim is a widely-respected, highly-experienced, antitrust official, attorney, expert, and professor, who enjoys high and broad trust in his capabilities and integrity. 

If confirmed, this means he will be a formidable DOJ Assistant Attorney General of the Antitrust Division.

 

The big under-appreciated change here is not that Mr. Delrahim has any predisposition towards Google either for or against. I do not believe he has any predisposition on Google antitrust one way or another.

The substantial change here is that a Delrahim-led U.S. antitrust system will no longer be politically shut down from investigating Google for antitrust offenses, because Mr. Delrahim has pledged under oath “politics will have no role in antitrust enforcement,” if he is confirmed.

Simply, Google antitrust complainants will no longer face a politically closed door; the system has a chance to work again in the U.S.

Google’s new risk now that few appear to appreciate, is that Google no longer enjoys extraordinary political protection from U.S. antitrust law.

If the Bush DOJ thought Google was worthy of a Sherman Act Section 1 & 2 monopolization case in 2008, and by all measures Google is vastly more dominant eight years later, it would be surprising if Mr. Delrahim would not be open to entertaining complaints that Google might be violating U.S. antitrust law, if the evidence was compelling.

What has changed is that the system is being expunged of politics and it can work again; let the process, merits, and evidence proceed for the first time in over four years.

In short, if Google has done nothing wrong, it has nothing to worry about with Mr. Delrahim.

However, if Google turns out to be the next Microsoft-like antitrust case on the merits, the law, and the evidence, Google should be very worried about Mr. Delrahim being above politics and serving as America’s lead antitrust official.  

 

***

 

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.

 

Trump Administration Google Antitrust Series

Part 1: America’s Indefensible Media Concentration Double Standard [12-5-16]

Part 2: The Google-Facebook Online Ad Cartel is the Biggest Competition Problem [1-12-17]

Part 3: Twitter & Snap Evidence Confirm Goobook Ad Cartel Crushing Competiion [2-15-17]

Part 4: Look What’s Happened Since the FTC Stopped Google Antitrust Enforcement [3-13-17]

Part 5: Google Antitrust Implications of Makan Delrahim as DOJ Antitrust Chief [3-28-17]

 

Part 6: Trump Administration Implications for Google Antitrust in EU, US & Markets [4-7-17]

Part 7: 6 Reasons Trump DOJ Will Take Lead from FTC in Google Antitrust Enforcement [4-13-17]

Part 8: Google-Russia Antitrust Deal Has Big Implications for EU Cases, Trump DOJ [4-19-17]

 

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