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Two Fatal Flaws in Google's Antitrust Defense -- Part VII Google Pinocchio Series

Google search executive Amit Singhal exposed two fatal flaws in Google's antitrust defense in an excellent and revealing interview with James Temple of the San Francisco Chronicle.

The core of Google's antitrust defense (overall, in Google-ITA, and in the Google Book Settlement) are two foundational claims:

 

  • Everything Google does is for users and is pro-user -- so tautologically Google cannot be doing anything wrong; and
  • Everything Google does is innovative and is pro-innovation -- so tautologically Google cannot be doing anything wrong.

 

I. Does Google only work for user interests?

Beneath Google's saccharine claim that they only have users interests at heart, is a deep cynicism that everyone is stupid, especially antitrust authorities.

Does Google think antitrust authorities are so stupid that:

 

  • Google does not work for, or is influenced by advertisers in any way, even though they pay Google $28b a year, or roughly 99% of all Google's revenues?
  • No Google user customer service in the company's 12 year history is compatible with Google's claim it's search engine only serves users' interests?
  • A public Fortune 100 company does not work for, advance or protect the interests of its public shareholders in any way?
  • Google's search is not influenced subjectively in any way by Google's founders and senior management who own a controlling interest in Google?
  • Google search is only interested in users' interests when Google mines users' most private information to influence users to buy things, when multiple polls indicate users' have a very different view of their privacy interests than Google? (See the poll results: here, here, here & here.)

 

II. Is Google innovative and only pro-innovation?

 

At core, Google's branding that Google is synonymous with "innovation" is clever marketing and great politics, but it is a flawed and circular antitrust argument.

  • In defending Google's acquisition of ITA Software, Google, whose engineers to date have not been able to out-innovate travel search algorithm leader ITA Software, despite overwhelming resource advantages, argues that Google should be permitted to to buy market leader and innovator ITA Software, because with ITA Google could be more innovative. Duh. If you buy the best innovators in travel search then you are then more innovative by acquisition.
    • The point of antitrust law is not to improve monopolies' circular claims of innovation, but to maintain a competitive marketplace so competition remains to provide ongoing competitive incentives to encourage innovation long term.
  • If one sets aside Google's innovation cheerleading pom poms for a moment, as antitrust authorities are want to do, Google's main argument is that because Google has a monopoly grip on users, advertisers, publishers, has huge resources, and has over 500 products and services, Google could distribute the innovation of others faster to more people than the acquired company could.
    • The huge flaw here is that a monopoly could almost always make an argument that an acquisition could make the monopoly more efficient and thus benefit more people faster than competition could in the short term.
    • Google's real problem here is that the law is antitrust not protrust.
      • For over 100 years the law of the land has been that long term competition better serves consumers than monopolies,  especially monopolies that seek to extend their monopolies anti-competitively via acquisition and exclusion.
  • Antitrust authorities can see though Google's sloganeering and misdirection to see at core, Google antitrust defense is that Googleopoly is superior to competition and an unfettered Google will produce more user benefit and innovation than a competitive marketplace will.
  • By law and nature, antitrust authorities can be expected to side with competition over even the cuddliest and most politically-connected of monopolies.

In sum, Google main antitrust defenses assume antitrust is all politics and not law enforcement.

  • Google cynically thinks everyone is stupid.
  • They expect everyone to ignore the evidence, logic, and a hundred years of antitrust experience with monopolies.

 

One last thought, if Google, the self-declared paragon of "openness" was actually as innovative a company as it claims to be, say as innovative as Apple Inc., which Google characterizes as the epitome of "closedness," why does Google need to acquire 28 companies in the last twelve months and 88 companies overall, in order to be innovative... when Apple rarely acquires any companies and innovates so well in-house all by itself?

     

     

     

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    Google Antitrust Pinocchio Series:

    Part VI: Fact-Checking Google's Antitrust Defense

    Part V: "Google does not reap the benefits of significant network effects"

    Part IV: Stress-Testing Google's Top Ten Antitrust Defenses

    Part III: "Google-AdMob: 'Its too new to dominate'"

    Part II: Google: Antitrust's Pinocchio?

     

    Part I: What is "One click away?

    Q&A One Pager Debunking Net Neutrality Myths