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Stress-testing Google's Top Ten Antitrust Defenses -- Part IV of Antitrust Pinocchio series

Google announced it was under preliminary investigation by EU Antitrust authorities due to several antitrust complaints filed against it, and it began to frame its antitrust defense against the charges.

  • How well do Google's top ten antitrust defenses hold up to scrutiny?  

    1.   "This kind of scrutiny goes with the territory when you are a large company." (Julia Holtz, Google's Senior Competition Counsel, Google Policy Blog post

    • No. Over 99% of the Global Fortune 1000 are "large," but are not under antitrust investigation for monopolization.
    • This kind of antitrust scrutiny occurs to a very select few companies -- only companies that serially act anticompetitively. 

    2.   "We've always worked hard to ensure that our success is earned the right way -- through technological innovation and great products, rather than by locking in our users or advertisers, or creating artificial barriers to entry." (Julia Holtz post)

    • Google ignored the Foundem's data-driven evidence that Google Maps and Google Product Search only made strong gains in adoption when Google overrode and manipulated its organic algorithm-driven search results and inserted Google Maps and Google Product Search automatically at the top of the results above competitors, not as a result of Google's "innovation" or product superiority.
    • Google has long suggested that if it does not lock in users or advertisers or create artificial barriers to entry, it is not anticompetitive. Unfortunately, that is Google's selective self-serving definition of antitrust.
      • What Google is being accused of is a pattern of illegally abusing its monopoly power to crush actual and potential competition to Google in multiple market segments.
    • Google's defense assumes it is not a monopoly therefore it can do no wrong. Unfortunately for Google, the EU investigation is predicated on the fact that Google is a monopoly given that it has over 90% share of the search advertising market there.

    3.   The complaints are generated by our competitor Microsoft. (Julia Holtz paraphrased in blog.)

    • Most all antitrust investigations are prompted by documented allegations by competitors. The Microsoft antitrust investigation and case was prompted by allegations by competitors like Netscape.
    • Google invoking Microsoft is a political argument not a legal one.
      • DOJ and the EU pursued Microsoft violations because its competitors made legally compelling arguments.
      • Legally, it does not matter who is complaining, but whether or not their evidence and arguments have legal merit.
    • Microsoft has settled and resolved its past antitrust violations and is not currently being accused of being anticompetitive.
    • Google is being accused of current and ongoing anticompetitive behavior that has not yet been investigated, settled or resolved.  

    4.   "We haven't done anything wrong." Julia Holtz, quoted originally in the New York Times 2-25-10.

    • This is a rather sweeping absolution given that:
      • Ms. Holtz admitted in her official blog post the day before that "We are also the first to admit that our search is not perfect...;" 
      • The evidence of Google anticompetitive wrongdoing is mounting high:
        • The growing number of pending antitrust european lawsuits: Foundem in UK, ejustice in France, Ciao in Germany, and American lawsuits: myTrigger and TradeComet;
        • Antitrust authorities conclusions of Google's market power and anti-competitive behavior:
          • DOJ's opposition to the Google Book Settlement as a violation of antitrust, copyright and class action law; and
          • DOJ's blocking of the Google-Yahoo Ad Agreement as anticompetitive and reported plans to file a Section 1 & 2 monopolization case against Google, if it did not drop its proposed advertising collusion with Yahoo.   

    5.    "This stuff is tough." Google Fellow Amit Singhal's Google Policy blog post.

    • Yes that's a big reason why Google has assembled an unassailable monopoly.
    • It's also "tough" to compete against a monopoly that is serially anticompetitively impeding actual and potential competitors and that is serially extending its monopoly power to new market segments.

    6.   The algorithm is innocent, a computer can't be subjective or anticompetitive. Paraphrase of Mr. Singhal's antitrust defense in his post.

    • Google's search algorithm is a vast computer program that Google's Mr. Singhal admits: "use hundreds of different signals to pick the top results for any given query."... "On average, we make one  or two changes to them every day."
      • These "signals" and "changes" to the algorithm are human and subjective interventions in the basic algorithm to get it to rank certain results higher or lower.
      • Antitrust authorities will be investigating to learn if any of these hundreds of "signals" (or algorithmic bias variables) have any anticompetitive effect by subjectively ranking Google-owned products and services higher and identified competitors' results lower.

    7.   "It wouldn't be feasible to handle each [search] by hand anyway." Mr. Singhal's post.  

    • That's an obvious straw man argument.
    • None of the antitrust complaints against Google are suggesting that Google's search engine not be automated, only that the automation not be programmed to be anticompetitive in practice.

    8.   If an entity is ranked low it must be the entities' fault for not being excellent enough. Paraphrase of Mr. Singhal's defense in his post

    • Google admits that it has "clear written policies for websites that are included in our results."
      • It will be up to antitrust authorities and the courts to determine if any of those policies have illegal anticompetitive effects, in addition to their stated purposes, and if Google lives up to its represented policies in practice with the competitors that are suing Google.

    9.   "If Google was trying to prevent somebody from showing up well, I think they would be blocking Microsoft first." Danny Sullivan editor in Chief of Search Engine Land in the FT 2-25-10.   

    • This may be the most nonsensical antitrust defense I have heard.
    • Its the functional equivalent of saying that if a bank robber does not try and rob Fort Knox first, he must not be a bank robber.

    10.   "I find it hard to believe Google would rig its own search results to flatten other small operators. Frankly, it would go against the Don't be evil mantra in such a profound way as to make the ethos a lie." Clint Boulton of eWeek's in Google Watch 2-26-10.

    • Generally a character reference is relevant in the sentencing phase, but not in the investigative or adjudicative phases.
    • There are plenty of apparently upstanding citizens and top brands that have run afoul of antitrust laws.

    In sum, what is fascinating here is how weak these defenses are and how they are not at all fact or case specific.

    • My advice to Google:
      • Work harder on not acting anticompetitively and specifically addressing the weaknesses of specific complaints.
      • Spend less time on pollitical and PR arguments that will not help with law enforcement authorities...
        • ...unless your real strategy here is jury nullification or political intervention to order the cases to never see the light of day. 


    Google: Antitrust's Pinocchio? series:  

    • Part I: What is "One click away?
    • Part II: Google: Antitrust's Pinocchio?
    • Part III: "Google-AdMob: 'Its too new to dominate'"