Why the FTC's Case Against Google Has No Merit
Now that the Federal Trade Commission is making like it's putting the screws to Google, the inevitable comparisons between the Justice Department's antitrust case against Microsoft more than a decade ago are coming to bear.
Fairly or not, the DOJ versus Microsoft set the standard for modern high-tech cases. Except in this case, I would argue Google had the foresight long ago to architect its business so that consumers are not locked in to any one software platform (as people were with Windows) or browser (as people were with Internet Explorer).
Don't like Google search or Gmail? Switch to Bing or Yahoo Mail. So I and others find it hard to believe when Gary Reback, who helped prosecute Microsoft, says this is "Microsoft redux" and that it "is almost exactly the same case."
I spoke to D.C. lawyer David Balto, a former FTC antitrust litigator about the FTC versus Google imbroglio last Friday for this story.
Read the story and you'll see Balto doesn't believe there is a lot there, but then I asked him to highlight the core differences between this new case and the DOJ's case against Microsoft. This is what he told me:
With Microsoft, if you wanted to switch from Microsoft Windows to something else, it was basically impossible, but if you wanted to, it would cost you a few hundred dollars and all of a sudden you'd have a product that was incompatible with what everybody else used.
If you don't like Google, it takes a click to go to Bing or Yahoo and you have emerging competitors arising. Moreover, Microsoft's conduct was clearly aimed at preventing competitors from trying to emerge. It cut off their air supply. There's no evidence of that with Google.
I want to noodle over something Balto alluded to, specifically the point about there being "emerging competitors arising."
What could this mean? Well, search isn't so simply defined by the Top 5 players anymore. Sure Google is dominant, Yahoo and Bing are the respectable second- and third-position players. Some older-fashioned folks still use AOL and Ask.
But search--and you can bet Google is going to make this case if it must in court to the FTC--has grown to include Twitter, Facebook and several other social Websites.
Maybe these Websites don't get counted as major search engines, but they could. They draw a lot of traffic. Bing and Facebook didn't partner for nothing. The deal is around social and search.
Google could make the case, based on the social-network searches, that the search market is more competitive than ever. But that doesn't seem to be the issue for the FTC and the smaller guys complaining that they are getting beaten up.
The issue seems to be whether Google funnels users to its Web services and whether that limits choice.
Google probably does funnel users to its services over lesser-known rivals, but how do you make the argument that that is bad for consumers?
They didn't have to click on a Google product result. That's not limiting choice; that's lowering the barrier to entry on Google's sites. That's smart.
One final question: Obviously, the FTC has been called to action because it sees some merit to the plaintiffs' complaints, but I wonder how hard it will look.
If the five FTC commissioners share former FTC policy director Balto's outlook, this inquiry may be simply an exercise in satisfying the lot of whiners.