The Case for Why the DOJ Should See Google as an Antitrust Threat
Fred Vogelstein, the writer who painted Facebook as a competitive threat to Google in June in Wired, has written another long piece for the magazine that is sure to open eyes, or at the least, raise some eyebrows.
When I read the headline, "Why Is Obama's Top Antitrust Cop Gunning for Google?" this week, I expected a profile on Christine Varney, the former FTC attorney that President Barack Obama appointed head of the Justice Department's antitrust division in January, and who seems destined to go after Google.
I expected to read about Varney's chops when it comes to prosecuting cases, a chronicle of how she represented Netscape in the late 1990s, when she was "instrumental in painting Bill Gates and company as overeager bullies."
Instead, I read a four-page piece that compares Google's octopus-like approach to search and Web services (Google Apps, Android, Chrome and Chrome OS) to Microsoft's multifaceted presence in desktop software (Windows, Office, Windows Media Player, Internet Explorer). Vogelstein wrote:
Lawyers and economists say that things get complicated, though, when Google moves beyond search and into Web services like online spreadsheets and video sites. Because its search and advertising algorithms are secret, there is no way for competitors or partners to know whether Google tweaks results to direct traffic to its own properties over theirs... If Google is using its search position to promote its other businesses, that could leave it open to charges of illegal bundling and leveraging--the same charges that Microsoft faced for packaging its browser onto the Windows desktop.
This doesn't tell us anything new about Google for those who follow the market closely. It doesn't reveal a wizard behind a curtain as being up to something cunningly evil.
What it does do is paint a damning picture of a company that has accrued such sway over the search market that its sheer size is prohibitive for any entrant hoping to make a go of it in the business of organizing the world's information.
The piece is written in such a way that it will make some people scratch their head and say, Doesn't that company try to "don't be evil"? In that sense, the piece may eventually be used as one of the cornerstone articles in a federal indictment against Google.
ReadWriteWeb's Marshall Kirkpatrick wrote that the piece is important, and he's probably right. I believe this because it might be one of those bludgeons that Varney and her DOJ colleagues would wield against Google in future litigation, as Kirkpatrick noted: "Talk itself, though, could help build that case with the public before it's built in court."
To wit, I'll confess that when I first saw the headline of the piece--"Why Is Obama's Top Antitrust Cop Gunning for Google?"--the obvious answer that popped into my head was that Varney can make quite the name for herself as the legal eagle that spears Google, which has been a slippery fish for antitrust regulators.
When Varney told colleagues and peers at the ninth annual conference of the American Antitrust Institute in June 2008, "I think you are going to see a repeat of Microsoft," I read that as: "I see Google as my Microsoft."
That could spell big problems for Google. The top antitrust lawyer in the country has come out and basically said she thinks Google is becoming a monopolist.
Many steps brought us to this point. Off the top of my head, Google trod on thin ice when it bought DoubleClick, with privacy advocates complaining DoubleClick's technology would provide Google too much data on Web users.
The Google Book Search deal is under formal DOJ scrutiny, while Google CEO Eric Schmidt's position on Apple's board is in the FTC's crosshairs.
I've chronicled the perception-is-reality problem Google faces in trying to convince the public it has the best intentions. I've more recently questioned whether antitrust laws should be amended to consider Google's use of free Web services to undercut market rivals.
But kudos to Vogelstein, who does the best job I've read yet describing the fallout from Google's bid to partner with Yahoo. What a year ago seemed a bid to thwart Microsoft's attempt to get stronger in search advertising now reads like a crucial piece of evidence the DOJ could use in an antitrust case.
Indeed, the writer intimated that Google put a bull's-eye on its $20 billion-a-year chest when it tried to strike a search ad deal with Yahoo to stymie Microsoft:
Schmidt says today that if he had it to do over again, he would; indeed, it probably kept Yahoo out of the hands of Microsoft, which dropped its own bid soon after. But it will also have a lasting effect on Google. Any future deals of comparable size will inevitably draw the same kind of scrutiny. Schmidt had been so focused on renouncing Microsoft's behavior that he had led his company to the same fate: Google was now branded as a top antitrust target.
Vogelstein does offer Google an out, noting that Varney said the FTC took so long to tag Microsoft as a monopolist because it started too late: "In other words, even if an antitrust case is years away, the all-important political ground is being prepared right now. How Google responds will determine whether it can fend off years of intensive investigation..."
The question is: How will Google respond?