Should Antitrust Protect Competitors Or Competition?
from the rewriting-antitrust dept
While there is plenty of breaking news to go around, tech junkies will not have missed the Department of Justice’s long-awaited announcement of their antitrust lawsuit against Google. This is just the latest in a number of government moves aimed at applying more pressure to big tech. Congress is also reviewing potential reforms to antitrust law in order to make it easier to target online platforms. During recent hearings, the House Judiciary Committee examined how these companies compete and highlighted individual competitors that struggle to compete or work with dominant firms.
But in its rush to legislate market fairness into the tech world, Congress seems to be missing the point: we need to protect competition, not the competitors themselves.
The Supreme Court warned about this nearly two decades ago. As the Court explained of the Sherman Act, “[t]he purpose of the Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.”
In other words, competition law doesn’t care what happens to small competitors, it cares that these companies have a chance to compete.
This is where Congress is treading on dangerous ground. Earlier this month, the House Judiciary Committee released an extensive report detailing their investigation into online markets. In this report, Congress finds themselves worried about what happens to individual competitors, not competition writ large.
For example, at one point the report states that “Google’s preferential treatment of its own verticals, as well as its direct listing of information in the ‘OneBox’ that appears at the top of Google search results, has the net effect of diverting traffic from competing verticals and jeopardizing the health and viability of their business.” Because of this, the report recommends Congress overturn judicial precedent on attempted monopolization, which currently requires that plaintiffs show that the company has a dangerous probability of monopolization.
But Google does not seem to be preventing vertical search engines from competing and as far as we can tell, it hasn’t monopolized this service. Their “OneBox” gives users a quick answer to a question or a product they are looking for. True, a competing vertical search engine may lose traffic, but the consumers get more search results overall. If Google could monopolize vertical search markets, then that would effectively prohibit competitors from offering better, rival services. But so long as a firm like Google can’t actually achieve that monopoly in the new market, the competitive constraints on behavior still exist.
And even if a general search feature and anticompetitive conduct led to monopolization of vertical search, antitrust law would act as a check to protect competition. The Department of Justice’s long-predicted antitrust lawsuit against Google is evidence of this. If Google has illegally acquired, attempted to acquire or maintained a monopoly, then current antitrust law will ensure that any anticompetitive harms are corrected without hurting the consumers. But if they simply outcompeted rivals by offering a more efficient product, then competition policy should not, and currently does not, worry about the individual competitors who can’t keep up.
Competition protects consumers and is critical in the online marketplace. In the fast-moving technology sector, some companies will not keep up. But Congress cannot lose focus by worrying about individual competitors. Instead, they must keep an eye out for anticompetitive behavior that prohibits competitions because the firm controls the entire market. In the end, if we artificially prop up less efficient or innovative competitors, then it will be the consumers who end up suffering.
Jeffrey Westling is a technology and innovation resident fellow at the R Street Institute.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: antitrust, competition, competitors, doj
Companies: google
Reader Comments
Subscribe: RSS
View by: Time | Thread
It protects the public... Duh!
[ link to this | view in chronology ]
Re:
It's supposed to anywys
[ link to this | view in chronology ]
This lawsuit has nothing to do with antitrust or monopoly. It's just a corrupt administration getting more corrupt with each passing day.
[ link to this | view in chronology ]
What the report calls "verticals", we website reviewers for the Open Directory Project called "affiliate banner farms". Here's how it works out: we editors would go looking for local businesses for, say, Podunk, N.J. There might be a dozen local hotels; and it would be good (our theory went) for users to have a list of their websites. So search for "Podunk Hotel", right?
And what search returns you is a list of a thousand affiliate websites, each one offering to show you all the world's hotels--each one listing maybe no hotels (but they've still got a heavily-promoted page for Podunk), or if you're lucky two or three of those hotels. There's nothing to recommend any of the thousand over the others--they're all the online equivalent of car-window-washing scamsters at city street corners. All you want is to get past them to the real content, and all you have to do to get past them, is pay them to only show you a small part of the real content.
Pure evil, the scum of the internet, not a conscience or a public-spirited thought behind a single one of those thousand sites. THOSE are the "verticals" that love to whine about Google killing them off. Google killing them off, stakes through the heart and heads mounted on more stakes, would be the biggest public service that could conceivably be done online.
They aren't competition, any more than those street-corner oily-rag-wielders are competition for the hotel. They are sociopathic parasites--they would not exist were it not for the hotel, and they cause palpable harm to the hotel and all its customers. No just society would permit them to live, or even to die a painless death.
[ link to this | view in chronology ]
No, BIG IS JUST PLAIN BAD.
You just confuzzle with false alternative.
It cannot result in good when a single corporation in control of HUGE numbers of both people and money, -- The House report states HAS a monopoly, while the corporatist like Masnick and Schmidt try to dodge away by saying "it's not 100%", sheesh.
BREAK UP GOOGLE, only way to get competition.
[ link to this | view in chronology ]
Re: No, BIG IS JUST PLAIN BAD.
So to protect consumers you would break up successful companies, giving them worse service. What would help is a set of laws to restrict the data that all companies can gather and store. Eliminate tracking and the gathering of all information that can squeezed out of the users devices.
[ link to this | view in chronology ]
Re: Re: No, BIG IS JUST PLAIN BAD.
Bbbbbut.... what about the rights of corporations to milk consumers for all their worth? /s
Breaking up a company is a penalty for getting too big. As in, "Too Big To Fail." Companies are not governments. Companies by definition do not have the public's best interest in mind. Companies are for making profits. Everything else a company does is a secondary side effect, not the intended outcome. When companies become so large and influential that they can outpace the government, the public suffers. The government's job is first and foremost to protect it's citizens. As such, it's a government's primary job to prevent companies from getting too big.
Governments prevent companies from getting too big through government issued regulations. When those measures are insufficient, the government forces companies to disband and be broken up. This does two things: 1. It prevents companies from gaining too much influence over the lives of the citizenry. 2. It ensures market competition by destroying monopolies.
FYI: Once it's copied, there's no way to reliably confirm that the information has been destroyed. This is a property of information that can't be bypassed. (As the number of copies that exist and where they are located is a completely different and wholly independent piece of information from the copied data and must be tracked separately.) No law can fix that. The best you can hope for is a blanket ban on all data collection without consent, but that will just get the consent moved into the shrinkwrap EULA / ToS that no-one reads.
[ link to this | view in chronology ]
Quick question: For what reason, other than the sheer size and popularity of the service, should the government force Twitter to either shut down or be somehow broken up?
[ link to this | view in chronology ]
Should the government also give economic handouts to Vimeo, DailyMotion, and other video services so they’ll have a leg up on YouTube?
Should the government also find some way to help DuckDuckGo so it’ll have a slight advantage over Google?
Should the government also make it possible for Twitter and Facebook to somehow overtake Google Pl…oh wait that already happened without government help.
Point is: If you want competition for Google, asking the government to make it won’t help. Using the competition will help.
[ link to this | view in chronology ]
Re: Point is
The point is that many people believe that only government "Experts" can make an economy operate efficiently and fairly.
These true believers are unable to explain how these government experts acquire their unique wisdom and ethical superiority.
[ link to this | view in chronology ]
Re: Re: Point is
Ok, I'm curious ... how does one make an economy operate efficiently and fairly, for whom does it operate and has there ever been such a thing in the history of humans?
[ link to this | view in chronology ]
Re: Re: Re: Point is
obviously one builds a large 'Regulatory State' government supervisory apparatus to oversee the private economy.
have you not noticed the vast number of regulatory agencies and economic regulatory rules at every level of American government?
[ link to this | view in chronology ]
Re: No, BIG IS JUST PLAIN BAD.
BIG IS JUST PLAIN BAD
....so the really really really BIG Federal Government is hyper BAD, according to your core principle.
[ link to this | view in chronology ]
Re: No, BIG IS JUST PLAIN BAD.
Where have you been since the 1920s? Just waiting for teh goog, ignoring everything else?
Yeah thought so.
[ link to this | view in chronology ]
Unjust Law
"we need to protect competition"
How wonderful -- but you and the Feds can not objectively define "competition", "anti-competitive" behavior, nor "monopolistic" behavior.
Result is a sloppy, totally arbitrary set of antitrust statutes that have been a huge mess for over 120 years.
Fair an Just laws require clarity. How was Google to know beforehand which specific Google activities would now be deemed illegal by DOJ ??
Exactly what "criminal behavior" do trust/monopoly villains commit that authorizes any government agency to forcibly change their business practices or structures ?
U.S. AntiTrust Law is couched in vague, indefinable terms -- permitting the government and its courts to omit defining in advance what is a "monopolistic" or "anti-competitive" crime... and what is not.
No businessman knows when he has committed an 'antitrust crime' and when he has not -- and he will never know until some government bureaucrat arbitrarily decides to swoop down upon him and prosecute.
[ link to this | view in chronology ]
Re: Unjust Law
"No businessman knows when he has committed an 'antitrust crime' and when he has not "
Gimme a friggin break, they know exactly what they are doing and think they can get away with it. When exposed, they throw a fit and blame everyone but themselves. I'm the victim here! they loudly proclaim as they attempt to stash the ill glotten gains.
[ link to this | view in chronology ]
Something to note: without competitors, there is no competition. The question shouldn't be whether antitrust law should protect competitors, but rather what it should protect them from. It shouldn't protect them from their own poor decisions, but it should protect them from the malicious actions of a dominant player aimed at keeping them from ever becoming large enough to become a threat.
[ link to this | view in chronology ]
Re:
But you still can't define competitors/competition as an all purpose legal principle.
Are TV Networks legally 'competitors' to the Hollywood movie corporations , since they are both in the 'entertainment' industry or are they actually in very separate economic sectors?
Is a Chinese restaurant chain legally a 'competitor' to a pizza chain nationwide because they both sell food (..but of very different type)?
Pinning down precise definitions of competitors/competition is impossible in the real economic world, which is why it is never done in American law or courts. It's all highly subjective.
[ link to this | view in chronology ]
Re: Re:
"But you still can't define competitors/competition as an all purpose legal principle."
This could apply to everything, therefore nothing is defined.
What are judges for and why are they given leeway when legislators get votes for their law 'n order fire 'n brimstone three strikes and minimum sentencing after a plea bargain for something they cannot prove you did because it is not defined.
But I digress ...
[ link to this | view in chronology ]
Blinkered by accident or intent?
This essay skips over the main issue. It's not that Google has a monopoly in search, it's that Google has a monopoly on online ads and uses its search to support it!
[ link to this | view in chronology ]
Re: Blinkered by accident or intent?
This essay skips over the main issue. It's not that Google has a monopoly in search, it's that Google has a monopoly on online ads and uses its search to support it!
Assuming this is the case, then really the DOJ should have filed an antitrust suit about that. But it did not. It filed it about search.
[ link to this | view in chronology ]
Re: Re: Blinkered by accident or intent?
"Only the best people!"
[ link to this | view in chronology ]
Re: Blinkered by accident or intent?
How does it have a monopoly on online ads? The majority of online ads are placed directly on web sites, and there I see primarily non-Google ad networks showing the ads. And how would Google use search to support controlling which ad networks web sites use for their own ads, anyway? It's not like they refuse to list web sites in their search results based on which ad networks they use. I'd be more concerned about their web analytics tools myself. Google's main focus isn't search or advertising, it's user behavior data and web analytics tools are the most comprehensive way of collecting user behavior data without users even realizing it's being collected.
TBH I think the real problem's that Google's reached the point where it's got so much money and so many resources that if it wanted to open a restaurant chain it could guarantee success simply by buying up such a large portion of critical supplies (napkins, basic foodstuffs like tomato sauce or ground beef or soy sauce) that other restaurant chains simply couldn't afford to stay in business.
[ link to this | view in chronology ]
Re: Re: Blinkered by accident or intent?
TBH I think the real problem's that Google's reached the point where it's got so much money and so many resources that if it wanted to open a restaurant chain it could guarantee success simply by buying up such a large portion of critical supplies (napkins, basic foodstuffs like tomato sauce or ground beef or soy sauce) that other restaurant chains simply couldn't afford to stay in business.
Counterpoint: Stadia.
[ link to this | view in chronology ]
Re: Re: Re: Blinkered by accident or intent?
Which has been up and running for a year now. The big question now is exclusive titles. Do you think Google lacks the money to pay a studio enough to make making a major must-have title exclusive to Stadia?
[ link to this | view in chronology ]
Re: Re: Re: Re: Blinkered by accident or intent?
'up and running' might be a wee bit of an overstatement given it basically faceplanted at launch thanks to the pricing system and an abysmal launch lineup and hasn't been doing so well since then(Google couldn't even be bothered to have Stadia supported on their latest Chromecast until next year), but regarding a 'must-have' title yeah, I kinda do, as unless they massively change how the platform works at best they'll have an amazing game on an otherwise horrible 'console', which isn't going to bring in many people.
Do they have the money to pay a game studio to create a Stadia exclusive? Without a doubt. The real question is would it do them any good, and at the moment I'm not seeing how it would be worth the costs they'd incur.
A restaurant might have the most amazing dish to be found in 100 miles, but if their would-be customers know that to get in the door they have to be kicked in the crotch and they'll then be slapped with a rotting fish once they sit down the number of people coming in to eat is going to be mighty slim.
[ link to this | view in chronology ]
Of all the things on earth that could not possibly be monopolized, surely online advertising is the mostest.
The cost to entry is as close to zero as one could get: a free webpage, and a friend with a business to advertise, and you're off. The supply of webpages is as close to infinite as humanity can approach. Marketroids are like cockroaches; they breed in vacuum and they eat anything organic. Growth requires a database (free and open source) and some programmers (not unlimited, but available worldwide.)
There are numerous newspaper chains and ad agencies and classified-ads distributors that have already been distributing advertisements at large scale for generations now--human generations, I mean, not cockroach generations. All of them have all the necessary ingredients: an existing supply of customers, an existing repertoire of content to present on webpages, an existing process for matching the two.
There is, finally, no conceivable barrier that would keep customers from mixing-and-matching ad channels to find the best fit for themselves; and in fact, customers large and small have been doing THAT for generations.
Which brings us to the second half of the assertion. How, exactly, does Google's very very good search engine support its advertising business? Clearly, Google puts several ads on each search page, but that is an infinitesimal part of the advertising it places. Compare that to a large newspaper chain, which places ALL of its advertising around its "own content" (by which one mostly means, stuff copied off the newswires, and local interest material donated by the interested locals.) Google could shut down its search engine altogether, and the advertising intermediation business would continue without noticing.
It MUST be the other way around Google's advertising supports its search engine, but in a much less direct way than, say, the New York Times advertising supports its paper distribution. And you might ask, why doesn't the NYT give up its feeble journalism efforts and focus on advertising where the money is? Perhaps, some decades after that question has been settled, you might ask why Google doesn't give up the expense of running a search engine for free, and focus on ad brokering?
And, at some point, you get down to the fact that non-economic factors must be involved--on both sides of the fence. Google wants to give the world good search, like Elon Musk wants to get humans to Mars, Larry Ellison ... well, for him maybe it's all greed. And Google's detractors just hate Google because bigger than them, which is blasphemy for any autotheist.
[ link to this | view in chronology ]
Re:
No. Google provides search because that is what gets Eyeballs for it to sell to advertisers, and Eyeballs to direct to it's other offerings. Offerings that can then sell those same eyeballs to advertisers again.
Also, it's not a flat rate that Google, or anyone for that matter, sells online ad space for. They auction it off at the time of page access. Using the visitors' hardware resources to both define the available space for sale and to run the auction itself. That's why your 4 GHz computer slows down so much when loading a sterile white webpage with plain solid colors and some text. When a 500 MHz computer back in 1999 could load the same content much faster. It's also the reason why adblockers work, they prevent the auction from running.
Given both of these, Google makes a lot of money per click. Multiply that over untold numbers of clicks per day, in every country on earth, and you'll find all the financial motivation Google, or anyone else, will ever need.
TL;DR: Companies exist to make money. Non-profits exist to distribute good will. Pick one.
[ link to this | view in chronology ]
Re: Re:
Companies do not need good will because eventually they all will become monopolies and to hell with their ungrateful customers. Only a fool would waste any time what so ever on being good to potential consumers because screw them it doesn't affect your right, you still sell your product cause its the only show in town.
TLDR: screw you I got mine
[ link to this | view in chronology ]
Re: find a monopoly
[ link to this | view in chronology ]
Re: Re: find a monopoly
Comcast
Spectrum
Verizon
AT&T
All of them regional, destructive monopolies.
[ link to this | view in chronology ]
Re: find a monopoly
so personal broadband internet to your home is a basic requirement of human life like food & water ?
It is a mandatory purchase, no matter how high the price ?
There are absolutely no economic alternatives... like doing without, using free WiFi services, sharing internet service with family/friends, using cheaper/slower internet service ?
Your view of a monopoly business far differs from its formal economic definition.
[ link to this | view in chronology ]
Re: Re: find a monopoly
"so personal broadband internet to your home is a basic requirement of human life like food & water ?"
What planet are you on?
[ link to this | view in chronology ]
I agree with the substance of the post, but I disagree with the take on the congressional report. Congress is fit to do it's own fact finding for it's legislative purposes, which is what it did. The provided recommendations are about "Restoring Competition in the Digital Economy" and "Strengthening Antitrust Laws & Enforcement."
Google got in trouble for Google Shopping results surfaced on the results page in the EU, and the outcome there was a more diversified way of producing results. Sounds more competitive to me! If Google wants to separate out results it needs to do so fairly, and let users be the judge.
The DoJ lawsuit is clearly driven by incompetence and corruption as others have mentioned.
[ link to this | view in chronology ]