Google, which has never been one to show much regard for Microsoft, could well be feeling sympathetic toward Redmond now that it finds itself under the antitrust gun.
Microsoft has been beleaguered by antitrust investigations in the U.S. and Europe for decades. To be sure, Microsoft brought much of that regulatory attention on itself — but its supporters will say, with some justification, that the more recent investigations have been gratuitous.
The question is, is Google starting down that path? It seems likely, based on the responses of antitrust officials to some of Google’s actions so far. Where is Google’s antitrust story heading?
The events of the last few weeks provide some clues. Certainly, any aspect of U.S. antitrust law will be used against Google, even seemingly arcane statutes such as the Clayton Act of 1914, namely Section 8, which covers interlocking directors.
The most recent antitrust activity concerns the fact that Google CEO Eric Schmidt and Genentech CEO Arthur Levinson both have seats on the boards of directors of Google and Apple. The FTC has opened an inquiry into whether this violates the Clayton Act, which specifically restricts interlocking directors when the revenues from competing products comprise more than 2 percent of the revenues of the respective companies.
All About Access
However, it is the Department of Justice’s inquiry into a settlement Google recently negotiated with representatives of book publishers and authors to make their works available online that is the most likely harbinger of future antitrust probes.
It is difficult to pinpoint exactly where the antitrust fault line is in this particular case, which revolves around a lawsuit the Association of American Publishers and the Authors Guild filed against Google some three years ago in an effort to shut down its book-scanning project. Critics of last month’s settlement said the plaintiffs do not represent all of the authors of works that Google will eventually publish in its Book Search Project.
The possibility that this deal could give Google a monopoly over electronically available copyrighted works appears to be the antitrust basis for the inquiry.
Anything having to do with access to information — especially if there are not other, competing points of access — is likely to bring in investigators, Christopher M. Collins, an attorney with Vanderpool, Frostick & Nishanian, told the E-Commerce Times.
Collins emphatically disagrees with this antitrust approach, which largely has its roots in another century. “To automatically investigate antitrust issues whenever Google does something is a waste of government resources,” he said.
However, “Google has risen so fast creating an industry virtually by itself,” he said, “that anything it touches will be analyzed.”
Past regulatory actions are a useful indicator of problems for Google in the future, noted Ryan Radia, information policy analyst with Competitive Enterprise Institute. “Any business agreement that Google enters into will be scrutinized,” he told the E-Commerce Times. The partnership with Yahoo it wanted to form last year, he said, was essentially scuttled because of potential antitrust concerns.
Investigations into its footprint in the online search and online advertising markets will also bring down more investigations, Radia predicted. “There is a perception that Google has a monopoly on online search, which some consider a distinct market. But that is not a compelling argument, because every market it operates in has competitors.”
The irony is that consumers are much more concerned about Google’s privacy issues than its compliance with antitrust provisions. However, privacy laws are too weak — and they’re not advanced enough for Web 2.0 — to give Google much trouble, at least in the United States.
That is not the case in the European Union, which linked a review of Google’s acquisition of DoubleClick with privacy matters, even though the two were not related, according to Google General Counsel Peter Fleischer.
The DoubleClick acquisition went through, of course, but the door is open for similar maneuvering, particularly on the other side of the Atlantic.
Google probably fears such unexpected body slams more than a head-on assault on, say, its online search market share. “A number of academics, privacy advocates and Google competitors have argued that these competition/antitrust authorities should consider ‘privacy’ as part of their merger review,” Fleischer wrote in 2007.
“That’s just plain wrong, as a matter of competition law. If online advertising presents a ‘harm to consumers,’ let’s try to figure out what exactly the harm is, figure out which online advertising practices to change, and then apply those principles to all the participants in the industry. But we shouldn’t bootstrap privacy concerns onto a merger review.”