What People Are Saying About the FTC’s Investigation of Google

9/20/12 | 4:40:00 PM


Search is a “highly competitive market where change happens rapidly”;
“To characterize Google as a ‘gatekeeper’ is to attribute to it power that it does not possess”;
“It is hard to see how consumers are harmed here”

Search is “a well-working, highly competitive market where change happens rapidly”; Google’s “next competitive threat can come from anywhere”

Daniel Oliver, former FTC Chairman
“​This competition should also be instructive for the Federal Trade Commission, the several state Attorneys General, and the European Commission who are investigating Google for its alleged dominance of search that they should show actual harm to consumers before seeking to interfere with how markets evolve. This competition should also demonstrate to them that search is a well-working, highly competitive market where change happens rapidly — the sort of market regulators should let flourish on its own.” (The Hill, April 13, 2012)

Chris Crum, WebProNews
The bottom line is: nobody is forcing users to use Google. Some people use Yahoo as their search engine of choice. Some use Bing. Some use Baidu. Some use Yandex. Some use Blekko. Some use DuckDuckGo. Some use Ask. Some use something else entirely. It just so happens to that the vast majority of people prefer Google.” (WebProNews, June 13, 2012)

Hal Singer, Managing Director and Principal at Navigant Economics & Affiliate at the International Center for Law and Economics
“It may not be natural to associate Amazon (an online retailer), Apple (a device maker), and Facebook (a social media site) with search, but in the technology industry, your next competitive threat can come from anywhere. Monopoly and the kind of robust platform competition between Apple, Amazon, Google, and Facebook are mutually exclusive portraits of reality. Will the FTC turn a blind eye toward this advanced form of competition?” (Forbes, September 18, 2012)

Gary Shapiro, President and CEO of the Consumer Electronics Association
“Ultimately, if an online business is forced to slow its pace of innovation, the company will suffer the same fate as Alta Vista, Infoseek and countless other search engines that didn’t survive. The Internet’s open design, consumer choice, and the nature of competition and free markets almost guarantee it. Technology and innovation have made it incredibly simple to switch to a competing service -- from Pinterest to Facebook, Bing to Google Search, Hotmail to Yahoo! Mail -- it’s all simply one click away.” (Real Clear Policy, May 24, 2012)

National Taxpayers Union Open Letter to Public Officials, Signed by 101 Economists
“Google, with its popular online search engine, is the latest target of regulators claiming to be acting in consumers’ interests, even though barriers to entry into the search market are exceedingly low and Google’s competition is but one click away for online users. Furthermore, such competition can come from many different directions, not just among similarly structured companies in a given sector. Any search engine’s business model faces competitive challenges not only from other search engines, but also from social networks such as Facebook, mobile-phone applications, and a variety of other advertising platforms.” (National Taxpayers Union, May 7, 2012)

“Google doesn’t act like a monopolist”; “to characterize Google as a ‘gatekeeper’ is to attribute to it power that it does not possess”

Glenn Manishin, Duane Morris LLP
Google doesn’t act like a monopolist and shares none of the characteristics sheltering classic monopolists from competition. Its astounding success in Internet search is universally regarded as a consequence of better design, superior code, better products and plain old hard work.” (Forbes, February 3, 2012)
Ed Black, President and CEO of CCIA
Google’s competitors have bellowed about Google’s so-called ‘monopoly.’ But popular doesn’t mean illegal. According to economic theory, a monopolist provides a product or service that has few, if any, substitutes and therefore can charge higher prices, innovate less, and generally ignore customer’s needs. This is simply not what is occurring in the ‘search’ space.” (Forbes, June 19, 2012)

Stephen Foley, Associate Business Editor of The Independent
...I'm not convinced Google has a monopoly position in searching the internet. Yes, the 67 per cent market share is large, and Microsoft's Bing has stalled below 16 per cent, but these figures could change quickly if Microsoft – or more likely, a new pair of graduate students at Stanford University – invent a better search engine.” (The Independent, August 18, 2012)

Howard Rich, Chairman of Americans for Limited Government
“As of May 2012, Google sites accounted for 66.7 percent of U.S. web searches, according to comScore. Microsoft sites ranked second with 15.4 percent, while Yahoo sites came in third with 13.4 percent. That’s a commanding lead, but it’s certainly not a monopoly – and even if it was government would still have no business interfering.” (Forbes, June 19, 2012)

Tim Worstall, Forbes contributor
“Finally, in economic terms, that Google has a monopoly is obviously untrue. It’s the largest of a number of contestants in the market, this much is true. But market dominance is not in itself an economic reason for legal or political action. Only possession of an uncontestable such position is. And since anyone can indeed start up a new search engine, indeed people try just that every couple of months, there just doesn’t seem to be any reason at all why Google should be forced to change its ways in the first place. Further, any web user has a choice of engines to use: there just isn’t a lock in which would justify action.” (Forbes, May 24, 2012)

Jonathan Rubin, Rubin PLLC and Advisory Board Member, American Antitrust Institute
“Beyond its influence over users’ preferences, Google has no means of control over its users’ access to any website on the web. To characterize Google as a “gatekeeper” is to attribute to it power that it does not possess.” (RUBIN PLLC Public Interest Blog, July 10, 2012)

Robert H. Bork, Antitrust Scholar, Law Professor, and Author
There is no coherent case for monopolization because a search engine, like Google, is free to consumers and they can switch to an alternative search engine with a click.” (Chicago Tribune, April 6, 2012)

“Comparisons [to the Microsoft case]  are naive and inaccurate”
Ed Black, president and CEO of CCIA
“Some have compared the FTC’s current investigation of Google to other big antitrust actions in the high-tech space. These comparisons are naive and inaccurate. Not all ‘high-tech’ markets are built alike, and neither are all antitrust actions. The markets for mainframes, operating systems, nationwide wireless providers and microprocessors bear as much similarity to the competitive realities of websites as they are to the market for tennis shoes.” (Forbes, June 19, 2012)

Glenn Manishin, partner at Troutman Sanders and former DOJ antitrust attorney
U.S. vs. AT&T and U.S. vs. Microsoft – both of them had a bottle neck over consumer access to technology. Google has no such thing. It doesn’t own the line; it doesn’t own the software; it can’t control where users go on the Internet. It has no power over price even for the ads because they’re auctioned off. And there’s no barriers to entry.” (CCIA Media Briefing call, September 13, 2012)
Search results are a “legitimate exercise of Google’s First Amendment right”; “the government cannot force Google to rearrange its search results”

Eugene Volokh, UCLA Law Professor
“Briefly, the heart of the accusations is that Google somehow prioritizes its own thematic search results over results originating from specialized competitors. Whether this is so is a contested question, which turns, among other things, on disputes about what would constitute ‘neutral’ judgments and what would be a departure from those judgments. Yet even if it is assumed that Google engages or plans to engage in such prioritizing, that prioritizing would constitute the legitimate exercise of Google’s First Amendment right to decide how to present information in its speech to its users.” (SSRN, May 9, 2012)

Neal Katyal, former U.S. Acting Solicitor General, partner at Hogan Lovells
The First Amendment protected speech is the creation and use of the [search] algorithms — in expressing a judgment to select from and rank the thousands of sites that might be relevant to a search request. . . . Just as it could not order a newspaper to publish a certain op-ed in the interest of "fairness," so, too, the government cannot force Google to rearrange its search results because it believes the results would be "better" under some other still-to-be-identified metric. The simple point is that search results are themselves a form of speech because the algorithms that produce those results embody the search engine company's editorial judgment as to which content in its index is most responsive to the user's query.” (Law360, August 21, 2012)

“The FTC’s mandate is to protect consumers. Where are the consumers that are hurt?”

Eric Goldman, Professor of Law at Santa Clara University School of Law and director of the school’s High Tech Law Institute
From the consumer side, we don’t have a lot of evidence indicating that consumers have actually suffered any harm themselves. In other words, there are a lot of people who have a lot of money and interest in trying to prove that there’s a problem. And yet all those resources dedicated to this issue haven’t yielded anything persuasive that consumers aren’t getting what they’re looking for from the online experience.” (CCIA Media Briefing call, September 13, 2012)

Geoff Manne, Executive Director of the International Center for Law & Economics,
In fact, the theoretical case against Google depends entirely on the ways it may have harmed certain competitors rather than on any evidence of harm to consumer welfare. For example, Google’s implementation and placement within its organic search results of its own shopping results is alleged to make it difficult for competing product-specific search sites (like Nextag or Amazon, for example) to reach Google’s users. Leaving aside the weakness of the factual allegation. . . it is hard to see how consumers are harmed here.” (Forbes, May 7, 2012)

Orson Swindle, Former FTC Commissioner
Antitrust law is about preserving competition in markets for the benefit of users and consumers. . . . And since consumers have the choice of whether or not to use these websites, the companies can hardly be legitimately subjected to allegations of unfair business practices or monopolistic pricing schemes when everything is available for free.” (Daily Caller, April 10, 2012)
Mike Masnick, Chief Executive and Founder of Techdirt
"The question is are consumers being harmed, that'd be an interesting debate to have, but the only complaint so far seems to be 'Google's big’ . . . . The complaints are coming from companies who don't like how they rank in Google, and it's not government’s job to remedy that.” (Dow Jones Newswires, April 12, 2012)

Charlie Black, Republican strategist and adviser to Mitt Romney
“The FTC and the Justice Department are fighting over who gets to go after Google, because they’re big and successful . . . . The FTC’s mandate is to protect consumers. Where are the consumers that are hurt?” (Bloomberg, August 29, 2012)

Wall Street Journal editorial
Tying down Google's search functions in a bid to satisfy Brussels won't necessarily improve the user experience. Search has come a long way in the past decade, but it's still often frustrating and tedious. That suggests there's plenty of room for improvement and competition. Making Google less useful to make competitors happy won't make surfing the Web any better for consumers.” (Wall Street Journal, May 23, 2012)

Proposed remedies “are problematic and largely unworkable”; they would “harm consumers, impede competition, and stifle innovation”

Greg Sterling, Search Engine Land
“Overall I was very surprised at the skepticism that speaker after speaker expressed about the success of a potential antitrust case against Google...While many legal experts conveyed discomfort with Google’s power and size, the large majority of panelists during the sessions I attended argued that antitrust rules either don’t fit the situation or wouldn’t legally apply or that remedies are problematic and largely unworkable. Echoing the earlier discussion about GM, etc., there was also a recognition of how dynamic and unpredictable the technology markets are today.” (Marketing Land, May 17, 2012)

Marvin Ammori, first amendment lawyer
"The proposed remedies might benefit the short-term economic interests of Google’s competitors that are members of FairSearch and ICOMP, but benefiting competitors is not the goal of antitrust law. The goal of antitrust law is to promote consumer welfare, competition, and innovation. The proposed remedies, however, would do the opposite: harm consumers, impede competition, and stifle innovation. The remedies would invite government agencies and technical committees to second-guess and evaluate both mundane and game-changing engineering and user-interface decisions regarding Google Search, reverse long-standing fair use principles rooted in constitutional requirements, and empower competitors to litigate rather than compete against daily innovations and disclosures by Google." (white paper, May 14, 2012)

L. Gordon Crovitz, Commentator for the Wall Street Journal
“As a regulatory matter, there is real risk that the current antitrust review by the Federal Trade Commission will block innovation in the search industry. The agency could freeze Google into its historic way of doing business by stopping it from delivering answers directly (removing the consumer benefit) and by banning acquisitions such as Frommer's. There is a long history of government overreach in technology, which changes faster than regulators can keep up. Antitrust claims are often based on the size of the companies involved and not on antitrust's true purpose: to maximize consumer benefit, not to protect competitors.” (Wall Street Journal, August 19, 2012)

Eugene Volokh, UCLA Law Professor
"Most of us started out by using search engines other than Google; we switched to Google because we had heard that it provided superior results. We can easily switch away if we conclude the results are no longer satisfactory. This user power -- and not governmental coercion -- is the proper remedy for any perceived unfair selection by search engines, and the proper deterrent to such supposed unfairness." (Antitrust & Competition Policy Blog, May 22, 2012)

National Taxpayers Union Open Letter to Public Officials, Signed by 101 Economists
"Perhaps most alarming is the notion that Washington can engineer a “remedy” in this case that is superior to the equilibrium markets will find. There is even discussion over rules dictating how search results “should” appear to a user. Micromanagement to this degree deserves neither a place nor a precedent in our economy." (Open letter, May 7, 2012)

Robert H. Bork, Antitrust Scholar, Law Professor, and Author
"In this rapidly changing industry, control through an antitrust decree is simply unrealistic. Some market-oriented legislators have suggested that an antitrust remedy against the search engines is preferable to more direct regulation. But there's not much of a difference. An antitrust order would convert a court into a regulatory agency. And what is the court to regulate? Google estimates that it introduces changes to improve its search algorithms 500 times a year, more than once a day. The first opinion completed by a judge will be hundreds of algorithms behind. . . . Competitive discipline is far more effective than any antitrust decree." (Chicago Tribune, April 6, 2012)

Tom Lenard, president and senior fellow of the Technology Policy Institute
"[I]f designing a remedy for Microsoft was difficult, it would be even more so for Google. Virtually any conceivable remedy would constrain Google's ability to improve its search results and be a vigorous competitor in the emerging interplatform competition. This would not serve consumers." (Investor's Business Daily, March 23, 2012)

Facebook's Rumored Search Engine Evidence of Competitive Market

9/11/12 | 11:29:00 AM



“Facebook Doesn’t Need to Index the Web” to Succeed;
Every Search on Facebook Is a “Query That Users Don’t Need Google For”


Facebook’s Foray Into Search Is a “Serious Threat” to Google, Evidence That “the Search Market Is Competitive,” and a Reminder That Tech Companies “Must Run Ever Faster to Stay in Place”

“[T]he rumors du jour [about Facebook search] should serve as a reminder that no corner of information technology is safe from what Joseph Schumpeter famously called "creative destruction." That, in turn, should remind us that the public policy governing what is OK to do in the marketplace and what's not is based on assumptions that rarely apply to the industries powering innovation and growth in advanced industrial economies.”

“[W]hile the management of the current crop of winning companies may be as eager as monopolists of yore to bar the doors to rivals, rapid technological change denies them the opportunity. Thus IBM's lock on mainframe computing was broken by the arrival of small-scale computing. Microsoft's dominance of business-applications software faded with the rise of the Internet.... [W]ith hindsight, it's obvious that the IT behemoths must run ever faster to stay in place—and that competition regulators can't show that their intervention has made the products of the IT industry any better or cheaper.”

“Indeed, from all accounts it appeared that the FTC was going to file suit against the Google acquisition [of AdMob] — until Apple bought Quattro Wireless.... Facebook is now analogous to Apple in that it provides a potential argument that the search market is competitive, and soon could become more so if the company launches an improved search capability (whether for site search or the web more broadly).”

“Of course, one could argue that Facebook is the threat to Google’s search that we have all been waiting for. The thinking is that Facebook is building a social graph of people’s tastes, along with their friends. And in many cases, that information can yield a much better result than a Google search.... Google may be finally facing its first serious threat in the form of Facebook, which is exciting.

Facebook’s Move Into Search Is “Not Surprising”; “Over Time, [Facebook and Google] Are Going to Be Directly Competing in Pretty Much Every Area”

"It would be more surprising if Facebook did not try and take a share of Google's search market," says Adrian Drury, a principal analyst at the research company Ovum. "Just as Google is pushing itself into the social space to increase relevance of targeted ads and its share of Web 'dwell time', so Facebook competitively must move itself into an adjacent market to expand its share of Web audiences and ad spend."

"It's not surprising that Facebook is working on doing more with search, just as it wasn't surprising to see Google push forward with Google+," said Dan Olds, an analyst at Gabriel Consulting Group. "Google and Facebook are like scorpions in a bottle. And the bottle is gradually getting smaller and smaller as both expand their reach. Over time, they're going to be directly competing in pretty much every area."

“With a more potent search engine, Facebook’s wine-loving users might be able to query the closest wineries that have been liked most often. That would give people one fewer reason to leave the site’s walled garden. Facebook could also follow the lead of companies such as Google and Microsoft and start selling relevant—and profitable—keyword ads alongside results.”

As a Public Company, Facebook Will “Face Pressure From Shareholders” to Maximize Profitability; Facebook Search Ads Represent “a Huge Amount of Revenue Waiting to be Unlocked”

“With an improved search engine, Facebook users might be able to search for, say, the most-liked restaurants in their area. The social network could also begin selling relevant keyword ads to display along with search results (like Google and Microsoft already do).... revamping its search function could allow Facebook to get a cut of the $15 billion search advertising market. This is a huge opportunity for the social network, especially as it prepares to go public and faces pressure from shareholders to maximize its options for monetization.

“Greg Sterling, a senior analyst at Opus Research, says Facebook could quickly become the second-most popular search engine if it tackles the problem in earnest. “There’s a huge amount of revenue waiting to be unlocked if they want to explore search-based pay-per-click advertising,” he says. “They can leverage the data and demographic information they already have.””

"Owning a successful search engine is one of the keys to the kingdom of Internet riches. Advertisers will flock to you and you can build a lot of ancillary products based on search. If Facebook can build a better search mousetrap, or at least a decent one, they'll have a much more compelling product to sell to advertisers," [Olds] added. Olds noted that Google has a lot of user data, but not nearly as much as Facebook. A strong Facebook search tool, therefore, could prove very attractive to potential advertisers.

“Suddenly, social, that former clown of the online marketing world, has become the most important ingredient in any marketing campaign. And oh the ad spend possibilities for Facebook! These guys have the ability to deliver a targeted paid ad like no other company in the business. Nobody can touch Facebook’s database when it comes to relativity.”

“Facebook Doesn’t Need to Index the Web” to Succeed, It Just Needs to “Make More Effective Use of [Its Social] Data”; Every Search on Facebook Is a “Query That Users Don’t Need Google For”

“Given Facebook’s enormous user base and all of the content that is posted to the social network every day, a competent search engine is needed badly.... Facebook doesn’t need to index the web the way Google does, however, to put a dent into Google’s search market share. Even if it can convince users to use its own revamped search feature for certain kinds of queries, that’s queries that users don’t need Google for. I’ve long maintained that the biggest threat to Google’s search market share is likely not the threat of a single competitor, but the diversification of search in general.”

The company has a lot of social data it can apply to the problem of organizing information. Instead of crawling and ranking the whole Web, as Google does, Facebook already allows users to avidly flag the most interesting content, such as the best articles, recipes, and shopping deals. Improving Facebook search in some ways means just making more effective use of that data.

“There’s no question that an improved search capability would benefit Facebook in several ways. It would encourage more search activity among users, who would be rewarded with a better experience, creating a self-reinforcing cycle.... Facebook doesn’t need to challenge Google directly in web search. Improving search on the Facebook site — including a better layout and presentation of results — wouldn’t be anywhere as difficult as general web search.”