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Democracy & Technology Blog Google as antitrust target

From a recent column in the New York Times:

“You almost feel sorry for Google,” said Danny Sullivan, editor in chief of Search Engine Land. “They’re doing a good job and people are turning to them. But when they pass 70 percent share, people are going to be uncomfortable about Google becoming a monopoly.”
* * * *”I have no beef with Google,” said Jeff Atwood, a co-founder of Stack Overflow. “I like Google. But I’m concerned. If you project this trend forward four years, just follow the graph. A world in which there is no competition strikes me as unhealthy.”

It is clear from the column that nobody is accusing Google of unfairly sabotaging its competitors; in fact, it is plain that consumers have a choice of Internet search providers and the overwhelming majority prefer the Google product.
The most serious allegation is “Google is a habit … and habits are very hard to break.”
This is an argument for nanny state socialism, not for antitrust enforcement.
There is no legitimate antitrust issue here.
The courts have confronted the situation before where a competitor achieves a dominant position simply because it is the best. In U.S. v. Aluminum Company of America, 148 F.2d 416 (2nd Cir. 1945), Judge Learned Hand wrote

It does not follow because ‘Alcoa’ had such a monopoly, that it ‘monopolized’ the ingot market: it may not have achieved monopoly; monopoly may have been thrust upon it.
* * * *[I]t is unquestionably true that from the very outset the courts have at least kept in reserve the possibility that the origin of a monopoly may be critical in determining its legality[.]

Judge Hand is saying is that the thing which is illegal is monopolization — not monopoly — and that monopolization requires something more than offering a superior product or service.

A single producer may be the survivor out of a group of active competitors, merely by virtue of his superior skill, foresight and industry. In such cases a strong argument can be made that, although the result may expose the public to the evils of monopoly, the [Sherman] Act does not mean to condemn the resultant of those very forces which it is its prime object to foster: finis opus coronat. The successful competitor, having been urged to compete, must not be turned upon when he wins.

Monopolies are almost always temporary, according to Schumpeter, and the possibility of a temporary monopoly induces innovation.
Hobbling Google or breaking it up would benefit Google’s competitors in the same way that raising taxes on the rich and distributing the money to the poor obviously promotes fairness from the narrow perspective of the poor, but it would harm consumers by leading to a market in which there can be no winners and no losers. That’s a recipe for economic stagnation which — some might not remember or care to recollect — we had in the 1970s.
_______________
See:Everyone Loves Google, Until It’s Too Big,” by Randall Stross, New York Times (Feb. 21, 2009).

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.