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Google on deck

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Google on deck

Does Google present Google products at the top of search result lists? That was the question Senator Mike Lee (R-UT) asked at a congressional hearing this week. Senator Al Franken (D-MN) complained that Schmidt’s response was “fuzzy.” See, e.g., this.
If the Google algorithm does favor Google products, is the implication that consumers are so stupid that they will not compare search results, but rather home in on the top search result? That’s absurd. Most consumers use the Internet in search or value, looking for the best products at the most reasonable prices. Consumers who want to save money are accustomed to hunting and searching. Google makes it easier than ever to hunt for bargains. Consumers can access the offerings of suppliers from all over the planet.
Is there anything inherently wrong with a firm showcasing its products and services? Imagine if retailers could not arrange their aisles and display areas to highlight popular products at competitive prices. Don’t forget that a retailer that occupies a key street corner or other location can, in effect, possess a monopoly. Of course, Google diminishes local monopolies by making it possible to search and compare nearby product and service offerings.
Does this mean that Google is ordained to control the relationship between consumers and suppliers? Of course not. For one thing, many people are relying on social networking sites for suggestions from friends and acquaintances that will influence their future purchasing decisions. Google could be doomed, for all we know.
Google is pioneering a world in which people can be smart as opposed to dumb consumers. We should be encouraging this trend.
Who would fear this model? The only people who would fear this model are competitors who seek the ability to charge excessive prices. This is the dirty secret of antitrust law – it isn’t about consumers, its about competitors.
What if we required Google to give equal placement to competitors in its search results? This idea is not as brilliant as it seems. The enforcement mechanism would be exceedingly wasteful and inefficient. They would impose enormous, unnecessary costs on consumers. We have a precedent from the telephone industry. This is a subject for a future blog post.
Antitrust is a fascinating area of law that delivers enormous fees for lawyers. It is also a playground for competitors seeking to hobble their rivals so they can charge higher prices. Antitrust is rarely the solution. It is frequently the problem.