Should We Raise a Posse and Go Google-Hunting?


Google (NAS: GOOG) is a big dog. With a 66% share of the American search market, regulators are even worried that Big G might be too big.

Four out of five FTC commissioners say that Google may have used its total dominance of online search to put illegal thumbscrews on rivals and customers. The fifth one is just "skeptical" of these claims, and might yet be persuaded to light a torch or grab a pitchfork.

But if he does, he'll face the wrath of elected officials. Democrat congressman Jared Polis from Colorado doesn't like the antitrust angle at all:

"I believe that application of antitrust against Google would be a woefully misguided step that would threaten the very integrity of our antitrust system," he said in a letter to FTC chairman Jon Leibowitz last week. An attack like that "could ultimately lead to Congressional action resulting in a reduction in the ability of the FTC to enforce critical antitrust protections in industries where markets are being distorted by monopolies or oligopolies."

In other words, Polis warns that going after Google with an antitrust rulebook and a noose might end up reducing the FTC's power to blot out real monopolies.

Who's paying your bills, sir?
That may sound like a totally partisan line of reasoning, and make you wonder how much money Google contributes to Polis' election campaigns. But the congressman actually has some reasoned arguments to support his position.

The search market only looks monopolistic if you watch it with blinders on. When consumers want to go shopping online, they tend to search (NAS: AMZN) rather than Google Shopping. Google Music can't hold a candle in the wind to Apple (NAS: AAPL) iTunes. Facebook (NAS: FB) and Twitter have a lock on real-time content and information, Yelp (NYS: YELP) rules the local search market, and so on. To take a monolithic view of such a fragmented search market "defies all logic and the very underpinnings of antitrust law itself," Polis said.

But wait -- there's more!
I'm nodding along to all of this, and would like to add a couple of points besides:

  • America is not the world. Baidu (NAS: BIDU) is crushing Google in China -- the world's largest consumer market -- and Yandex (NAS: YNDX) does the same in Russia. Google is actually king of online search in just a few isolated geographical pockets. Most of the world still prefers local alternatives. That's both a failure and a growth opportunity for Google, with plenty of greenfield left to explore.

  • If you're comparing Google's search success to the Microsoft (NAS: MSFT) antitrust situation in the last decade, you're barking up the wrong tree. Microsoft had a choke hold on the basic software that runs every computer you buy, and it's beyond the abilities of your average computer user to replace Windows with another option. With that kind of lock-in, Mr. Softy wielded a mighty weapon when it picked and promoted a default Web browser or other programs. But if you don't like Google, you know that Bing or Baidu are just a click away. Heck, Google will even help you find them. You pretty much had to use Windows before the Mac became a useful alternative again, but nobody's forcing you to stay with Google.

It's hard to abuse a monopoly power you never actually owned to begin with. Launching antitrust lawsuits against Google right now would not be a blow struck to defend the American consumer, but a direct attack on innovation and hard-earned business success. I don't think the FTC wants to set that kind of example here.

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