Statement on FTC and Google by AAI President Bert Foer

Jan 03 2013

The American Antitrust Institute (AAI), an independent watchdog that supports strong enforcement of the antitrust laws, did not take a position on the Federal Trade Commission’s (FTC) investigation of Google because, after studying the allegations and the law, we could not reach an internal consensus on either what law had been violated or what remedy would be effective. The FTC had the benefit of the subpoena power, intensive communications with the European Commission, the states and other jurisdictions carrying on similar investigations, not to mention extensive lobbying and public relations campaigns by a variety of stakeholders from every perspective. The AAI believes that the FTC has in recent years proven itself to be a politically balanced and well-respected enforcer of the antitrust laws, and so deserves a significant degree of deference in this particularly difficult matter. With this in mind, we stress the importance of the FTC providing a full public explanation of the scope of its investigation and a detailed rationale for its decision.

On the patent front, the FTC has been building an admirable track record of identifying and clarifying issues at the crossroads of antitrust and intellectual property. The consent order that clarifies the responsibilities of Google to license standard essential patents is a welcome and important step that will have ripple effects throughout the high tech industry. That said, however, AAI may want to offer a suggestion or two for further clarification of these responsibilities in the weeks ahead.

The issues relating to search manipulation allegations are complex, not only with respect to pinning down a theory of antitrust liability but also with respect to determining an effective remedy once liability has been determined. While we would have preferred to see a consent order that binds Google, it is nevertheless significant that Google has made commitments that deal with many of the most important allegations. We believe the result will be more transparency for the user, more flexibility for advertisers to leave Google, and fewer complaints about screen scraping. The FTC must monitor on-going activities to ensure that these commitments are adequate.

Some may question whether the intensive investigation of Google was justified. We believe it was. The centrality of this industry, with its political and constitutional overtones as well as its paramount economic importance, and the presence of many serious complaints of abuses, here and abroad, suggest that the antitrust agencies should have investigated. An investigation of this sort has many salutary effects, even if it does not eventuate in prosecution. It has raised the profile of competition values in a dynamic industry, without harming that dynamism. This is consistent with the flexibility demonstrated by both the FTC and the Antitrust Division as high tech questions have arisen over the last few years.

Indeed, with the knowledge now in hand, the FTC should continue to scrutinize developments with a skeptical eye and a willingness to open additional investigations if and as complaints arise. In this dynamic industry, close oversight together with on-going conversations offering informal guidance may serve as a reasonable, flexible alternative to prosecutorial strategies.

Going forward, it is important for both the FTC and the Department of Justice to work to support a competitive and transparent search environment, so that users and advertisers have realistic choices, and are not locked into only one universal search provider. In particular, any future acquisitions of “verticals” or providers of content or key inputs should be subjected to a high burden of demonstrable public interest.

We had hoped that the FTC and the EU would manage to come to a consistent conclusion on how to deal with Google. To the extent this does not occur, it may reflect differences in law, economic situation, and cultures that have to be accepted in a global economy where, despite the best efforts to act harmoniously, states are sovereign and must in the end make their own decisions.

Contact:
Bert Foer, 202-276-6002
bfoer@antitrustinstitute.org

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The American Antitrust Institute is a 501(c)(3) education, research, and advocacy organization. See www.antitrustinstitute.org. This statement was approved by its Board of Directors. Individual advisors of the AAI may hold different opinions. The AAI has received minor funding from Google, Microsoft, and other high tech companies. A list of contributors may be obtained by writing to aai@antitrustinstitute.org.