Google and the FTC
"The Federal Trade Commission is poised to serve Google Inc. with civil subpoenas," the Wall Street Journal reports, attributing the news to anonymous "people familiar with the matter."
There are a number of remarkable things about this situation. From the Journal article: "Though the outcome is uncertain, the agency fought hard with the Justice Department to handle the case, said people familiar with the investigation, and so is thought to be unlikely to walk away without taking any action." There's an interesting dynamic: The FTC's action, by this account, will be governed not merely by the law but by internal government power politics.
More: in a classic antitrust case, the government intervenes to protect consumers or other customers from having to pay high prices to a business with monopoly pricing power. But in the case of Google, many of its products and services are not highly priced; they are free. In the case of other Google-offered products and services, such as enterprise email or such as display or search advertising, Google has made profits and revenues by entering competitive markets — corporate email, advertising — and charging prices that are lower than the prices charged by competitors.
The Journal claims: "In the U.S., Google has sparked complaints from travel services like Expedia Inc. and TripAdvisor LLC, local listings services like Yelp, as well as Google's perennial rival, Microsoft. Many of them say Google promotes links to its own websites, starving their sites of vital traffic."
So what's really happening here is that the FTC is stepping in not to protect ordinary consumers, but to advance the interest of other companies. Expedia's board is chaired by Barry Diller and also includes Liberty Media's John Malone. Tripadvisor is owned by Expedia. Yelp's investors reportedly include Bessemer Venture Partners, Benchmark Capital, and Elevation Partners, where a partner is Bono. Microsoft has a search engine, Bing, that competes with Google, and Barry Diller's IAC has its own search engine, Ask.com, that is also a Google search competitor. Both Microsoft and Ask Jeeves (Ask.com's predecessor) were founded years before Google.
Is this really what we have the FTC, or federal antitrust enforcement, for? To protect Barry Diller, Bono, and John Malone from Larry Page and Sergey Brin? You'd think maybe those guys would be rich, powerful, or good enough at business to protect themselves by building their own businesses without needing the government to come in and subpoena their competitors. And anyway, if Google skews its search too much to results that aren't useful but that are Google-owned, consumers may eventually get irritated enough with bad results to turn to other, competing search engines.
Disclosures: I own some Google stock. I also use Google for search, for email, for an RSS reader, and for Web site analytics. Some of the ads on this Web site are served by a Google ad network from which this site derives revenue.
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