Blog

Google and The A Word?

Published: June 6, 2008

Author: David Rodnitzky



I’ve written numerous times in the past about the possibility of anti-trust actions being levied at Google, but I’ll be the first to admit that I’ve never taken the time to throw all the various anti-trust arguments together into one cohesive post. Fortunately for you and me, a reader recently alerted me to a post he had written that does a pretty good job of outlining many of the anti-trust issues surrounding Google. If you want to read the full article, you can check out Scott Cleland’s article here. For the record, I don’t know anything about Mr. Cleland’s background (for all I know, he could be a lawyer for Microsoft . . .!), but he’s certainly done a thorough job of research.
Among the most salient points he makes:

  • Google has dominant market-share of the search market;
  • The search market is a huge market with millions of participants;
  • There is little to no external accountability of how Google prices their ad auction market;
  • Google makes decisions about the price an advertiser pays without full disclosure as to how this price was determined;
  • Google is engaged in anti-competitive front running (placing their house ads ahead of the competition, regardless of the actual auction result);

I would add to this the “bundling” of products, such as the “Google Checkout” logo that you see in AdWords when a merchant participates in the Checkout program, as well as the free pricing of many Google products, which could be interpreted as a way to push competitors out of business (i.e. Google Analytics, Google Web Site Optimizer, Google Base).
As to why none of this has apparently bothered federal agencies, Mr. Cleland concludes:

Google appears to have fallen between the cracks of oversight by the FTC, DOJ, SEC and the CFTC — all of which have some responsibility to protect market users and the public from fraud, manipulation, and abusive market practices by dominant providers/market makers, and to foster open, transparent and competitive markets.

For the record, I have talked to lawyers experienced in Internet law who think all of this complaining about anti-trust is totally unfounded. In particular, one friend of mine said (and I paraphrase here): “Google provides an incredible free service to consumers. the DOJ is not going to file an anti-trust suit against them as long as consumers continue to get so much from Google for free. In that respect, there is a huge difference between Google and Microsoft.”
That may be true . . . for now. The question I have is what happens in 2009 if Obama is elected and the eight years of business-friendly regulators at the FTC and the DOJ suddenly become a little less likely to look the other way? It could make things a bit more complicated for Google.

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