Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
According to legend, when Winston Churchill and his lifelong foe Clement Attlee ran into each other at a row of urinals in the House of Commons, Churchill stood as far away as possible. Attlee asked, "Feeling standoffish today, are we, Winston?" Churchill replied, "That's right. Every time you see something big and well-working, you want to nationalize it."
Were Attlee around today, he would find soul mates at the European Union Directorate General for Competition, which is always in the hunt for big trophies. Its past "achievements" include the blockage of the Honeywell/GE merger and unprecedented fines on Microsoft and Intel for alleged abuse of market dominance. Even IBM is under antitrust investigation on both sides of the Atlantic, 50 years after its first antitrust go-round.
Now it's Google's turn. Last year, EU antitrust authorities opened a probe against Google. Now U.S. authorities are unloading subpoenas on executives regarding Google's core operations. This may become the Microsoft case of this decade.
Rivals claim that Google manipulates its search results to disfavor competitors' offerings and bolster its own properties. How Google ranks sites or steers traffic is its own prerogative. Yet even if it were to "unfairly" favor its own properties, it cannot escape the ruthless market consequences of those actions, as competitors would be ready to exploit its folly.
Antitrust undermines this healthy competitive process. Instead, it leapfrogs competition by forcibly granting one firm access to a competitor's customers. Even Republicans, like Sen. Mike Lee of Utah, not only tolerate antitrust but seek its interference. When it comes to antitrust, Republicans can be described as Tea "Partly."
The Internet is still the Internet, and it remains searchable and indexable by technologies other than the ones started in dorm rooms in 1998. Competing search engines like Microsoft's Bing are gaining ground. Others could be created by alliances among firms, should it come to that.
It wasn't long ago that many of us were "locked in" to the Yahoo and Altavista search engines. The very emergence of Google would have been impossible if antitrust enforcers' vision of Internet market share were true. Google's position is more precarious than it first appears. If consumers and advertisers decide that Google's methods are biased or it has dropped the ball, defection to Bing or elsewhere could follow rapidly - witness the migration from MySpace to Facebook.
Competitive discipline keeps companies innovative and consumers happy. Blunt government intervention does the opposite. In the case of Google, it would allow its rivals to stand still, yet gain nonetheless. There could not be a more anti-consumer policy.
Being big means neither being good nor bad. Brussels, Washington and state attorneys general (looking at you, Texas) should not replace market competition with one-size-fits-all rules. The economic costs of such rules are far greater than those of any transitory market power. After all, Google's market power derives from consumers choosing to use it. To forcibly deny that choice is wrong in its own right and short-circuits the competitive process that yields consumer feedback and keeps companies on their toes.
Prosecuting "bigness" for its own sake, on the basis of competitors' complaints, is one of today's great anti-stimulus policies. We add scare quotes around "bigness" because the U.S. sports a $14 trillion economy competitively arrayed against any genuine Google misdeeds. Meanwhile, a restless globe awaits to produce new competitors from around the world. "Enforcers" pretend to improve upon that as they strut in their invisible new clothes.
It is worth noting that non-biased Internet search may be an impossibility, for any provider. Moreover, bias is in fact good for consumers. That is the essence of competition - to do something better by deploying biases and formulas of one's own. Google's job is to balance the interests of its customers and its business partners. Forcibly altering Google's business model would bring that ongoing stuggle to a screeching halt - thus undermining competition in the name of saving it.
If Google truly injured consumers, lawmakers could simply forbid its use and require us to use one of dozens of other search engines. The fact that no one would consider that highlights the absurdity of antitrust regulation.
The entire Internet economy, not just Google, has proven to be as "big and well-working" as the Churchillian apparatus. If you don't like Google, give it the finger - by pressing down with your right index, that is. We cannot afford the anti-stimulus of antitrust.