European Commission Still Searching For Google Monopoly

Antitrust is one of America’s worst exports, but one adopted with relish by the European Commission (EC) as exemplified in newly announced formal charges against Google Inc.

In the role of “competition commissioner,” the charges are being spearheaded by the EC’s Margrethe Vestager.

Unable to settle with Google over the past few years, the European Union has its sights on Google’s search dominance (initially with emphasis on comparison shopping but open-ended) and on taking the Android operating system down a peg or two. You can see the EC’s “Statement of Objections” here.

The Commission’s preliminary conclusion is that, since 2008, “ Google systematically positions and prominently displays its comparison shopping service in its general search results pages, irrespective of its merits.”

Google has 10 weeks to respond and can seek a formal hearing.

Antitrust is predatory corporate welfare policy. Firms do get large and powerful, but never as large and powerful as governments that collude with rent-seeking firms to forcibly channel customers to the latter.

European competition commissioner Margrethe Vestager speaks on April 15, 2015 in Brussels as the EU formally charged Google with abusing its dominant position as Europe’s top search engine, laying the US Internet giant open to a massive fine of more than $6.0 billion. The European Commission also said it would open a separate anti-trust investigation into Google’s Android operating system, which dominates the global mobile phone market.

Antitrust’s goal is to absolve lawyered-up firms of the need to competitively respond to the new market regimes brought into being by the dominant firm; it artificially secures less-competitive firms’ survival by forcibly denying consumers the choices they otherwise would have been free to make.

The rent-seeking nature of antitrust was inadvertently demonstrated in a BBC News radio report the very day of the Commission’s announcement. Thomas Vinje of FairSearch Europe, a primary instigator of the case, noted Google’s unparalleled consumer data access and capabilities and remarked: “That enables it frankly to provide better search results than others.”

Oops.

Similarly, the Wall Street Journal referred to past EU settlement attempts unraveling “in the face of huge political pressure and opposition from the companies it was designed to protect.”

On the same BBC News radio report, the chief reporter in London wanted to figure out if Google was prioritizing its own offerings in search results, and compared arguably Google-centric results to her own simultaneous searches on Bing and Yahoo.

Oops again; you mean there are other search engines?

The case is basically saying that if Google inappropriately manipulates or skews results we are too thick to use another search engine. If that were true, we’d still be using Altavista.

The very notion of search dominance misconstrues the nature of the Internet. The Internet remains crawlable by whatever superior new technology may emerge. And mobile search is changing the landscape too. Google’s constantly shifting algorithms testify to the lack of stasis, and hint that what competitors really want is to stop it from freely reacting to such realities. The proper competitive response to Google’s “skewing,” if it is real, is for complaining firms to reconfigure, merge and partner to serve the same customers better and to run ads about it–not run to Brussels.

I’m irritated with Google today because of its centrality in pushing so-called “net neutrality” on the open, unregulated Internet in the United States, but karma is such that it is answering for that in episodes like this case. Google could have put a stop the net neutrality debacle years ago, but it is too beholden to left-wing groups in the U.S. Now, the EC is also getting on the net neutrality bandwagon, where the underlying “competition must be forced” Orwellianism is a close cousin of antitrust.

As with Internet Service Providers in the net neutrality debate, people have tried to claim Google is an “essential facility” for over a decade and the EC case is is the unfortunate modern manifestation. I’ve always pointed out that Google search is made of ones and zeros, and no one can “monopolize” those. The same was true in the Microsoft’s Internet Explorer case, in which it had to pay record fines to the EU. Today, Explorer is heading to the scrap heap. All was a waste.

Antitrust started out allegedly targeting smokestack era monopoly power. For perspective, monopolies are exclusive grants of power; they embody a ban on competition with the incumbent. Water and electric utilities are examples; they weren’t natural monopolies, but recipients of exclusive franchises. I recall one reform-seeking entrepreneur in competitive power options lamenting that you’d go to jail for running an extension cord across the street.

I wrote about the Google saga five years ago in the Wall Street Journal with Alberto Mingardi of Istituto Bruno Leoni and nothing has changed. Our subtitle then was: “If policy makers set the terms in a primitive year like 2010, nobody will have to respond to Google.”

We noted that “In search, as in the media itself, competing biases are good….The decisions about how to rank search or what to reveal in a search are properly a matter of Google’s own free speech, and it is not anyone else’s place or right to decide.”

Again–antitrust’s goal is getting forced access to the customer base of the the successful firm and allowing competitors to sit still.

The second but equal goal of antitrust is to enrich the antitrust bar and bureaucracies, expanding the state for new incursions and aspirations for power, such as net neutrality.

There are many ways in which predatory antitrust adventurism must be throttled and reformed. One of the most important is to disallow standing for rival firms when competitive disciplines are in play. Too much energy and and too many billions are being wasted on the manipulation of free markets and derailing wealth creation far beyond the easily visible; the very trajectories of entire industries gets altered by antitrust.

The very phrase “competition commissioner” is internally contradictory, and stands in stark contrast to the phrase free enterprise.