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60 Minutes Recycles Old Antitrust Complaints

· May 21, 2018

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The FTC closed its investigation into Google five years ago, and yet critics continue to recycle old criticisms of this decision, including in a 60 Minutes episode that aired last night.  As Axios points out, “[t]he ‘60 Minutes’ report is largely a rehash of familiar complaints against Google from longstanding opponents.” 60 Minutes spends a long time building up competitors’ arguments against Google, but these arguments can be rebutted in sixty seconds.

For example, a primary line of attack by critics has focused for years on an accidentally leaked FTC staff memo. Critics of the FTC’s decision to close the case regularly cherry-pick quotes and generally misrepresent this memo to promote a theory that the FTC failed to do its job.  Last night, 60 Minutes unfortunately promoted these myths about the FTC staff memo.  

DisCo has written on the closure before, and Matt Schruers has explained that the FTC investigation closure was based on a unanimous vote of commissioners in accordance with recommendation of all staff. Indeed, the leaked memo itself states “we do not recommend that the Commission issue a complaint against Google for this conduct.” When the memo was originally leaked, the FTC again confirmed that the investigation was closed based on recommendations by all staff — including “the FTC’s Bureau of Competition, Bureau of Economics, and Office of General Counsel.”

A recent essay by former FTC Chairman William Kovacic provides even more context for the closure. The essay explains that the jurisdictional overlap between the DOJ and FTC has led to some competition among the competition agencies when negotiating who gets to do what. In regards to Google investigations, Kovacic explains:

Senior DOJ officials have recounted to me the negotiations with the FTC to determine which agency would take responsibility for investigating single-firm conduct issues relating to Google. The two agencies agreed that DOJ would review mergers involving Google, and the FTC would address the non-merger matters. Before settling on this division of labor, DOJ carefully weighed the possibilities for bringing a monopolization case and concluded that such a case would be problematic. It did not convey this assessment or the reasoning that supported it to the FTC. Instead, in one telling, a senior manager in the Antitrust Division front office told me, with evident glee, how the FTC had seized the opportunity to pursue a matter that DOJ regarded as a dead end. The spirit of the comment was akin to the delight of a sports franchise that has pulled off a trade that exploits the miscalculation of a rival franchise by gaining a better player for a weaker player. (emphasis supplied)

That the Justice Department had such a dim view of a case against Google would be unsurprising, given that the Department had recently done a deep dive on Google Search as part of its investigation of Google’s acquisition of ITA.  It appears that after reviewing Google’s business practices as part of that merger, DOJ viewed the search bias theory as even unworthy of investigating.

The criticisms advanced by Google’s competitors on last night’s 60 Minutes is another example of “swampetition” — companies using unfounded antitrust arguments to get ahead. There is every indication that the FTC’s closure was based on a thorough investigation of the evidence, and where they had concerns in unrelated areas they were able to obtain concessions from Google. This is how efficient enforcement works. The FTC got what it wanted, without having to fight what its entire staff and apparently even the DOJ appears to have regarded as a losing case.

That won’t stop puckish tech critics from spending this summer (and beyond) dreaming up ways to undercut the FTC’s decision. But in the end it’s still much ado about nothing.

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.