Some Further Thoughts on Google Antitrust Remedies (FairSearch/EU)

Last week, at a conference at George Mason, I presented a paper on the remedies proposed by Google’s competitors in the antitrust inquiries in the US and EU. Yesterday, the European antitrust chief Joaquin  Almunia pinpointed four specific areas of concern for Google.

But he did not propose any remedies, asking Google to do it.

Google supported the paper that I wrote with Luke Pelican, but we wrote it because the remedies proposed by competitors have been so evidently problematic– bad for consumer welfare, competition, and innovation online, even if they would be good for Google’s competitors in a coalition called FairSearch (Microsoft, Yelp, Mapquest). Two remedies in particular–those regarding search neutrality and “copying”–struck me as most problematic perhaps, and are covered in sections #2 and #5 of our paper. (Beyond our paper, James Grimmelmann has written the classic article criticizing search neutrality and I wrote a blog post about the problems with the “copying” claim.)

The day of the conference, the main coalition of companies opposed to Google and pushing the antitrust case–FairSearch– issued a blog post accusing me of (1) claiming Google was above the law, (2) of (maybe?) admitting that Google “discriminates,” and (3) suggesting that the paper contradicts something I wrote in favor of specific government regulation of discrimination in a different market based on a different record and different economic and non-economic consequences.

I welcome a real response to the arguments made in our paper–and I expect to see a response eventually. But I’ll respond to these right now.

First, Luke and I do not claim Google is above the law–just that Google’s competitors have proposed remedies that have little basis in law and that would harm competition, consumer welfare, and innovation. Google also doesn’t claim it’s above the law–just that it has not broken the law.

Second, FairSearch’s post suggests that Google admitted to “discrimination.” I am not sure if that’s not a reference to our paper. In our paper, merely for the sake of argument we set aside Google’s competitors’ factual assertions in order to focus on evaluating the remedies. That focus on remedies obviously doesn’t concede anything on substance–just as a “motion to dismiss” certain damages claims in court assumes (for the sake of argument) but does not admit to the conduct at issue. But we don’t think really think search discrimination is a coherent concept (being persuaded by Grimmelmann‘s work) so we wouldn’t really “admit” that (or “deny” that) on behalf of anyone.

Third, there is nothing inconsistent about supporting a regulatory intervention in one market (network infrastructure) but not another, based on market characteristics. If the coffee lobby argues for “neutrality” among coffee beans at my favorite coffee shop in DC (Yola on Connecticut), my understanding of the economics of coffee and coffee shops in this market would lead me to oppose, not favor, the imposition of (not yet defined) “coffee neutrality” rules on coffee shops like Yola that use exceptional beans. The whole point of policy analysis is to determine when and how government should be involved in particular markets–by supporting or opposing a particular government intervention in one market you are not signing up to support all government intervention (or non-intervention) in every market.

I wrote a blog post today detailing the many differences between search neutrality and network neutrality, partly because I think my friend Frank Pasquale at Seton Hall Law School is mistaken about their similarities and I’d like to persuade him otherwise.

In light of the discussion of remedies, it’d be helpful to include a list of many remedies that have been proposed by Google’s competitors, which we place in five categories. The weaknesses of most of them are readily apparent:

  1. “search neutrality” re specific links: or a ban on Google disadvantaging the links of sites that compete with it (even though “search neutrality” is an incoherent concept that no technical committee or analogy makes administrable by a court or agency);
  2. “search neutrality” re specialized search competitors: a ban on Google showing Google Maps, News, or Places in a search result, and forcing Google to let users choose MapQuest, news sites, or Yelp for the search returns–or break up the company by splitting off Maps, News, and Places (even though the remedy would not benefit consumers and would retard and reverse innovation);
  3. a ban on Google’s “deception” by requiring Google to reveal its economic interest in links, deviations from “natural search algorithms,” algorithm updates, and advertising rates (while this set of remedies is the leas problematic,  Google does provide plenty of information and argues that providing more information would merely help spammers and competitors–and a standalone deception or fraud claim would be available if Google is being deceptive);
  4. a requirement that Google get permission to display snippets of text from some companies (even though displaying the snippets does not violate copyright and aligns with the fair use exception required under the Constitution) and a requirement that Google share its own content such as YouTube (even though Google already shares this content, companies like Facebook do not share much of their content within their rights, and forcing Google to share other content would simply enable an equally large Microsoft to free ride off of Google’s investment); and
  5. limits on Google’s ability to acquire companies or enter into exclusive deals for search on the iPhone, Mozilla Firefox, and elsewhere (even though all of Google’s largest competitors acquire small innovative companies to compete dynamically and excluding Google from these exclusive partnerships would merely lower the price Microsoft would pay for them).

These proposed remedies are weak, in my opinion, and most of them are weak on their face. Their weakness probably explains why Google’s competitors have listed so many remedies in a shotgun fashion, but have not provided much detail on how to implement them. The weakness of competitors’ proposed remedies probably also explains why the EU did not even propose remedies.

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