Is Google suppressing innovation and job creation? Congress wants to know

Mark Corallo Contributor
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The technology sector has long been wary of antitrust laws. Yet the tech sector has become aware of the very real consequences of abusing a dominant share of the economy. The figurative thorn in the side of the current tech sector’s ability to innovate and expand is the mother of all search engines: Google.

As a conservative, I am skeptical of any regulations that appear to stifle free-market growth. I firmly believe that supporting companies that are innovative enough to thrive and prosper regardless of size is a conservative position. Indeed, we conservatives self-identify as the champions of a capitalist, profit-based economic system.

Antitrust laws, properly understood and applied, are intended to ensure businesses get to compete on a level economic playing field and to protect them from some of the most egregious examples of economic bullying. When correctly applied, antitrust laws prevent a dominant player from unfairly leveraging its market share to thwart competitors and potential competitors from even entering the market with new and ideas, services and products. They encourage smaller businesses to jump into the game and innovate. A vibrant, competitive market place not only benefits consumers, but is the key to job creation and economic growth.

The problem with Google is not simply its sheer size – big does not automatically equal bad. It is the obstinate attitude Google has taken toward wielding its weight responsibly. Google’s failure to do so ultimately means bad news for the consumer who shoulders the higher costs, passed down by advertisers, and also loses out on the innovative new services and sources of information that are forced out in a non-competitive online market dominated by Google.

Google is notorious for its “unconventional” treatment of advertisers. The Internet giant is not alone in its use of paid advertising as the primary, almost exclusive, source of revenue. But Google claims that its system of having advertisers bid on advertising rates is a transparent, equitable and fair system in which the advertisers, not Google, set the price. The opposite is true. It is closed, secretive and arbitrary. Minimum bid rates and other factors that Google sets determine what each advertiser must bid to win the auction, and Google can choose to make those rates skyrocket overnight, by hundreds of percent, with no explanation to the advertiser. This arbitrary system of doling out rates leaves advertisers with few choices: either advertise elsewhere, where their exposure will be limited to less than one-third of Internet searches, or bite the bullet and pay the arbitrary fee.

Many advertisers feel they have no choice but to suck it up and pay whatever price Google demands on a given day or be subject to the whims of where Google chooses to place them in the rankings, often appearing low down on the page below paid and sponsored ads and Google’s own services, which get top billing on its pages. This has a colossal effect on how high or low a site is ranked in response to a query. When Google decides, with no explanation, to change its rankings, web users lose out, workers lose jobs, and startups are put at risk of suffocating under Google’s bloated position in the market.

Google shamelessly promotes its own Google Products while pushing other providers, even those who pay for top billing, further down on its page, forcing all competitors to pay higher total and per-unit ad rates to Google just to be seen by Internet users. That means less revenue these companies could invest in innovating and providing more free information and services to consumers.

But Google insists on digging itself deeper still. From 2000 onward, Google has brokered exclusive deals with top online advertising platforms, social networking sites, and other news and media outlets while making a laughably feeble attempt to mask the self-promotion the company gives its own products via these platforms. YouTube, which Google purchased in 2006, has stirred up recent problems for the search system. A privacy advocacy group has called on the FTC to investigate its claim that Google gives preference to its own videos trying to paper over its many privacy problems over non-Google videos from privacy advocates that should objectively rank higher. And that’s just one example. The alleged abuses inflicted by Google are numerous and various.

I’m a staunch believer in the rule of law – we can hem and haw about policies we want changed, but we are obligated to follow what’s on the books until Congress makes a change. And the fact is that U.S. antitrust laws are a non-partisan issue. Google’s allies have tried to vilify our case with “sky is falling” claims that its competitors are advocating a “government-funded search engine” or the creation of a “bureau of search regulation.” That is nothing but hot air meant to distract from the real problem: Google seems to think they are above the law.

The appropriate response of government in this situation is simply to look at the many credible claims against Google. To this end, on September 21st, The Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights is holding a hearing titled, “The Power of Google: Serving Consumers or Threatening Competition?” The hearing makes clear that both parties in Congress understand that competition, not regulation, is the only way to secure an innovative, honest, and pro-consumer tech market. No matter how big it is, Google is not above the law, and its business practices merit the scrutiny they are starting to receive.

Mark Corallo was the Public Affairs Director for the Department of Justice from 2002-2005. He is the founder of Corallo Media Strategies and is a spokesman for Fairsearch.org