Economists tell FTC to ‘buzz off’ on Google antitrust investigation

Josh Peterson Tech Editor
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Economists have had it with the forceful gaze of government regulators directed at Google.

101 economists from some of the nation’s most distinguished universities, and from the National Taxpayers Union, expressed concern over the swath of scrutiny directed at Google in an open letter published Monday.

The Federal Trade Commission recently announced it hired a prominent outside litigator as part of its current antitrust investigation into Google. The NTU letter openly criticized the antitrust regulatory framework that the government has forced businesses to operate under, claiming that it is doing more harm than good to the economy.

“America’s business landscape is scarred with numerous antitrust enforcement actions that have: deprived consumers of choices, stripped entrepreneurs of their freedom to innovate, denied workers and shareholders opportunities to build wealth, enriched competitors whose key attribute is political clout, drained ‘defendant’ companies of capital due to legal expenses, and thwarted potential growth in the economy,” they wrote.

“Perhaps most alarming is the notion that Washington can engineer a ‘remedy’ in this case that is superior to the equilibrium markets will find,” they wrote. “There is even discussion over rules dictating how search results ‘should’ appear to a user. Micromanagement to this degree deserves neither a place nor a precedent in our economy.”

The economists — from academic institutions including Hillsdale College, Stanford University, the University of Notre Dame, George Mason University, Duke University and the University of Hawaii — pointed out that consumer access to Google’s competitors was only “one click away for online users.”

Disruptive technologies change the sector’s landscape over a period of months, and technology policymakers in Washington face continual criticism for struggling to regulate a fast-paced and continually changing part of the U.S. economy.

The meteoric rise of Facebook alone has posed a significant threat to Google’s business model, which depends on users viewing advertisements placed on its search results pages. Facebook’s business model attempts to keep users contained within its own ecosystem, making a dent in a vital revenue stream for Google.

Google CEO Larry Page has expressed his concern over the competition his company faces from Facebook. The architecture of the Internet has become increasingly more social, dependent on the everyday social interactions of users to share content and build strong networks around a company or brand.

Google’s devotion to the success of Google+, the search giant’s latest foray into the social networking world after repeated failures, is the company’s recognition of that shift.

The economists noted that former FTC Chairman Tim Muris, in a 2010 Wall Street Journal op-ed, wrote, “Competitor complaints are driving recent EU investigations into companies that include Qualcomm, Google, Oracle and IBM.”

Google is battling Oracle in court, defending itself against allegations that Google used copyrighted parts of Oracle’s Java programming platform to develop its Android operating system. A verdict is expected Monday.

The Washington Times reported Wednesday that as early as 2010, the FTC was pondering whether probes into Google’s business practices were being sponsored by Google’s competitors like Microsoft, Facebook and Yahoo.

Consumer Watchdog, which petitioned the FTC to investigate Google over it’s “Street View” mapping project, claimed it was not funded by Google’s competitors.

“Competitors can provide valuable information about marketplace realities, but they have every incentive to misuse the government to obtain an advantage that is otherwise unattainable,” said Muris.

“Policymakers should instead deploy their talents on restructuring our broken, burdensome regulatory and fiscal management systems in order to foster strong competition and economic growth into the future,” the economists wrote.

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