Top 5 reasons the FTC made the right decision on Google

Doug Kellogg Comm. Manager, National Taxpayers Union
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On Thursday, the Federal Trade Commission (FTC) announced it would not bring suit against Google’s search engine and other practices on anti-trust grounds. This has led to outcries from the lobby cheerleading the investigation, which continue to rail against the FTC and look for reasons for another government entity to resume the witch-hunt.

But consumers, taxpayers, and public officials should be wary of these desperate attempts to keep pushing the authorities in Google’s path – especially anyone who thinks government’s role in business, markets, and the Internet has grown large enough already.

Here are the five biggest reasons the FTC made the right call:

  1. The FTC’s refusal to prosecute a case clearly demonstrates the anti-Google crowd, led by “Fair Search,” has little legal backing. Those who lobbied to launch this ill-advised probe have attempted to engage the Justice Department, Attorneys General throughout the states, and perhaps any government entity they can persuade to waste public dollars impeding Google. Now though, the FTC Commissioners’ 5-to-0 vote in favor of closing the investigation speaks most loudly; as Chairman Leibowitz said: “None of my colleagues has concluded that there is reason to believe that these practices violate any antitrust statute.”
  1. Deciding in favor of Google’s competitors would have risked bringing European-style corporate regulation to the U.S. FairSearch has been calling for the FTC to follow the regulatory approach of the European Union, even though the FTC has found no violation of the law by Google. Opening up the U.S. to the type of anticompetitive, heavy-handed, regulatory leviathans that have helped to keep Europe’s economy on fumes would have been bad news for our already-fragile recovery.
  1. Does the main player behind the “Fair Search” effort, Microsoft, truly believe Google has meaningful monopoly power or dominance? How else to explain the “Bing challenge” advertising campaign inundating multimedia? If Google had monopoly power, why bother to lure consumers to a different product like Pepsi did to Coke? It would be patently absurd for Pepsi to seek government action against Coke. As Leibowitz said at the FTC’s press conference, many of Google’s complaining competitors are copying their practices. With no price-fixing, or anyone being forced out of a market, it’s a wonder this case got so far in the first place.
  1. The American people clearly were not feeling harmed by Google, and they don’t want any agency cracking down on Internet search. An NTU/IBOPE Zogby poll found 79 percent of respondents felt the federal government “should not regulate the content and appearance of search engines and their results”. 101 members of the economics community are skeptical as well; they warned the FTC that action against Google would be a recipe for economic and regulatory disaster.
  1. The practices being attacked were pursued by Google to provide a legitimate competitive advantage in response to peoples’ preferences. Features like weather forecasts at the top of your search page, or intelligent prioritization of results, grew from consumer demand meeting with visionary innovation. As Leibowitz said of Google’s search practices: “Google adopted the design changes that the Commission investigated to improve the quality of its search results, and that any negative impact on actual or potential competitors was incidental to that purpose.” Commissioner Thomas Rosch said of Google’s advertising policies that were investigated, “No federal court has ever found liability for similar conduct.” The FTC correctly identified that Google’s not controlling the competition, they are simply winning – a fact that can change rapidly in the online world.

The National Taxpayers Union is concerned about these anti-trust cases — as we were with Microsoft’s in the 90s — because government overreach poses threats to a free economy, constitutes an abuse of the power taxpayers are funding, and sets a problematic precedent where a company’s competitors can entice the “referee” to change the game.

Perhaps most disturbingly with the Google case, however, permanent government regulation of Internet search was a plausible outcome had the proceedings gone further. That would have taken antitrust intervention to perhaps its furthest extent yet.

Concerned citizens should be glad the FTC did not open this Pandora’s box, but the pleas of those clamoring for more government meddling online will drone on. Let us hope they continue to fall on deaf ears.

Douglas Kellogg is Communications Manager for the 362,000-member National Taxpayers Union (ntu.org).