Here, right here on this very blog, I have predicted repeatedly that the U.S. antitrust authorities would bring suit against Google. Suit hasn't been brought just yet, but by now you've seen the stories that the FTC is investigating. (To be fair, I predicted the DOJ's Antitrust Division not the FTC. But you won't hold a detail like that against me, will you?)
The investigation is applauded by dopey commentaries like this one in Time:
The power of Google to determine what information we see, and when, is enormous. Apparently, the U.S. government is worried Google has abused that power. . . . It is clear that Google has a tight hold on the Internet. And that has been clearer than ever in the past year. The New York Times has run a number of stories showing how companies have been able to boost their sales by gaming Google's search algorithms. When Google changed its algorithm, those sites fell off the search page, basically hiding them from the world. The stories also showed what lengths companies will go not to cross Google — and what they will do to try to make up. If that's not a sign of monopoly, I don't know what is."
Dear sir: Google's power to determine what information we see is akin to, in the old days, the power of a good reference librarian. That is, not so much and almost all to the good. And any user who feels exploited by Google can totally obliterate the "power of Google" in just one mouse click. Bing is fine as are any number of others. Any advertiser who feels exploited has--I don't know, this is just a rough guess--one zillion alternatives. As for power being evidenced by people wanting to kiss up to them: can we worry about U.S. Congressmen being monopolists and investigate them, too? (And what about . . . Oprah?!)
TechCrunch's Erick Schoenfeld, in contrast, is concise and accurate:
I’d argue that if a full-blown antitrust investigation does get launched, it may be a signal that Google’s market power has peaked. Remember when Microsoft went through its antitrust ordeal? It’s been downhill for them ever since. And now, just as social (and Facebook) is starting to take over from search as the fundamental way information is shared, discovered, and organized on the Web, the government is focusing on the last decade’s war.
I wouldn’t worry too much about Google’s marjet power. Technology has a way of overthrowing the powers that be more quickly and naturally than the government ever will.
So are Robert W. Crandall and Charles L. Jackson:
In each of our three cases [IBM, AT&T, and Microsoft], the ultimate source of major changes in the competitive landscape appears to have been innovation and new technology – technology that was apparently not unleashed by the antitrust litigation. In each case, the government did not and probably could not see how technology would develop over time. Therefore, it was difficult for the government to design remedies that would accelerate competition when this competition developed from new technologies.
Finally, just because it's appearing coincidentally and because it makes very well the point of how evanescent market power is, particularly in tech markets, here's an article describing the plunge in fortunes of Myspace. Remember Myspace?
P.S.: Shankar Saikia races ahead of me for the next good prediction:
MEMO TO FACEBOOK
Here’s the trajectory of a successful tech company.
- Idea
- Growth
- More growth
- Government feels that growth harms competitors
- Government accuses company of anti-competitive behavior
This happened to IBM, MSFT and GOOG. So, we should expect the same to happen to Facebook ;)
