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FTC Dropped Google Antitrust Action Staff Wanted - But Why Should That be Surprising?

Yesterday, the Wall Street Journal reported they had obtained the internal staff report from the Federal Trade Commission, where top staff urged action against Google for abusing its monopoly position.  

On four key questions, (1) Did Google illegally favor its own content over rivals, (2) Did Google illegally copy content from rival sites, (3) Did Google illegally restict advertisers' ability to run campaigns on rival search engines, and (4) Did Google illegally restrict other websites that publish its search results from working with rival search engines, the staff report found that Google had violated the law and that the FTC should take action.

However, when the FTC commission made its ruling, while a few commissioners expressed concern, they argued in the end that Google had done nothing illegal and no action was warranted.  Notably, the commissioners did not even reference most of the evidence outlined in this unredacted report, which was based on nine million pages of documents from Google and other parties.  Factually, one important detail that the FTC staff had found was that Google's dominance of seach was not 65% as widely report but potentially as high as 84% of U.S. search queries.

The FTC Commissioners may well have just had a different view of the evidence than its staff -- although I obviously thing the staff had the better arguments (see my law review articles here and here on other approaches I argue the government should be taking against Google on antitrust) -- but what's surprising is that anyone would expect the political appointees at the FTC to take any other action.  The Republican-chosen members had an ideological bias against antitrust action of almost any kind to begin with, while the Democratic nominees were just very unlikely to go after one of the most important political friends of President Obama.

Eric Schmidt, Chairman and previously CEO of Google, was not any ordinary political funder of Obama.   He was a core political operative for the campaign who played a key role in establishing the digital operations that wowed the nation as Obama built a campaign network that took first the nomination and then the Presidency.   As David Plouffe wrote in his campaign autobiography, The Audacity to Win: The Inside Story and Lessons of Barack Obama's Historic Victory:

“With the help of supporters like Eric Schmidt of Google, we dramatically improved our digital strategy and execution, and I’d say we were competitive digitally with any business-world start-up.”

It is not overly cynical to note that while Obama has taken on corporate interests in a number of fields from health care to the for-profit health care industry to the energy sector, he has been notably softer on a few of the sectors where he got the most core initial campaign support, notably Wall Street finance folks clustered around Goldman Sachs and Silicon Valley.   And Google through Eric Schmidt was one of the key conduits for that Silicon Valley support, so expecting Obama's FTC to take what would be a groundbreaking antitrust action against Obama's key political supporter was unlikely to ever be in the cards.

This emphasizes that one of the core dangers of monopoly is not just that its distorts the economic marketplace, but that large centralized corporate monopolies end up distorting the political field as well to the point that they can't be challenged either by economic rivals or by elected officials.  

Public Citizen last fall published a report Mission Creep-y: Google Is Quietly Becoming One of the Nation’s Most Powerful Political Forces While Expanding Its Information-Collection Empire.  The report noted that in the first three quarters of 2014, Google ranked first among all corporations in lobbying spending in the United States.  It has steadily hired former government officials into its lobbying operations and "a steady stream of Google’s employees has been appointed to high-ranking government jobs," including helping save Obama's mismanaged initial rollout of the Obamacare website.  More broadly, Google has disclosed that it contributes to about 140 trade associations and other non-profits to spread its influence across multiple sectors.

As Public Citizen noted in conclusion of its report:

As Google’s forays into new technologies far outpace the relevance of existing regulations, Google is seizing the opportunity to influence what new regulation will look like. Citizens must ensure that new technologies are designed and regulated through open, democratic processes, not to further empower dominant entities like Google, but to protect and empower consumers.

That the FTC barely acknowledged the criticisms and evidence marshalled by its own staff of Google's abuses in dismissing action against the company reflects that Public Citizen's expressed concerns are well warranted. 

 

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