Shackling Success – Google’s Fight Against Antitrust

President Theodore Roosevelt, political godfather to the Progressive wing of the Republican Party, once proudly fronted himself as the “Trust Buster.” The same man who believed (at least nominally) in the foreign policy of “speak softly and carry a big stick” had no misgivings about wildly swinging the government’s club throughout the economic sphere under the guise of the Sherman Antitrust Act of 1890.

To him and other Progressives in the period, one man’s accumulation of wealth inherently harmed the rights of another. Unfortunately this belief, supported by the doctrines of sociologists, economists, and political scientists of the time (all of which were entirely new professions, even in academia), has stood the test of time and pervaded throughout our governmental structure to the present day. The Sherman Antitrust Act, undoubtedly, is one of the largest and most lasting affronts against individual rights within the current U.S. legal code, on par with other unwarranted government actions such as the Social Security Acts of 1935 and 1965, the USA PATRIOT Act of 2001, and the “Patient Protection and Affordable Care” Act of 2010.

In recent times, two of the most notable uses of antitrust legislation in this country are United States v. AT&T (1984) and United States v. Microsoft (1998). In the former, the United States government decided that AT&T had acquired too large a portion of the metaphorical “economic pie” in the market for providing telephone services. The outcome of the case resulted in the breakup of AT&T into several smaller companies, nearly all of which have been absorbed into larger companies or have changed the focus of their business since their creation. In the latter case, the Department of Justice sued Microsoft Corporation on the grounds that Microsoft’s bundling of its Microsoft Windows operating system with its Internet Explorer web browser was unfair competition and potentially harmful to consumers. You read correctly – Microsoft was sued for including that which you once had to pay for (web browsers like Netscape Navigator and Opera) into its regular products. In the end, Microsoft was forced to change some of its business practices for the sake of “consumer protection.”

In 2011, the Antitrust Division of the Department of Justice again reared its ugly head and set its sights not only on AT&T with regards to its proposed merger with T-Mobile, but also on a business whose well-being particularly interests me. I use this business for my E-mail, my web browser, for social networking, storing documents online, getting directions, finding local restaurants and other businesses, for entertainment, research, finding a website for which I don’t know the URL, for automatically translating webpages written in foreign languages, for getting a quick question answered by texting “466453”, and if I ever get incentivized enough to create one, for organizing my schedule in an online calendar. It tops the charts as the most valued brand in the world, and has over $57.8 billion in assets as of December 31, 2010. If this vast array of products has not already identified it, then maybe this will: “About 10,900,000 results [for ‘The Mendenhall’] (0.18 seconds)”.

Fortunately for businesses that deal with web services like Google Inc., it has become increasingly difficult for the DOJ to label them as a monopoly (though, if one is rational, it should be clear that natural monopolies are entirely impossible in the first place). The reason for this is that, to compete with an online business, an entrepreneur need only develop his product and upload it online (ignoring, of course, such regulations as registering URL’s and filing tax forms). After the producer raises awareness of his product, it is up the consumer to choose the service through his own volition. Quite ostensibly (meaning moreso than in other economic spheres to those not quite as well-versed in economics), no one business can hold a monopoly on that which can be produced through literally infinite permutations of combinations of electrical impulses.

Furthermore in one of the few Supreme Court cases regarding the rights of individual online (specifically relating their right to view “obscene” material online), Justice Stevens wrote in the opinion of Reno v. ACLU (1997) that “a series of affirmative steps is required to access specific material [online].” In other words, for someone to view something online (with only few exceptions), they have to deliberately act through their own volition to pursue that something. No one, for example, is forced to use Google over Yahoo as their search engine – they simply choose to use it.

Nevertheless, the DOJ remains undeterred. On September 21, the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights found that “Google dominates search and search advertising… Google is expanding its dominance into a broadening range of search-dependent products and services (which also protects and reinforces its search dominance)… [and as] one company gains control over access to more and more products and services on the Internet, consumers can expect to face higher prices and reduced innovation” (3). Despite such unfounded notions as “consumers can expect to face higher prices and reduced innovation” as Google expands (especially when it appears that the direct opposite of which is actually the case), this Subcommittee on Antitrust insists that it is protecting consumers.

Primarily, governmental complaints stem from Google’s placement of its own services (Google Maps, Google Videos, Google Documents, etc.) above those of its competitors in its search results, even if doing so goes contrary to the algorithmic functions that are typically employed to find other results. Additionally, Google is charged with unfairly “taking over” other smaller businesses as an anti-competition tactic.

First, I want to immediately address the property rights question: Google Inc. is at complete and utter liberty to develop its web services in any manner as it pleases, respecting the intellectual property rights (i.e. patented and copyrighted inventions and programs) of others; its alleged stealing of copyrighted information from other websites without accreditation, such as consumer reviews from Yelp, would be an example of a legitimate violation of these intellectual property rights. As an organization, Google is the sole owner of its search engine – competitors can lay no claim to ownership of it and, as such, have no right to dictate through government force how Google displays particular results. If the individual consumers were dissatisfied with these trends, they are more than welcome to use another search engine free from any form of coercion, but clearly such shameless (and rightfully so) self-promotion is not offensive to the vast majority of Internet-goers who continue to use Google willingly. Any legislation that would alter this situation in favor of more government intervention would violate both the property rights of Google and those rights of association possessed by individuals in choosing the goods and services that they desire free from governmental force.

Additionally, in every case in which Google purchases a smaller competitor, everyone should remember that the competitors themselves would only sell their businesses if it were in their best interests to do so. They would not, for example, sell their businesses for less than they rationally believed they were worth and, by accepting Google’s offers, they are in fact improving their own lives. Any and all government force employed to prevent Google from making such acquisitions commits a double violation of rights yet again: both the rights of Google and the rights of Google’s competitors to pursue their rational self-interests are infringed.

Even so, one need only examine the rest of the Subcommittee on Antitrust’s report to see the utter ridiculousness of the government’s charges and of its clear attacks of success simply because it is successful. Regarding Google’s tailoring of its search results, the Subcommittee on Antitrust’s report stated the following on page seven: “For example, a query for ‘milwaukee doctors,’ returns nearly a full screen of links — which include multiple links to Google Places pages — that are separate from the natural search results that begin only at the bottom of the page.” The statement was immediately followed by this image:

“Heaven forbid that Google would give a map of doctors in the Milwaukee area along with addresses, phone numbers, and consumer reviews from its own services at the top of its search results rather than send me here first! How dare they require me to scroll a quarter of the way down the page before I see a non-Google product! What right does Google have to use the search engine that it created to advertise for itself without telling me that’s what they’re doing!?” Every right.

Furthermore, Google was accused of purchasing ITA Software which “[p]rior to being acquired by Google… had a long history of developing innovative new flight search technology that it made available to new licensees, including Orbitz, TripAdvisor, Bing Travel, and other online travel search sites” (9). Google used the technology to open its own travel search service which compares the costs of various flights across various airlines – links to other travel search sites (such as Orbitz et al.) are omitted. According to the government, when the owners of ITA voluntarily sold a business (of which they were the sole owners) to Google, they were violating the rights of the traditional customers of ITA Software despite the fact that none of them were entitled to any of what ITA was producing. And again, consumers are more than free to use travel sites other than Google and each of these sites is more than free to develop their own flight search software, but none are entitled to the products of someone else’s labor if that someone does not deem it rationally selfish to share them.

After attacking Google for the production of its Android operating system, bundling that system with its existing search features, and having the ability to “give away Android for ‘less than free’” (11), the government firmly states the following: “Google’s tactics result in real harm to consumers in the form of deception, increased prices, and less innovation” (12). Personally, I think this a typo on the part of the Subcommittee on Antitrust; they accidentally placed “Google” where the word “Government” should be.

Think of all the money that companies such as Google must waste in our justice system defending that which should be obvious – their property rights and the rights of association that their consumers possess – instead of reinvesting it and inventing new products. The market is a fluid place, and even moreso in the online world: individuals may enter and leave at their pleasure, and consumers may visit only the websites that they want to visit without once being compelled to use the services of another site with which they do not wish to do business. Any arguments that Google could ever possess a monopoly, temporary or permanent, under such conditions is an evasion of reality in the worst of sorts – arguments that the (often imagined) rights of consumers are injured are equal works of fantasy.

Only the government can create monopolies through the initiation of force. True, the government rightfully has a monopoly on retaliatory force (meaning that we defer to an objective code of law when rectifying injustices rather than solving problems through vigilante violence), but at any time the government initiates force, it is acting immorally. Because individuals have free will and have the right to choose only those products and services that they desire, only when the government mandates that they must purchase a certain product from a certain company (as is the case with state-granted monopolies in the area of utilities, or the federal-granted monopoly on legal tender held by the Federal Reserve) are the rights of individuals infringed – people acting independently and of their own free will never violate the rights of others as no man has the right to violate the rights (life, liberty, and property) of another. The rights of individuals to start a business and compete with existing businesses are not infringed if individual consumers choose the existing companies (hopefully for rational reasons) over the new ones.

It is unfortunate in our current mixed economy that individuals’ rights to start and run businesses are seriously impaired. The endless amounts of red tape that must be cut, the seemingly infinite line of government bureaucrats that must be pleased, and the increasing number of unnavigable tax forms that must be completed (not to mention the existence of coercive monopolies) does more to stifle free competition and restrict man’s standard of living than any private businessman ever could. Through the creation of false rights, the value of our real rights has inflated to the point of meaninglessness and been forgotten – this is what we must reclaim.

The Internet and web-based businesses are a shining glimpse of a truly free market. Is the Internet a truly free market? No – coercive regulations still exist, but compared to more corporeal industries, it is the last economic frontier (excluding those yet to be invented) that is relatively free. This is why we should defiantly stand, here and now, to prevent the spread of antitrust legislation and begin to roll back the tide of government regulation rather than allow it to inundate yet another sphere of the economy.

Sadly, Google is not entirely innocent in this respect. Google itself has supported much government intervention with regards to the Internet, particularly regarding the FCC’s Net Neutrality doctrine (the doctrine which forbids individual ISP’s, or Internet Service Providers, for granting additional bandwidth to preferred sites or from blocking content from its users). Ironically, the charges against Google for granting higher spots in its search results to its own preferred services are nearly identical to the regulations that Google pressed for against ISP’s.

In an open letter to its users, Google CEO Eric Schmidt stated that he supported Net Neutrality, saying, “Today the Internet is an information highway where anybody – no matter how large or small, how traditional or unconventional – has equal access. But the phone and cable monopolies, who control almost all Internet access, want the power to choose who gets access to high-speed lanes and whose content gets seen first and fastest. They want to build a two-tiered system and block the on-ramps for those who can’t pay.” Google would violate the very real property rights of ISP’s in order to protect itself from the (largely invented) possibility of ISP’s restricting some level of content. If he were rational, Schmidt would be aware that only a free market in which individuals are free to compete against these ISP’s and in which consumers were free to choose the ISP’s they want (even ISP’s that block content, should the consumers so choose) would fully recognize the rights of all individuals.

Regardless of the internal contradictions inherent in Google’s political policies, this battle against antitrust legislation must be waged. “Without property rights, no other rights are possible,” and this attack on Google is an attack against the rights of everyone, either directly in the form of assaulting property rights or indirectly through ignoring rights of association.

There is ever-increasing evidence that we have hit an inflection a point in which the public is increasingly resistant to any expansions in government power, but lawsuits such as these continue to remind us just how far we are from a capitalist system. If capitalism is to be achieved, the reasons for the very existence of such lawsuits must be challenged, not just outcomes of the lawsuits themselves. Because those in charge of Google lack the circumspect philosophy necessary to offer a formidable response to the government’s accusations, that responsibility falls on those of us from outside Google – not for Google’s self-interests, but for our own.

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