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September 2012 Policy Study, Number 12-10

   

The Federal Trade Commission’s Investigation of Google

   

The Power of Change

   

 

Another problem with the monopolization claim is that the high-tech industry changes quickly, certainly too quickly for government to keep up with. Once upon a time Nokia and BlackBerry were the dominant phone handsets, until — seemingly from nowhere — the iPhone came along. Sirius and XM radio discovered that the real competition to satellite radio was streaming music, the iPod, and — who would have guessed? — old-fashioned radio. In 2010, the Federal Trade Commission investigated Google’s purchase of the advertising company AdMob but decided not to bring a case when Apple quickly acquired Quattro Wireless, a competitor of AdMob, and became a significant competitor in mobile ads.

 

The FTC’s announcement of its closing the investigation is instructive, and is worth quoting at length:

 

In a statement issued today, the Commission said that although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market, most notably a move by Apple Computer Inc. — the maker of the iPhone — to launch its own, competing mobile ad network. In addition, a number of firms appear to be developing or acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android, and these firms would have a strong incentive to facilitate competition among mobile advertising networks.

 

“As a result of Apple’s entry (into the market), AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the Commission’s statement explains.[9]

 

Put into plain English, what the Commission did was to take into account fast-moving industry changes. It was right to do so in May of 2010. It should do so again today.

 

Google faces competition not only from other general search engines like Bing and Yahoo. It also faces competition from a host of other services: social networks (Facebook), specialized search sites (Amazon, Yelp), mobile apps, and new forms of search like Apple’s Siri. And that’s just what we know about today. Who can predict what tomorrow will bring? Certainly not the Federal Trade Commission.[10]

 

A current rumor in the high-tech industry is that Facebook will enter the search business, which will make it even more of a direct competitor to Google than it already is. The immediate advantage Facebook would have over Google is the vast amount of personal data it could mine in producing personalized search results. The recommendations of socially networked friends turn out to be particularly important, and particularly valuable, for advertising purposes. The industry talk is of knocking Google “off its perch.”[11] A candidate for being knocked off its perch hardly seems like a good candidate for an FTC investigation of monopolization.

 

In the tech space, everyone is competing against everyone else. Farhad Manjoo described the current state of play in a piece last October for Fast Company:

 

The four American companies that have come to define 21st-century information technology and entertainment are on the verge of war. Over the next two years, Amazon, Apple, Facebook, and Google will increasingly collide in the markets for mobile phones and tablets, mobile apps, social networking, and more. This competition will be intense. Each of the four has shown competitive excellence, strategic genius, and superb execution that have left the rest of the world in the dust.[12]

 

Raise your hand if you think the Federal Trade Commission will serve consumers’ interests better than competition in the fast-moving high-tech world?[13]

 

It is apparent, then, that there is no monopolization claim against Google.


   

 

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