In a long but surprisingly weak story, the New York Times’ Charles Duhigg is the latest analyst to try to find an argument for why antitrust law should be used to break up Big Tech firms (Duhigg’s particular target is Google). In so doing he makes many of the same mistakes that have been made repeatedly on both the left and the right — but at least he doesn’t go so far as to claim that Apple is the sex organ of the Big Tech body politic, as a particularly bizarre piece in Esquire did a couple of weeks ago. The mistakes include taking debunked claims from competitors at face value, ignoring empirical data, and applying a revisionist history to how antitrust law has developed.
The story frames itself around the claims of a British couple that Google unfairly deprecated the results of their own “vertical search” comparison-shopping site, Foundem, in its search results. The European Commission agreed with this complaint, giving a veneer of respectability to the claim. Indeed, from reading the article one might think that Foundem was a revolutionary technology that should supplant Google and would do so were it not for those pesky engineers at the Googleplex.
Yet that impression would be wrong. As this article from 2009 (when Foundem’s complaints about Google were really getting serious) makes clear, the site was “a study in SEO (Search Engine Optimization) fail.” It was merely an aggregator of content produced by others, with “duplicate content all over the place,” that failed to deliver the sort of useful information that Google users would want.
Indeed, as my colleague Geoff Manne put it, Google had a very simple and reasonable business case for not highlighting Foundem:
In fact, all Foundem does, in essence, is pull information from other sites and present it on its own. While in general this is little different than what Google does (although the quality of the information and its presentation may be different), from the point of view of a user who has already searched once in Google, the prospect of Google serving up sites requiring the user to make duplicate searches in other search engines to find the information she is looking for would seem to be pretty poor.
Yet — and this is the really important point when it comes to antitrust law — the claim that Google unfairly penalizes vertical-search competitors has already been investigated by the Obama-era Federal Trade Commission, which found there was no case to answer. It found that
the evidence presented at this time does not support the allegation that Google’s display of its own vertical content at or near the top of its search results page was a product design change undertaken without a legitimate business justification. Rather, we conclude that Google’s display of its own content could plausibly be viewed as an improvement in the overall quality of Google’s search product. Similarly, we have not found sufficient evidence that Google manipulates its search algorithms to unfairly disadvantage vertical websites that compete with Google-owned vertical properties.
This then ties into the point that Duhigg has ignored the nature and practice of American antitrust law over recent decades. As I mentioned in my previous Corner post on this subject, American antitrust law differs from European in that it does not really mind market dominance as long as consumer welfare is not impacted. If Google’s search algorithm was really disadvantaging the consumer by not prominently displaying its competitors, the Obama FTC and/or Department of Justice would have taken action. They did not.
Indeed, Duhigg actually comes up with a whole new interpretation of antitrust law — that it’s there to enforce creative destruction on industries. He suggests that it was the Clinton DOJ’s pursuit of Microsoft that forced them to pull back and allow Google to rise in the first place, and posits an untestable counterfactual hypothetical that if that hadn’t been the case, we’d all be using Bing now. But if we’re going to play that game, perhaps without the paranoia at Microsoft engendered by DOJ harassment we’d have a Bing that was actually better than Google. We can’t know.
What we do know is that enforcing creative destruction has not been an object of antitrust law absent demonstrable harm to the consumer, at least in the modern era of antitrust. We should also note that despite large market shares in one area or another, the Big Tech firms are fiercely competitive with each other in other areas. Apple pioneered voice assistance, but Amazon’s technology got a huge boost with the release of the Echo, and Google is making inroads with its in-home devices, while Microsoft’s Cortana sits on a lot of our computers. Even in the shopping area, Amazon now gets half of all shopping queries (something the EU conveniently left out of its analysis), and is making an inroad into online advertising.
This level of fierce competition is one reason why antitrust is so out of place in the technology market. A sleepy monopolist would not be the second biggest spender on R&D in the U.S., as Google is. And the empirical data tells us that large tech platforms can fall very easily without constant improvement. As David Evans of University College London says,
The history of online platform competition also provides empirical refutation of the proposition that data on users protects platform leaders from competition or puts an insurmountable obstacle before entrants. All this points to online platforms facing sleepless nights since any online platform that tries the quiet life of monopoly risks catastrophe.
The article quotes antitrust freebooter Gary Reback as saying “They don’t need dynamite or Pinkertons to club their competitors anymore. They just need algorithms and data.” This might be something of a category error.
One final data point that sheds light on the issue is contained right at the bottom of Duhigg’s article. The founders of Foundem now run a consultancy for companies who blame their woes on Google. The Times article might represent better advertising than they’d ever get from a search engine.