The anti-trust statue denounces violations of its provisions as crimes and subjects violators to heavy criminal penalties.
– Lawrence Vold*, as quoted in Google Scholar
Does the United States government really believe that Google has committed “violations” of the anti-trust statutes and should be subjected to “heavy criminal penalties?”
Based on recent revelations that the Justice Department and the Federal Trade Commission have engaged in a three-year-long brawl over who should have the honors of prosecuting Big G, the answer would seem to be a resounding “yes!” If either agency thought the case was anything less than airtight they’d be running away from it rather than fighting to lead the charge to the courtroom.
With the Senate Judiciary Committee’s antitrust subcommittee having scheduled a September 21 hearing on “The Power of Google: Serving Consumers or Threatening Competition?” the DOJ and FTC have apparently reached a compromise. The deal calls for the DOJ’s antitrust division to investigate Google’s recent and planned acquisitions for possible competition-stomping violations and the FTC to probe Googliath’s increasing stranglehold on the search market.
While we would, frankly, love to devote a hundred posts and ten or 20 thousand words to all the juicy details of the political and legal infighting between the Sultan of Search and its enemies, we can’t. It would be fun, but it would also be miles off topic.
The LinksManager blog is supposed to be about linking – one-way linking, two-way linking, link exchanging, reciprocal linking – and internet, search engine and end user developments that in some way or another impact how and why we link.
Which means that our main interest must lie with the FTC’s scrutiny of Google’s search engine environment.
But before we go there, some brief comments on a few events indicating that at least some of these anti-trust issues are already having a major effect on the way Google does business.
First and foremost, there’s the Nortel patent auction. We’ll skip the details. Suffice it to say that whoever owns those patents will – after a suitable number of years and hundreds of millions in legal fees – own the licensing rights to the Android operating system.
Since Google owns Android, it is quite clear why they should want to retain the licensing rights. It is equally clear why Apple, Microsoft and RIM (Blackberry) would want the rights. New Android phone activations are outrunning combined iPhone, Windows Mobile and Blackberry activations by more than three to one and that ratio is likely to eventually spread to the tablet market.
If every manufacturer of Android devices had to pay a licensing fee to Apple and/or Microsoft or RIM it could – and almost surely would – become the biggest, baddest patent cash cow since … well, yes, since Windows.
So why did Google and its bidding partner Intel drop out of the Nortel patent bidding auction and let a consortium of companies led by Apple and Microsoft (and including RIM) buy them for a paltry $5.5 billion bucks? OK, $5.5 billion isn’t exactly paltry in the real world. But Google? Intel? They don’t live in the real world any more than the Pentagon does. (Neither does Microsoft or Apple, for that matter.)
The real reason, we suspect, Apple and Microsoft got those patents was because Microsoft’s antitrust problems are, after nine years, finally behind it (at least for the moment) and Apple, as far as the outside world knows, doesn’t have any. Though why the trust-busters aren’t jumping all over the iPod/iTunes/iStore iMonopoly is one of those inside the Washington beltway mysteries.
(NEWSBREAK: This just in, rumors are flying that the occupants of certain cubicles lining the corridors of the Justice Department are examining Apple’s core role in the Nortel patent war for signs of rot or worms.)
Intel, given the nature of the CPU market, is a perpetual antitrust target and Google … well, Google. Put it this way, would Eric Schmidt really want to go before Congress to explain away apparent monopolies in advertiser-supported internet search and advertiser-supported mobile device operating systems? (Google does not charge per-activation fees to license Android to phone makers, it is ad supported.) Would you?
And would you also like to be forced to deny, under oath, allegations that your search results are deliberately skewed to benefit advertisers or other significant others? Probably not. And probably Erich Schmidt wouldn’t like it either. But he’s almost certainly going to have to do it because ….
Welcome aboard. You don’t have to worry about passports and security scans, because this is only a virtual flight to Brussels, where the European Union on August 2 filed nine formal anti-trust charges against Google.
Though the exact nature of each count was not available as of this writing, one of them very likely concerns an allegation that Google tweaked its Italian search results to penalize – and in some cases delist – newspapers whose publishers opted out of having their contents appear in Google News Italia.
Perhaps mindful of the energizing effect an adverse ruling in Italy might have on U.S. regulatory junkies, Google settled a local Italian Competition Authority case based on these charges in January. Without admitting any wrongdoing, Google agreed to heighten corporate oversight of how newspapers were ranked and, more significantly, provide access to contracts governing its revenue-sharing arrangements with major AdSense partners.
As we said in our last blog, “Google currently receives right around 65 percent of the total number of search-engine queries generated by U.S. web users and is expected to break the 70 percent barrier by the middle of next year … (and) a 70 percent market share has been a historic red flag in the halls of the Justice Department’s Anti-Trust Division. ”
We also pointed out the seeming absurdity of trying to prosecute a company for achieving a so-called monopoly in “a bazaar in which every visitor is free to pick out any product he wants and use it for free”
But if the government can actually prove that Google manipulates its natural search returns to steer people to its own or its major advertisers’ sites and products, you can toss the “absurdity defense” out the window. A search engine with one or two or five or even 30 percent of all search queries doing a bit – or even a whole lot — of finagling is not going to set off any regulatory flares.
To be perfectly cynical – and absolutely correct – about it, those cases wouldn’t have nearly enough headline potential to interest any careerist Washington bureaucrat. (Unless, of course, the search engine in question happened to be Bing … .)
But Google? A company right at that 70 percent “monopoly” threshold? Against a target that big and visible, all kinds of charges could and would be filed.
Time for a reality check. At this moment, no federal charges of wrongdoing of any kind have been levied against Google. Official fact-finding investigations and media witch hunts have been launched. A congressional hearing has been scheduled.
Even if these processes eventually result in charges being filed – which is by no means certain – it will prove nothing. Charges are not convictions.
At the end of the day (or, more likely in this case, decade), the facts may very well prove that the only thing Google is “guilty” of is living up to its corporate philosophy of “making money without doing evil.”
Having said all that, let’s play “what if.” What if Google were convicted of operating an illegal monopoly of some kind? How could the potential penalties affect small-business website operators?
OK, most of the remedies the government might seek would have nothing to do with any of us who aren’t Google shareholders or major advertisers. Huge fines, divestiture of such acquisitions as PostRank, AdMeld and SageTV, cease and desist orders involving “reward our friends, punish our enemies” search returns aren’t going to be felt by the small e-business community.
The only foreseeable penalty that could really filter down to our level is the most drastic one, an order that Google somehow cause the search-engine playing field to be leveled.
Would Larry Page, Serge Brin et al spend their – and their shareholders’ – last dollar fighting that one through every court three times? Maybe they would. And not just because of the lost billions in profits, either. We’re talking about some very proud individuals who are justifiably gratified by what they’ve built. Nobody uses Google search with a gun pointed at their head, after all, they make a conscious, informed decision to use it.
Let’s suppose, however, that was the ruling and the penalty stuck. Let’s further suppose that some method could be devised to enforce it – perhaps by prohibiting Google from adding new search bells, whistles, and services for a certain number of years to give its competitors time to catch up.
What would a world in which, for sake of argument, four search engines which each had roughly 25 percent of the daily queries do to us?
How about “drive us crazy” as an answer to that question? Let’s face it. Rightly or wrongly, for better or worse, 97 percent of us attempt to optimize our sites for Google while letting the other search engines’ chips fall where they may.
If we’re very good or very lucky (which is more important), we get a decent ranking on Google and a pretty similar ranking on the other engines which, because of Google’s dominance, are scared to death to use ranking algorithms more than a little red nasal hair’s different from Google’s.
In a new world order with no one engine dominant, however, each company would almost certainly use widely different algos in an attempt to differentiate its returns from the competitions’ and increase its market share.
We would, in essence, be forced to try and optimize our sites for two or three or four engines with substantially divergent views on the value of keywords vs. descriptions, on-page text vs. metatags, earned reciprocal links vs. random backlinks, etc. etc.
An impossible task? Probably. We might even wind up having to launch multiple sites with the same products but different content, structure, keywords and tags. Lots of fun, right?
Not! No fun at all. And not likely. It would be a pretty drastic step. But not impossible. After all, Microsoft’s alleged antitrust violations resulted in its serving nine years of pseudo-probation under the supervision of a federal district court. Nine years in which Linux grew like a weed, Apple (as a computer maker with a proprietary non-Windows operating system) came back from near death, and iTunes relegated Windows Media Player to the also-ran dustbin alongside the likes of RealPlayer, MJB, etc.
So court-ordered search-engine parity could someday – one day — happen.
If it does, one thing is certain. On that someday, that one day, reciprocal linking will be even more important for building traffic than it is now or has ever been before.
* Are Threefold Damages Under the Anti-Trust Act Penal or Compensatory, 28 Ky. L.J. 147