What data should federal investigators seek to obtain from Google?
It would be a misreading of antitrust law to suggest, as some writers have, that American jurisprudence says antitrust law is only "about the consumer, stupid." Likewise, it would be a misreading of the law to claim that it is not intended to protect competitors, or that it should not be used to address complaints by competitors. The Sherman Act, which forms the basis of US antitrust law, explicitly seeks to protect consumers by protecting both "competition" and "the competitive environment." Moreover, it does so by prohibiting the following: (1) actions taken to create a monopoly, (2) actions taken to strengthen and maintain a monopoly, or (3) actions taken to exploit a monopoly by using it to create, strengthen, or maintain a monopoly in additional lines of business. It does protect competitors and competition, and it does not just address protecting consumers. The reason for this is clear: even if consumers do not buy steel or aviation fuel, abusive practices that raised the price of steel or aviation fuel would raise the price of cars or air travel.
Google's first line of defense against complaints of monopoly power is its claim that choice is "only one click away."¹ This claim seems plausible, and it is frequently repeated by Google's defenders. It will be essential to assess this, because the claim is fundamental to much of the rest of the investigation. Google is arguing that consumers can readily switch search engines and companies can readily abandon Google's keyword auctions. How can Google have power over consumer search even if its market share is overwhelming, if consumers can readily abandon Google and search elsewhere? How can Google have power over companies that complain about the price of keywords or the structure of its keyword auction, if companies can readily abandon Google and buy keywords elsewhere? How can Google have power over companies that complain that Google discriminates against them, if they can easily position themselves more attractively on other search engines? If consumers are truly "one click away" from competitors in search, and if consumers truly do use their "one click away" option, then establishing abuse by Google will be more difficult. Consequently, the truth of the one click away argument should probably be the first subject of investigation.
The One Click Away Defense
If consumers are not really one click away, then numerous possible antitrust and unfair competition abuses become more plausible, including unfair pricing, unfair presentation of search results, and a host of other alleged violations of Section 2 of the Sherman Act and Section 5 of the FTC Act. All of these can harm competition and directly or indirectly harm consumers. The absence of true one-click mobility for consumers does not prove that abuses have occurred, but it makes their occurrence more plausible, including the major violations alleged in the European Union Complaint against Google.
First, we need to know if consumers switch search engines or not. If consumers principally use only one search engine, and if companies want to reach all consumers, then companies need to participate in both search engines and need to pay the fees demanded by both. Some abuses are indeed possible if consumers use only one search engine, even if they could use more.
Second, we need to know if consumers use an alternative search engine to duplicate the same query. Consider the similar situation of consumer behavior in air travel, which we have analyzed for over two decades. Today, two well-known online travel agencies, Orbitz and Travelocity. Orbitz uses Travelport, and Travelocity uses Sabre. Most travelers check one of the major comparison engines for any single flight, so airlines need to listed in both GDSs and need to pay both of their fees. Similarly, if consumers use Google, Bing, or Yahoo, but seldom use more than one for any given search, then companies have to pay the fees of all search engines to ensure that they are found by all consumers. Some abuses are indeed possible if consumers use only one search engine at a time, even if they do use different search engines at different times.
Investigation The One Click Away Defense
What would an investigation of the one click away defense entail? What does the one click away claim mean, and how would you know if it is true or not? There are at least three separate areas in which data can be obtained from Google and others, to assess the accuracy of the one click away defense.
- We need to know if consumers act as if they are one click away from other search engines, and if they do not we need to know why. If they do not act as if they are one click away, then the various abuses alleged become possible. And if consumers do not act as if they are one click away because of actions Google may have taken to interfere with competition, then we need to identify these as well. We can debate whether consumers frequently do comparison-shop by using two search engines or do not. We can debate the conditions under which consumers use more than one search engine. We can debate the types of searches for which consumers will abandon a search engine that produces results that surprise them and the types of search for which consumers will stay with a search engine because it provided unexpected recommendations. But we simply do not know.
- If Google has taken actions intended to make the one click away option less available to consumers, then that raises the possibility of antitrust abuse, based upon the Sherman Section 2 prohibition of actions intended to gain, maintain, or strengthen a monopoly. Exclusive marketing agreements are one way to keep consumers from being one click away. For example, AOL and Google have signed a second 5-year exclusive agreement, and Google is the only search engine available at AOL on any AOL page; I have not figured out how to change the default. Search at sites as diverse as my university and at the New York Times are likewise both powered by Google, and, likewise, I have been unable to figure out how to change the default. Google's SEC filings have indicated that they deliberately overpaid for some of these exclusive deals; perhaps full discovery might disclose Google executives' intent. Other ways to make one click away difficult would include prepackaging integrated search with Chrome (much as Microsoft was accused of doing with Internet Explorer and Windows), or making Google Toolbar persistent and difficult to delete (again, as Microsoft was accused of doing with IE). Android phones are, not surprisingly, Google phones; if I want to set up an Android phone I need a Google account, and my geo-positioning data are reported to Google, and my phone has Google search pre-installed; I cannot, however, uninstall Google search or reset my default search engine to any alternative. I guess I could "one click" start my car, drive to another cellphone provider, and see if I can find one that offers the Android phone without a restrictive agreement on search, but that scarcely fits the common understanding of the meaning of "one click away." Even superior integration of free offerings, like YouTube, could be seen as subsidies to keep consumers with Google. If consumers do not act as if they are one click away, then we need to know whether this is simply because Google is superior, or because Google has limited consumers' mobility; the first is a result of offering superior search, while the second is unfair and illegal competition.
- If Google has used its monopoly control over its corporate assets to limit competitors' ability to make one click away attractive to consumers, that opens up different possibilities for anticompetitive behavior, again banned by Sherman Section 2 prohibition of actions intended to gain a monopoly, intended to maintain, or strengthen a monopoly, or intended to extend that monopoly to other areas. Google might have take actions to make other search engines less attractive, as by denying them access to Google's books or to YouTube. Even massively subsidized Google phones could be shown to be a Section 2 violation if (i) they were intended to make the phone and its integrated Google search more attractive and (ii) this could be shown to be intended to strengthen monopoly power in search or to extend monopoly power to mobile search or other aspects of mobile marketing. If consumers do not act as if they are one click away, then we need to know whether this is because Google has limited competitors' ability to make their offerings attractive; once again, this is unfair and illegal competition.
Implications and Subsequent Areas for FTC Investigation
Most importantly, as I have noted elsewhere, if consumers are not truly one click away from other search engines, then corporations are not one click away either. If my employer requires that I book through the company's corporate travel agency, then any airline that wants to be found by my company's employees has to pay the fees to be listed in the GDS used by my company's travel agency. If my employer requires that I use Verizon, and I want an Android phone, then I am not one click away and neither are the companies that hope to be found by me or my fellow employees.
Depending on the results of a "one click away" investigation, the following investigations become more or less critical:
- If consumers cannot or do not readily switch search engines, then Google's extraordinary market share gives it great power to extort monopoly prices from companies that must participate in their keyword, harming consumers who purchase these companies' products.
- If consumers cannot or do not readily switch search engines, then Google's extraordinary market share gives it great power to influence what consumers find when they search, enabling unfair and deceptive marketing practices.
- If consumers cannot or do not readily switch search engines, then Google's extraordinary market share gives it great power to influence what consumers find when they search, enabling it to harm competitors in a wide range of businesses in areas other than search, like retailing and travel. This can entail harming companies that would be as efficient and as effective as Google is in these areas but for their limited access to consumers, creating a clear violation of Section 2 of the Sherman Act, of American law on monopolization, and on European competition law.
Subsequent posts will address how to investigate these potential abuses.
¹Indeed, a Google search for "one click away" produces over 9.5 million results, almost as many as "In God we Trust," slightly more than "girls just wanna have fun," and more than 50 times more than "God Save America."