Panelists at FairSearch Event Review Investigations of Google, Potential for Action

September 13th, 2012 | Bookmark and Share | SUBSCRIBE

FairSearch stands by this blog post, which is entirely fact-based and accurate.

This morning, FairSearch hosted a discussion of issues related to competition and innovation in the online marketplace. Before a full house at the Newseum’s Knight Center, panelists that included former state and federal officials  and technology industry executives reviewed the current state of European Commission and Federal Trade Commission investigations of allegations that Google is violating antitrust and consumer protection laws.

Albert Foer, president of the American Antitrust Association, predicted antitrust enforcement authorities are likely to focus on whether Google has “substantially foreclosed markets” and that “vertical foreclosure theories are probably where the action will be” when antitrust officials decide whether to bring a case against Google. He noted the importance of the European Commission and the FTC to act together.

“I think it would be best for antitrust as an institution if the European Commission and the Federal Trade Commission are able to come out approximately the same way,” he said.

Antitrust Experts: The State of Competition in Internet Search & Advertising from FairSearch.org on Vimeo.

Meanwhile, entrepreneurs Tim Carter of AsktheBuilder.com and Dan Savage of TradeComet.com, and Skyhook Wireless general counsel Rodman Forter explained in detail how Google has misused its monopoly power in ways that make it harder for innovators to introduce new technologies and services to the market.

“I wouldn’t have invested if I knew what I know now,” Savage said. Entrepreneurs “want to minimize the risk,” he added, “if you have an unpredictable player that controls all your metrics, that’s an unacceptable risk.”

Susan Athey, Professor of Economics at Stanford University’s Graduate School of Business, and a consultant to FairSearch member Microsoft, explained how Google’s abuse of its market dominance in search makes it difficult for anyone else to compete in that market, offering as an example how Google makes it difficult for advertisers to export data they put on Google to other advertising platforms.

Athey added that deals with Apple to make Google the exclusive default search provider, and with Android phone manufacturers requiring Google to be the default search engine to gain access to offering the Android market to users extends the company’s dominance in search (where Google has 97 percent of mobile search).

“In 2007, there was a long term exclusive deal made between Apple and Google for all the default search traffic. That leads to a situation with [Google having] 97 [percent] of market share in mobile. That’s not because 97 percent of consumers choose Google,” Athey said.

Adam Kovacevich, a Google spokesman, would not acknowledge during the question-and-answer session that the search giant requires Android devices to use Google as the default search engine in order to be allowed to offer Android Market to consumers. Athey asked Kovacevich: “So are you able to use the Android app store if you have Bing as the default. If Verizon was to make Bing the default, would they have access to all of Android?” To which Kovacevich said: “That I don’t know.”

The exchange is reminiscent of the Senate hearing on Google’s power, when Sen. Franken asked, “Is Google still using Yelp’s content to drive business to Google Places?” and Google Chairman Eric Schmidt responded, “As far as I know, not.”

Tech Executives: Exploring Barriers to Innovation in Mobile and Online Services from FairSearch.org on Vimeo.

Google gets awfully squirrelly when you ask them about their business practices under investigation. Just try asking a Google spokesperson if they agree with a federal judge, the FTC, and the DOJ when each found Google to have a dominant position in the market.

A manager in Google’s Android division has said the company wants to use “compatibility as a club to make [phone makers] do things we want.”