These days, speculating about antitrust cases against major companies appears to be all the rage. A few months back, there was a ton of chatter on the interwebs about Facebook’s potential liability for antitrust. This morning, CNET ran a piece entitled, “What an anti-Google antitrust case by the FTC may look like.” The key source for the piece: a Covington Burling partner Thomas Barnett who represents Google’s competitors. His point: FTC action against Google isn’t necessarily on tap, but it might happen. Utterly earth shattering.
Let’s look at Barnett’s (weak sauce) case in favor of FTC antitrust action against Google: First, Barnett says, “They [Google] systematically reinforce their dominance in search and search advertising.” What does that even mean? Where are the nuts and bolts of an antitrust case? Let’s focus solely on the US market. Granted, Google has better than 65% of the market share in the search engine market. They are absolutely a monopolist and clearly the most dominant firm in the American search engine market. But when dealing with search, where is the evidence that Google has achieved its position in that market through predatory or exclusionary conduct? When an internet user decides to run a web search, they can choose. Most choose Google. Some choose Yahoo or Bing. In fact, over the past three years, Bing has managed to slowly accumulate market share. Again, where is the evidence of anticompetitive conduct?
The best allegations Microsoft (Bing) could come up with, contained in its antitrust complaint filed in the EU last year, are as follows: Google does not allow Bing to fully index the content on Google-owned websites like Youtube. The first thing that comes to mind: This is a pretty thin reed on which to build an antitrust case. A claim based on this YouTube argument does not go to monopolization of the entire search market and does not explain Google’s dominance in that market. The second consideration: this is an essential facilities case. Here, ability to index YouTube is basically the essential facility. Microsoft is arguing that it needs this ability and that Google’s denying it this ability is harming it and therefore competition. That argument is a tenuous one for a number of reasons. First, it is a big leap of faith to treat the ability to index YouTube content as an essential facility. Second, it is unclear how competition is harmed in any tangible way. If the consumer does not like the video search results on Yahoo or Bing, they can just use Google. Meanwhile, Bing continues to gain market share. Any harm to competition in this scenario is speculative and difficult to quantify. Finally, the Supreme Court has never endorsed the essential facilities doctrine. There are very few published antitrust cases in which the plaintiff has prevailed when the claim was based solely on essential facilities. It is not a strong argument.
However, just today in a new CNET article, Barnett lays out another possible avenue of attacking Google: Google is using its dominant position in the market to unfairly prioritize its own services over those of its competitors. A good example is Google Flights, which is given priority over Expedia, Travelocity, etc. Again, this is not a compelling argument. I frequently fly from Fort Lauderdale to Baltimore. I just ran a Google search for that exact term: Fort Lauderdale to Baltimore. The search results included the following: (1) Three sponsored listings at the top of the page done through Google AdWords. One of these was by Orbitz and another was by Southwest (2) Google’s own sponsored listing (below the normal top three ads) for Google Flights. This listing came with a disclaimer that indicated it was sponsored and also indicated that Google could be compensated by the third party service providers listed therein (3) Natural search results: Fare Compare, Kayak, Expedia, etc . (4) More sponsored listings to the right, including Orbitz, American Airlines and Kayak. This is a weak foundation for a possible antitrust claim. As with the YouTube theory, this is an example of allegedly anticompetitive conduct that does not really implicate the online search market at large. If someone – even the FTC – chose to use this as the predicate for an antitrust action, they would still be required to satisfy the most basic elements of an antitrust claim. What is the market? The market clearly is not the online search market— that is far too broad. Is it the market for in internet searches for plane tickets? What about reasonable interchangeability? If a consumer looking to book a plane ticket from Miami to DC can search on Google or Yahoo or Kayak or Expeia— aren’t these all reasonably interchangeable? If the market is broadly defined, Google may arguably not even be a monopolist in that market.
Clearly, however, Google’s opponents are pushing for a much different (and downright silly) market definition: The market for being at the top of the page in a Google search for plane tickets. Once again, this starts to sound an awful lot like the essential facilities doctrine. Facility: being at the top of the page. But it gets even more complicated. There are sponsored ads at the very top of the page. There are the top rankings in a natural search. And then there is that spot in between where Google Flight has its own sponsored listing for its services. So the essential facilities argument is even more absurdly nuanced: the essential facility is being in the exact spot where Google Flights has a sponsored listing. To anybody who has studied or practiced antitrust law, this Is, of course, utter nonsense. Expedia (or Travelocity or any other competitor) is basically arguing that this particular spot on the front page of a Google search amounts to an essential facility. This is a far cry from Aspen Skiing and an arguably essential facility. There is nothing essential about it. Can Expedia et al still compete? Of course. They can improve their content to get the first hit in the natural search results (as most consumers click on natural search results vs. sponsored listings). Or they can buy Google AdWords and obtain the very top listing among the sponsored results. Moving beyond the essential facilities doctrine, there is the even bigger point about competition: Where is the harm to competition or the consumer? It is nowhere to be found. The consumer can easily scroll down the page and look for the Expedia listing. Or, they can just type Expedia.com into the browser.
Just to see what others were thinking on this point, I ran a search for Google and essential facilities. Apparently, I’m not alone in viewing this Google antitrust nonsense as, well, exactly that: nonsense. See, e.g., Robert H. Bork & J. Gregory Sidak, Journal of Competition Law and Economics, Vol. 8 (2012) “What Does the Chicago School Teach About Internet Search and the Antitrust Treatment of Google.”