Two trustbusters who could decide Google's future

Joaquin Almunia in Europe and Joshua Wright in the United States hold influence in the fight over whether Google abused its dominance in search.

Joaquin Almunia, the European Commission's commissioner for competition
Joaquin Almunia, the European Commission's commissioner for competition European Commission

Think of them as the good cop and the bad cop.

Two individuals hold central positions in Google's antitrust challenges from the U.S. Federal Trade Commission and the EU's European Commission. As the European commissioner for competition, Joaquin Almunia has tremendous influence over what happens to Google. And in the United States, George Mason University professor Joshua Wright is expected to get some influence soon as an incoming FTC commissioner.

They contrast sharply. Almunia has been highly critical of Google and how it's done business since becoming dominant in search. Wright, though, not only advocates minimal regulation of fast-moving high-tech companies, he's also written papers that explicitly defend Google's position.

Regulators ready for action
The two men's views both figure in the debates over Google's immediate future, though Wright for now is technically an informed outsider. Both sets of antitrust regulators invested a lot in their Google cases, and they're both poised to take action.

The FTC's scrutiny of Google began formally in June 2011. It hired high-profile attorney Beth Wilkinson , a former DOJ prosecutor and a partner in the firm Paul, Weiss. The FTC's staff recommended a lawsuit against Google, The New York Times reported in October, and four out of five FTC commissioners agree, Reuters reported. The FTC's antitrust concerns expanded to include patent licensing concerns with Google's Motorola Mobility division.

Joshua Wright
Joshua Wright George Mason University School of Law

Meanwhile, the EC began its Google investigation even earlier, in February 2010. It's been engaged in discussions with Google since this summer. And it, too, is holding out the threat of serious legal action, which in Europe means filing what's called a statement of objections.

Ironically, the antitrust attention comes at a time when there's arguably never been fiercer high-level competition among tech giants Google, Apple, Microsoft, and Amazon. "They're all running the same playbook," said Adrian Drury, Ovum's lead analyst for media and broadcast. "They're all investing in cloud services, hardware, original content production, music services." This antitrust case is narrower in scope, though -- not that search isn't plenty broad on its own.

Almunia's attack
Almunia began the European Union's case against Google and is engaged in discussions about whether to settle it or lodge a statement of objections. He's been outspoken about his objections so far.

"Our investigation has led us to identify four concerns where Google business practices may be considered as abuses of dominance," Almunia said in a speech in May.

The first: "In its general search results, Google displays links to its own vertical search services differently than it does for links to competitors. We are concerned that this may result in preferential treatment compared to those of competing services, which may be hurt as a consequence."

For more details, check our story on the issues and possible outcomes of Google's antitrust cases .

Almunia also said the EC is concerned that Google copied content from other sites for use in search results -- though he didn't specifically name Yelp, a company that's complained about that very thing. He also objected to "de facto exclusivity" for Web site publishers that include Google search boxes, saying third parties can't offer accompanying search ads. And he pointed to Google restrictions that make it hard for middlemen to offer their advertiser customers the ability to place search ads on multiple sites.

Almunia has been on the European Commission since 2004, with most of that time spent as commissioner for economic and monetary affairs. The EC's heavy antitrust scrutiny of Google's search operations kicked into high gear at the same time he became commissioner for competition in February 2010.

The Spanish politician's earlier projects could induce uncomfortable squirming at a corporate colossus that prefers more laissez faire regulation. In the early 1990s, he directed a research program called "Equality and redistribution of income" at the Fundacion Argentaria. And in 2002, he became director of the progressive research center called Laboratorio de Alternativas, which seeks to improve laws to create "an advanced society" when it comes to "individual and collective liberties, justice and social equity, and economic progress."

Google's ally
In the United States, Joshua Wright clearly sees things more Google's way. In September, the Obama administration announced its intent to nominate Wright to be an FTC commissioner to replace J. Thomas Rosch, who is retiring.

A study by Joshua Wright, the Greg Mason University antitrust scholar whom the Obama administration has named to an FTC commissioner post, compared Bing and Google search results that include content from the two companies' own services. In cases where the companies featured their own content in the first page of search results, the Google content appeared on rival search engines nearly twice as often as the Bing content. "These results suggest that Bing's organic search results are significantly more biased in favor of Microsoft content than Google's search results are in favor of Google's content," Wright concluded in a 2011 paper.
A study by Joshua Wright, the Greg Mason University antitrust scholar whom the Obama administration has named to an FTC commissioner post, compared Bing and Google search results that include content from the two companies' own services. In cases where the companies featured their own content in the first page of search results, the Google content appeared on rival search engines nearly twice as often as the Bing content. "These results suggest that Bing's organic search results are significantly more biased in favor of Microsoft content than Google's search results are in favor of Google's content," Wright concluded in a 2011 paper. International Center for Law and Economics/Joshua Wright

An FTC decision to file a lawsuit or settle a case requires a majority vote by the five FTC commissioners. Wright is about as strong an ally as Google could hope for in those discussions.

In a 2011 speech, Wright displayed his caution about interfering in fast-moving markets because of what he calls "error costs" of regulatory action:

We ought to be concerned when innovation is a particularly important component of the competitive process, not just static competition on prices -- you go to the store, Coke and Pepsi put different price labels on the bottle. We ought to be really careful about condemning what turns out to be pro-competitive behavior.

Regarding Google specifically, Wright published a paper titled "Defining and Measuring Search Bias: Some Preliminary Evidence" that examines how often Google blends material from its own services into general search results, and he compared that to how often Microsoft's Bing and others do the same.

His conclusion, based on an analysis of 1,000 search queries: "Everybody who owns their own content gives it better shelf space," but "the own-content bias is about twice as high for Bing." Wright said in his speech that the finding has antitrust implications for Google:

In antitrust law there's conventional wisdom that if firms without market power are doing something and firms with market power are doing something, there's a plausible inference that there's a good business reason for the conduct that's not exclusionary.... There's probably a good reason that has nothing to do with the acquisition of market power. We ought to think really hard about those antitrust first principles, about finding competitive effects before we break out the Sherman Act in its many splendors.

That paper and another pro-Google piece Wright co-authored, "If Search Neutrality is the Answer, What's the Question?" were sponsored by a grant from the International Center for Law & Economics (ICLE). And as both papers disclose, "ICLE has received financial support from several companies and individuals, including Google," although Google said it wasn't involved in the study.

Google has plenty of other legal allies -- among them former federal judge Robert Bork , who was in favor of antitrust action against Microsoft, and Daniel Crane. But Wright's FTC clout gives him special importance.

 

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