On Capitol Hill, it's all about beating down Google
A recent discussion in Washington, D.C., shows that while no U.S. antitrust lawsuit has been filed against Google, congressional staff have already delivered a guilty verdict.
commentary WASHINGTON--It was inevitable that Google, one of the world's largest technology companies, would find itself in the crosshairs of the Washington antitrust establishment. But what is, or should be, a little surprising is how enthusiastic the establishment became about pulling the trigger.
Take an event I moderated last week in the U.S. Capitol building organized by the free-market group TechFreedom, a nonpartisan think tank.
In theory, members of Congress and their staff carefully craft public policies that encourage the development of new technologies and benefit the entire nation. But the reality of the questions asked was less Schoolhouse Rock and more jockeying over who gets to be on the firing squad at a corporate execution. One staffer on the Senate antitrust committee offered this complaint, which I'm not making up: "Nobody on the panel talked about innovation and that being a potential harm to consumers."
Through a quirk of timing, the building's public entrance was closed during much of the event because of airport-style concerns over an unattended backpack. That meant the audience was almost entirely congressional aides able to bypass such inconveniences. One of those aides--this one was from the Senate Commerce committee--wondered aloud whether anyone saw "a problem with Google launching its content with its other services like Gmail?"
TechFreedom's panel on search neutrality was composed of law professors, a species of academics not uncomfortable with arguments untethered from reality. But even they didn't know exactly how to respond to a Senate staffer's speculation that the government should punish innovation.
"It was a pretty uniformly hostile audience," says panelist Geoffrey Manne, who appears to have mastered the art of delicate understatement. Manne, executive director of the International Center for Law & Economics and a lecturer at the Lewis & Clark Law School, recalls the questions from Capitol Hill aides as being quite "aggressive."
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A week or so later, it's clear where that aggression has been channeled: confirmation that the Federal Trade Commission is investigating Google in what appears to be a broad-ranging inquiry into the company's business practices, especially in search advertising.
And those same aides have been behind threats by the Senate Judiciary's antitrust subcommittee to send subpoenas to Google CEO Larry Page or Chairman Eric Schmidt to force them to testify at a hearing that will be held before the August recess. This is an exercise in public relations, not fact-finding: politicians know that a CEO's appearance will draw more press attention.
Sen. Herb Kohl, the Wisconsin Democrat who heads that subcommittee, seems to be as neutral and open-minded as his aides. Kohl previously sent a letter to the Justice Department suggesting it spike a Google-Yahoo ad partnership; he informed the FTC of his "concerns" about Google's acquisition of ITA Software; he worried about "undue market dominance" as the result of Google's purchase of AdMob. In a press release in March announcing a "subcommittee agenda" for the next two years, Google was the only Internet company singled out for special attention.
Kohl surely knows that the FTC pays close attention to what House and Senate oversight committees do: research has shown that one additional congressional hearing raises the probability of an FTC merger challenge by around 4.2 percentage points. (At this rate, it wouldn't be entirely surprising if Kohl takes a post-Senate job as a Microsoft lobbyist. Anyone remember where FCC commissioner Meredith Baker ended up?)
The final question at the event came from an antitrust subcommittee staffer who asked this:
Some of you were praising Google for their ability to separate sponsored advertisements from the natural results. I guess I question that a little bit. Because there's been a major evolution in Google to reducing the size of the disclaimer from sponsored advertisements to just the three letter word "ads." ... I'm wondering if the separation is really as clear as some of you have described it as.
Eric Goldman, a panelist who teaches law at Santa Clara University, offered a cogent reply.
The change was "driven by some of the litigation over trademark battles where the term 'sponsored' has special meaning under trademark law," Goldman said, "And by other critics who demanded that Google change it from 'sponsored links' to 'ads.' And so they did it in part in response to their critics. And now the critics are saying, 'Why did you change it?'"
Translation: you're damned if you do, and damned if you don't. Welcome to the reality of modern antitrust investigations, Washington-style.
Disclosure: Declan McCullagh is married to a Google employee.
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