Antitrust

I am now also a contributor for Forbes writing the Tech Capitalist blog:

• Click here for my first post: Why Motorola's Patent Play Backfires.

Google's purchase of Zagat, a leading restaurant guide and reviewer, opens a search conflict can of worms just as the FTC is in the middle of a broad antitrust investigation of Google, which includes investigating the allegation that Google deceptively favors its own content in its publicly represented unbiased search rankings.

Top ten questions for the FTC to ask Google.

The DOJ lawsuit against the AT&T/TMobile merger has many serious flaws that will make it difficult for the DOJ to meet its burden of proof in court that this merger is anti-competitive.

• Court cases are precedent, fact, and merit driven, and DOJ's case is much weaker in those critical dimensions than most appreciate or reports indicate.
• (See DOJ's release here and the DOJ's complaint here.)

Importantly, if the DOJ ultimately cannot prove this merger is anti-competitive in a court of law, that official legal decision would make it legally difficult for the FCC to block the merger on competition grounds under the FCC's public interest standard, especially given that the merger would bring more broadband speed more quickly to more Americans, and create jobs, which the FCC's claims are their top public interest priorities.

• Simply, the precedents, facts, and merits are friends of the proposed AT&T-T-Mobile deal.

I.   Summary of Top Ten Flaws in DOJ's Case

The DOJ's very tough enforcement agreement to not criminally prosecute Google for knowingly promoting illegal prescription drug trafficking for six years has many under-appreciated implications for Google's business and brand going forward.(See the DOJ-Google Agreement here and the DOJ's release here.)

• Simply this is a criminal non-prosecution agreement not resolution of a civil case because:
  • Only the criminal statutes that were violated authorize a $500m forfeiture penalty; and
  • The agreement explicitly empowers the Government to criminally prosecute Google at its sole discretion, if it believes Google has violated the agreement.
• In effect, this is a criminal plea bargain where Google agrees to a huge fine, cooperation with the government's ongoing investigations, and two years of probation in return for no criminal prosecution of Google.
  • Reading between the lines, the Government's undercover "sting operation" must have uncovered exceptionally incriminating and embarrassing evidence that Google did not want exposed in a long public criminal trial.

To understand how Google is deceptively misdirecting attention away from their own ignominious record of serial property infringement by loudly accusing its competitors of being anti-competitive for enforcing their patent rights, see my new Forbes op-ed: "Google Asserts Property Rights Are Anti-Competitive."

This is important because:

• The FTC is currently investigating Google for a variety of deceptive and anti-competitive acts and behaviors;
• Google has a history of trying to distract law enforcement from focusing on Google by flinging accusations at others; and
• Infringement of competitors' property rights is arguably one of the most anti-competitive practices a dominant firm can engage in.

Few have connected the dots of how Google's serial mass infringement of competitors' property has been integral to Google's rapid monopolization of the search business and its strategy to rapidly extend that search business market power in most every direction.

Simply, no one can compete with unabashed property infringers.

Find the op-ed here.

In the end, the U.S. Government is highly-likely to approve the AT&T/T-Mobile merger, despite the significant opposition, because of three over-riding realities: 1) market/financial realities, 2)DOJ legal/precedent realities, and 3) FCC public-interest realities.

I.    Market Reality:

T-Mobile's leadership and owners have decided that they are unable and unwilling to invest what is necessary in order to compete going forward in the American 4G wireless market, and given that fundamental premise, the AT&T/T-Mobile merger is the optimal market outcome for T-Mobile's customers and for competition.

• T-Mobile shopped itself for a good while in order to fully test its market options and ultimately chose to merge with AT&T as the best outcome for all concerned from its perspective.

So the key baseline fact grounding the DOJ/FCC's decision processes here, is that T-Mobile's leaders/funders are effectively exiting this business one way or another long term via merger, sale or benign neglect.

Silicon Valley local merchants, who compete with Google Places, have complained to Silicon Valley's local paper, the San Jose Mercury News, that Google is effectively penalizing their online content so that in practice, no one can find them.

• See the article here: Local Business Site Challenges Google Ranking.
• See the site Google has penalized here: www.ShopPaloAlto.com.

This could have the makings of another Google antitrust complaint of interest to the FTC and/or the California Attorney General to determine if Google is being:

• Anti-competitive to an important local competitor to Google's own local offering, Google Places, or
• Deceptive in its representations of being an unbiased information broker and never manipulating search results for its own commercial benefit.

Where Google is vulnerable here, is that it is forcing its own self-serving and unappealable standard of online "authority" (which drives Google's search ranking and reinforces Google's market power), on the Silicon Valley local shopping marketplace, smack in the face of common sense and real life commercial authority in the physical marketplace.

How Google's deceptive and predatory search practices harm consumers is the focus of Part VIII of my four-year antitrust research series on Google. (See www.Googleopoly.net for the whole series.)

I. Summary:

My Googleopoly VIII white paper here presents evidence of four things of import to the FTC's current antitrust investigation of Google:

To see the first free-market legal argument explaining how Google's market behavior systematically harms consumers under antitrust law, read my Forbes op-ed: "Google's Deceptive Practices Harm Consumers."

• This is important because Google and its defenders believe the benefits Google provides consumers are the bedrock of a winning antitrust defense.

Few have grasped the huge significance that it is the FTC (with its unique supplemental Section 5 authority) and not the DOJ, that is investigating Google for antitrust.

Most also have missed how vulnerable Google is to the charge that many of its marketing practices are illegal deceptive misrepresentations of its business.

My Forbes op-ed link is here.

The FTC is centering its Google antitrust investigation on Google's predatory search practices that anti-competitively abuse Google's dominant market power to thwart competition.

• As the dominant online information access gatekeeper, Google has unique market power over the one place online where every business needs to be able to compete in order to be found by potential customers.
• At core, Google's predatory search practices manipulate search results to anti-competitively advantage some Google content and disadvantage some competitors' content, all while misrepresenting to the public that Google's search business is unbiased and never manipulates search results.

Google's Predatory Search Practices

The FTC would not have launched this investigation if it did not believe Google has dominant market power in search advertising, and as such, has special legal obligations to not abuse its market dominance to impede competition -- market obligations that non-dominant firms do not have.

• Gaining or enjoying dominant market power or a monopoly is not illegal, but it is illegal to anti-competitively gain, maintain or extend dominant market or monopoly power.