Daily Journal

The FTC Witch Hunt Against Google and Entrepreneurial Success

Nov. 13th, 2012
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RALEIGH — The U.S. Federal Trade Commission is once again overstepping its bounds. Recent news reports suggest that the FTC will soon file a formal antitrust case against Google. The case will claim that Google engages in anti-competitive behavior such as unfairly favoring its own products in its search results.

In response to these allegations, we must ask the FTC a very important question — one that should be asked far more often when federal bureaucracies attempt to justify their power grabs: So what?

So what if Google favors its products over its competitors’? Does this give Google a monopolistic advantage over others? More importantly, does it warrant federal action against one of the most innovative and successful companies of the 21st century? On both counts, no.

The FTC’s case against Google just doesn’t hold water. Case in point, the foremost concern of any antitrust action should be consumers, and there’s no evidence that Google’s practices have harmed consumers in any way. According to a March 2012 survey conducted by Zogby and the National Taxpayers Union, 79 percent of Americans said the federal government should not “regulate the content and appearance of search results.” 87 percent of respondents agreed that they could switch to another search engine easily if they didn’t like the results a particular site was giving them.

Therein lies the main flaw in the FTC’s shoddy claims against Google. The company has done nothing to give itself an unfair advantage over competitors. In fact, the Internet is rife with search engine competition. One of Google’s biggest challengers, Microsoft’s Bing, recently launched a “Bing it On” campaign, which puts Bing’s search results up against Google’s. According to Microsoft, consumers prefer Bing 2-1 over Google.

And that’s just one rival. Google faces an abundance of competition from other sites like Amazon, Kayak, TripAdvisor, Yahoo, and Yelp. Even Apple has joined the Internet search game with the introduction of Siri to the iPhone.

In the face of so much competition, how has Google managed to stay on top? By innovating and outperforming. Google’s search algorithm isn’t designed to make you wade through dozens of semi-relevant results until you find the perfect match. Google knows consumers want relevant results fast, and that’s what the company aims to deliver. By constantly tweaking its search formula and rigorously analyzing the outcomes, Google has so far been able to outperform its competitors. The search giant’s success is a testament to its ability to please consumers. The FTC foolishly misreads that success as evidence of unfair trade practices.

With such a wide variety of available search options and such a low barrier to entry into the search engine market — not to mention Google’s high consumer satisfaction — the FTC has no legitimate reason to file antitrust claims against Google.

That won’t stop them, of course. The commission has a history of dreaming up monsters to slay — including the Schwinn Bicycle Company in the 1960s, IBM in the ’70s, and Microsoft in the ’90s. Google’s supposed monopoly is no different.

If the FTC moves forward with its case, it will strike a blow against innovation, entrepreneurship, and free enterprise. That’s the view of 101 prominent economists who signed a letter by the National Taxpayers Union urging public officials to be wary of the FTC’s ill-advised investigation. As the NTU’s letter points out, the Federal Trade Commission is sending a contradictory message to all American businesses: “Be productive and creative, but not so productive and creative that competitors and bureaucrats find it in their interest to undermine you.”

Worse yet, this case will affirm the FTC’s seemingly limitless power and the economically corrosive cronyism already so prevalent throughout the federal government. In pushing this case, the Federal Trade Commission isn’t protecting American consumers. It’s protecting Google’s competitors, whose profits and market share shrink as a result of Google’s success.

The FTC is taking consumers’ clearly demonstrated preferences and tossing them aside as it attempts to restructure the market according to its whims. This dangerous practice is antithetical to the free market competition that ensures producers’ goals focus on pleasing consumers rather than government bureaucrats.

Taking action against Google attempts to correct a nonexistent problem and will do far more harm than good. By preparing this case, the Federal Trade Commission is perpetuating a shameful history of government favoritism toward corporate interests over consumer choice.

Garrett Hunter and Hubert Papes are research interns for the John Locke Foundation.