What's really at stake in the Google antitrust case?

What's really at stake in the Google antitrust case?

Summary: The FTC probe into Google's allegedly anticompetitive business practices may prove damaging to the search giant. But the entire technology market could be at risk, too.

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There's a lot we don't know about the FTC's antitrust investigation into Google. But no matter how it plays out, one of the fundamental principles of the Internet as we know it is on trial.

Let's back up. We know that Google is under scrutiny for allegedly stifling competition by favoring its own sites in search rankings, among other things. And we also know that Google chairman Eric Schmidt is going to be testifying in front of the US Senate on September 21st at a hearing billed as “The Power of Google: Serving Consumers or Threatening Competition?”

That's all eclipsed by the things we don't know. What will Schmidt say on the stand?  What questions do legislators have for Schmidt? Will the FTC actually lodge a formal complaint? In short, and for lack of a better way to phrase it, is Google guilty of antitrust law violations?

To get some perspective on how all those questions might be answered, I spoke to New York-based intellectual property lawyer Rob Kunstadt, who's been keeping a close eye on Google and was even quoted in a recent decision by Judge Denny Chin regarding the ongoing drama around the Google Books settlement with authors.

The main point that Kunstadt wanted to make in our conversation was that the sudden influx of lawsuits, legal attention, and, yes, antitrust complaints could simply be a sign that Google's decade-long winning streak as the poster child of the Internet era is drawing to a close.

After all, Kunstadt says, Intel and Microsoft may still be titans of the tech industry, but both ran into antitrust trouble that didn't destroy their businesses, but did demolish their positions as innovation leaders. And now it just might be Google's turn to face the music.

Moreover, Kunstadt explains that the FTC investigation is just that - an investigation. Regulators could find nothing at all. They could find a major infraction that requires Google to restructure its entire company. Or the FTC could fine Google for a few thousands of dollars and walk away satisfied.

There's simply no way of knowing what the FTC has in store for Google, and without hard data, there's a hypothetical case to be made for any contingency.

Kundstadt supposes that Schmidt's testimony will likely revolve around pushing the idea idea that as a business, and one of the very first major players in the search market besides, Google has the right to promote its own services ahead of competitors. That defense goes double when there are other search engines like Microsoft Bing ready and able to accept your search queries.

The extent of Google's market power an open question, and one worth exploring (the US Senate apparently agrees). But this all leads back to my original point.

What's really at stake in the Google antitrust case? The very notion of the web startup.

No matter whether or not the FTC brings a formal complaint to bear against Google, Schmidt's testimony is going to set the tone for the future of Internet business development. Is it worth even trying to innovate if Google is going to demote you in search results? The discussion of how much power Google wields is almost irrelevant in the face of public perception.

Look at the EU, where no less than nine antitrust suits have been filed against the search giant, accusing Google of essentially strangling their business with these supposed demotion practices. And investors are already skittish about making an enemy of the Googleplex. And that goes for the entire range of markets where Google is competing, from local deals to social networking.

I don't mean to be alarmist, and I highly doubt that letting Google continue as it allegedly has been would kill the very notion of innovation amongst web companies.

But barring a rhetorical miracle on the part of Schmidt when he takes the Senate floor, the spectre of doubt is going to be cast over Google for a long time to come no matter how the legal drama plays out. And that may turn out to be toxic for the technology market as a whole.

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18 comments
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  • Google wield a lot of power on the internet

    If Google for some reason drops your pageranking your internet related business could be finished. That is immense power. Wolrdwide 90% of websearches are done trough Google and google is using that enourmous power over the internet to move into other businesses as well.
    Google have bought 40 companies in recent years which is more than all their main competiros together and the are buying and wrestling their way into the entire scope of new web technologies competing with Facebook (Google+), with Apple (Android) and with Microsoft (Google docs, Chromebook)
    IE9
    • Message has been deleted.

      PeterCao
    • RE: What's really at stake in the Google antitrust case?

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      3shao
  • RE: What's really at stake in the Google antitrust case?

    Pure greed... those filthy people at google who broke all ethics in competition should be punished dearly and flushed down the city drain. The world doesn't need such evil people who has no respect for trade secrets to control the web. I really wish the EU and FTC hand them tough penalities so that their search and ad business is crippled .
    owlnet
  • RE: What's really at stake in the Google antitrust case?

    You just answered your own question.<br><br><I>"one of the fundamental principles of the Internet"</I><br><br>Google has way too much control over the Internet, which is scary.

    <I>"And that may turn out to be toxic for the technology market as a whole."</I>

    Maybe, but at least we'll have one less corrupt business poking about our e-mails, stealing our WiFi data, downloading browsers to our machines, most likely without users knowing about it, and have no regards for our privacy.
    The one and only, Cylon Centurion
    • RE: What's really at stake in the Google antitrust case?

      @Cylon Centurion Take your meds, buddy - you're going off thw deep end!
      radleym
    • RE: What's really at stake in the Google antitrust case?

      @Cylon Centurion Downloading browsers to our machines? The only browser Google has ever downloaded to my machine was a browser I specifically asked to have on said machine.
      Bucky24
      • RE: What's really at stake in the Google antitrust case?

        @Bucky24

        Download Google Earth, you'll see Google Chrome offered AND selected to download by default, hidden within the page. To make matters worse, <B>the option to make Chrome the default browser is selected by default as well.</B>

        http://www.google.com/earth/download/ge/agree.html

        Think people actually stop to read all that? Think folks downloading Earth actually see that they're downloading excess baggage? I wonder if they're doing this elsewhere...
        The one and only, Cylon Centurion
  • RE: What's really at stake in the Google antitrust case?

    I would be happy to drive the spike in the heart of google...however, google's power is simply a function of consumers using their tools.<br><br>Wanna break their back, stop using their junk.<br><br>I have a mail account so I can use an android, this is a serious violation, but I am sure the darn gumint won't look into that...<br><br>Luckily you can create a bogus email account and never use it.
    QAonCall
  • It's very easy to switch search engines

    Much easier than it is to switch OS'. What keeps Google's search engine on top is Google's credibility; if that is lost, users can, have, and will vote with their feet.

    I've not seen anything about this case that suggests that antitrust action is warranted.
    John L. Ries
    • RE: What's really at stake in the Google antitrust case?

      @John L. Ries
      co-sign .... I recently had to use Bing when the Chinese were at work on google, and I must say that lack of familiarity and trust sent me scurrying back to my goo.
      strangefruit
    • RE: What's really at stake in the Google antitrust case?

      @John L. Ries - What credibility? Google shapes the query response based on your location, past queries and your web surfing habits, and then directs you to sites that have paid for placement before giving actual search results. Google's past behaviour of spying on users without their awareness or permission doesn't engender credibility in a company, I myself will use any other search company before using Google's services, if they are tracking me, they haven't been caught at it yet but at least Bing doesn't complain because I do not allow cookies.
      Rndmacts
      • RE: What's really at stake in the Google antitrust case?

        @Rndmacts - You are nuts. Absolutely nuts. Just sayin'
        The Danger is Microsoft
  • RE: What's really at stake in the Google antitrust case?

    if you want to break up google, you have to break up apple, msft and FB, in short the concept of "ecosystem" that locks users in, as well as the single log in mechanism. google products are merely responses to competition from all said companies who employ the same strategy.
    jimmery
    • RE: What's really at stake in the Google antitrust case?

      @jimmery Msft already went through that "breakup" when they were forced to make consessions on the browser....They tried to claim that the browser was an essential part of the operating system and shouldn't be separated from it, or shipped without it.....yet the government in their infinite wisdom didn't believe them....Stupid Microsoft, the browser isn't an essential part of the operating system, right? Chromebooks, Android, iOS...none of those things rely on the browser, right?
      gomigomijunk
  • Message has been deleted.

    cambalkon
  • The Darling of the Internet

    What happened to the Darling of the Internet? Google, today, is not just a name, it is a verb like Xerox once was. My advice to Google is to work to build a reputation opposite of the one that people are talking about here.
    Minervo
    • RE: What's really at stake in the Google antitrust case?

      @Minervo Yeah, Google and Apple have become the new Microsoft and Microsoft has become the new kinder, gentler version of themselves, giving away their development tools, participating in many Open Source projects and contributing heavily to the Linux Kernal, etc....The world has turned upside down.
      gomigomijunk