BEFORE YOU WATCH: Five Facts Ahead Of Tonight’s 60 Minutes Segment On Tech & Competition Policy
This evening, 60 Minutes will air a segment focusing on Google’s critics, who say the company has “stifled competition,” and Europe’s Margrethe Vestager, an “antitrust enforcer who is taking action.” We’ve seen others recycle old arguments pushed by competitors of leading tech services in the past. So before you watch, below are five things you need to know.
1. The Federal Trade Commission (FTC) already spent two years looking at Google’s search practices, and all three Democrats and both Republican Commissioners – following a unanimous recommendation from staff – determined that Google’s search results didn’t violate antitrust law. After its extensive investigation, which included thousands of pages of documents and depositions of top Google executives, the FTC found this evidence “does not support the allegation that Google’s display of its own vertical content at or near the top of its search results page was a product design change undertaken without a legitimate business justification.” The FTC also found a lack of evidence that Google “manipulates its search algorithms to unfairly disadvantage vertical websites that compete with Google-owned vertical properties,” and concluded instead “that Google’s display of its own content could plausibly be viewed as an improvement in the overall quality of Google’s search product.”
2. The European Commission’s (EC) actions against Google are based on a puzzling analysis. For example, by determining Google Shopping does not compete with e-commerce platforms, it ignored the 27x increase in European investment in e-commerce platforms, cherry-picking struggling companies to argue harm. As CCIA’s Project Disco noted, the EC found that “merchant platforms compete in a different market than comparison shopping websites” and thus “cannot be considered as substitutes.” This was “a curious finding given that there are thousands of merchants on online marketplaces which allow consumers to quickly compare products and prices. It strains credulity to think that consumers who would like to compare product prices would use a comparison shopping service and consciously refrain from comparing offers on other e-commerce websites.”
3. Criticisms of tech leaders are driven by competitors seeking regulation that improves their own market positions. For example, Yelp claims harm from Google despite seeing users grow by 70% since the FTC closed its investigation. CCIA’s Matt Schruers recently wrote about this corporate strategy: “Rather than fight it out in the market, these businesses aim to improve their competitive position by waging war against rivals with the regulatory process, demanding investigation and regulatory intervention. These demands often receive media coverage, but the parochial interest often escapes notice.” Other critics featured in tonight’s show are part of this trend:
—Jonathan Taplin has a long history of championing Google’s competitors. He got his start at USC’s Annenberg Innovation Lab, which is largely funded by the content companies that have attacked Google for years. He started Intertainers, which became a patent troll that has sued tech companies since the 2000s.
—Gary Reback has been paid to represent complainants of Google since 2010, including Foundem, Disconnect, ShopCity, and FairSearch. Fairsearch is currently being run by Google competitors Oracle and Naspers.
4. Competition is thriving in the tech sector – which is growing at nearly 4X the rate of the overall economy – but overzealous antitrust action would harm start-ups, per Bruce Hoffman of the FTC. The highly competitive nature of tech leads to lower prices, better products, and more innovation. For example, the tech sector leads in R&D spending. But as Hoffman warned, if “acquisition opportunities are constrained the capital available for startups may fall,” reducing new entrants into the market.
5. 87 percent of people view Google favorably, and consumers value its products highly, reporting they would have to be paid $17,500 to forgo search for a year. Citing MIT economist Erik Brynjolfsson, The Economist reports, “Survey respondents said that they would have to be paid $3,600 to give up internet maps for a year, and $8,400 to give up e-mail. Search engines appear to be especially valuable: consumers surveyed said that they would have to be paid $17,500 to forgo their use for a year.”