In his letter today to FTC Chairman Joseph Simons, Senator Orrin Hatch (R-UT) asked the FTC to look into Google’s search practices. However, the facts haven’t changed since the FTC closed a comprehensive antitrust investigation in 2013.

—The FTC found Google’s search practices were pro-consumer, and today search is even more competitive, see our backgrounder here

—The global advertising market is highly competitive and vibrant

—Many claims against Google are old, debunked, and driven by competitors

The FTC’s Multi-Year Investigation Into Google Resulted In A Unanimous, Bipartisan Ruling That Google’s Search Practices Were Pro-Consumer And Did Not Violate Antitrust Law

The Federal Trade Commission (FTC) already spent nearly three 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.”

According to economists Erik Brynjolfsson, Felix Eggers and Avinash Gannamaneni, Americans would have to be paid $17,500 to give up search engines. “One way to quantify how much these internet services are worth is by asking people how much money they would have to be paid to forgo using them for a year. A new working paper by Erik Brynjolfsson, Felix Eggers and Avinash Gannamaneni, three economists, does exactly this and finds that the value for consumers of some internet services can be substantial. 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.” (“How Much Would You Pay To Keep Using Google?” The Economist, 4/25/18)

The Global Advertising Market Is Highly Competitive With Google And Facebook Expected To Lose Share Of Digital Ads In 2018

Advertising will grow to be a $535 billion industry, with digital and mobile advertising as just one component. “In its latest report on global advertising market trends, released December 4, 2017, MAGNA forecasts media owners’ net advertising revenues to grow by +5.2% to $535 billion in 2018. This will be an acceleration from 2017 (+4.1%) mostly due to the impact of cyclical drivers in 2018 (FIFA Football World Cup, Winter Olympics, US Mid-Term elections). Neutralizing the five billion dollars of incremental ad spend generated by those cyclical events, the 2018 growth would be +4.1%, compared to +5.1% in 2017. Digital and mobile advertising sales will grow by +13% in 2018 to reach $237 billion or 44% of global advertising revenues. They will comprise 50% of total advertising sales by 2020.” (Global Advertising Forecast: Winter Update, Magna Global, 12/4/17)

Online and offline advertisements substitute for one another, and companies allocate their dollars in a variety of ways, notes Project DisCo. “Economic research confirms that online and offline advertisements substitute for one another. This is consistent with what one would expect to find. As we’ve discussed here on DisCo before, Internet radio does compete with traditional broadcast radio — aggressively so. It would therefore be strange to suggest that advertising on digital radio doesn’t similarly compete with advertising on broadcast radio. By using data from the Internet Advertising Bureau [1], [2], the Association of National Advertisers, and market research and intelligence provider MAGNA Global, the graphic below illustrates where digital advertising fits into the broader advertising space with the four other major advertising vehicles (radio, outdoor/billboards, print, and television), and represents how this categorization breaks down even further in the digital ad-supported ecosystem.” (Matt Schruers, “Infographic: How Ad Dollars Are Spent,” Project DisCo, 1/16/18)

eMarketer research predicts leading tech services’ share of digital ads will fall as smaller rivals grow quickly, “seeking a larger share of the pie.” “In its latest forecast, research company eMarketer predicts the combined U.S. digital ad market share of Alphabet Inc.’s Google and Facebook will fall for the first time this year, shrinking to 56.8% from 58.5% last year. At the same time, overall digital ad spending in the country is likely to grow nearly 19% to $107 billion in 2018. To be sure, Google and Facebook are still increasing their total ad revenue significantly, and no other competitor even cracks 5% market share. But those smaller rivals are growing more quickly than expected and are seeking a larger share of the pie.” (Alexandra Bruell, “Rivals Chip Away At Google’s And Facebook’s U.S. Digital Ad Dominance, Data Show,” The Wall Street Journal, 3/19/18)

60 Minutes’ Segment — Cited In Hatch Letter — Was A Rehash Of Old, Debunked Arguments Driven By Google’s Competitors, Ignoring The Positive Role Of Leading Tech Companies In The Economy

Yelp, whose traffic has grown nearly 70 percent since the FTC closed its investigation, has continuously attacked Google for seven years, but its claims have been repeatedly debunked. Former FTC Commissioner Joshua Wright has noted that Yelp’s claims of harm are based on arguments from which “no empirical economist, social scientist, statistician, or student of the scientific method would be willing to draw any such inferences – much less impose legal liability or draconian remedies.”

As the Commerce Department noted, the digital economy has been a “bright spot” for the U.S. economy. “BEA’s initial estimates show that the digital economy has been a bright spot in the U.S. economy, growing at an average annual rate of 5.6 percent per year from 2006 to 2016 compared to 1.5 percent growth in the overall economy. The digital economy accounted for 6.5 percent ($1,209.2 billion) of current‐dollar GDP ($18,624.5 billion) in 2016. When compared with traditional U.S. industries or sectors, the digital economy ranked just below professional, scientific, and technical services, which accounted for 7.1 percent ($1,326.3 billion) of current‐dollar GDP, and just above wholesale trade, which accounted for 5.9 percent ($1,102.6 billion) of current‐dollar GDP (chart 1).” (Kevin Barefoot, Dave Curtis, William Jolliff, Jessica R. Nicholson, And Robert Omohundro, “Defining And Measuring The Digital Economy,” Bureau Of Economic Analysis, 3/15/18)