ICYMI: Search Defaults, Not Anticompetitive Faults
Today’s search market benefits consumers, advertisers, and distributors across the board. Though the DOJ lawsuit claims Google’s search default status is anticompetitive, the process to secure defaults leads to more competition, innovation, and affordability in the search market. New commentary from Jay Ezrielev at Competition Policy International explains that the DOJ lawsuit focuses narrowly on alleged harms to competitors, rather than competition. Misguided antitrust actions like this constitute a dangerous step backward for antitrust, creating confusion for innovators in the digital economy. As Ezrielev points out:
— “A default is a user convenience. It saves users the time and effort of selecting options, but also leaves them the flexibility to customize their systems through selecting alternative options.”
— “The revenue sharing agreements effectively reduce the distributors’ marginal costs of serving users and provide direct incentives for OEMs, wireless service providers, and browsers, to compete for new users by reducing prices and investing in innovation.“
— The competitive bidding process creates an efficient allocation of search status. “Securing distribution channels to reach end-users is a common element of competition, and it is normal for distributors to receive compensation for providing distribution services.”
— “The practice of paying to use scarce resources is ubiquitous in business. Firms hire talented engineers and scientists, lease retail and office space, lease production facilities, and lease supercomputing resources.”
— “The efficient allocation of a resource is one that generates the greatest value from its use. For the choice of a default search engine, this value reflects the value to consumers of having their preferred search engine set as default, as well as the value to search engines from gaining additional scale, which the search engines can use to improve their products and services.”
Additionally, DOJ’s complaint generates further uncertainty about antitrust standards, impeding incentives to compete in the technology sector. “In the view of the DOJ and the eleven states, how could Google lawfully compete for default status? What are the rules of conduct when it comes to going after users in a market with scale effects? Should Google have avoided paying for default status? Should Google have avoided bidding to be the default search engine? Should Google have bid on only some default opportunities at search access points? Should Google have bid less aggressively? Should Google have been more accommodating to other search engines so as to allow them to gain greater scale? The Complaint does not answer these questions, leaving market participants not knowing exactly what conduct would raise concerns for antitrust enforcers.”
Read “The Google Complaint: A Step Backward for Antitrust Policy” at Competition Policy International.