Admitting Role In Google Anti-Trust Complaints Microsoft Complains Of Google “Lock In”
Responding to Google’s aggressive assertion that Microsoft is behind many of the anti-trust complaints that have been leveled against Google in the recent past, Microsoft in a blog post by Vice President and Deputy General Counsel Dave Heiner essentially says “get over it.”
Google claimed that Microsoft was directly or indirectly responsible for the anti-trust complaints recently filed in individual European countries and with the EC:
Given that these complaints will generate interest in the media, we wanted to provide some background to them. First, search. Foundem – a member of an organization called ICOMP which is funded partly by Microsoft – argues that our algorithms demote their site in our results because they are a vertical search engine and so a direct competitor to Google. ejustice.fr’s complaint seems to echo these concerns . . .
Regarding Ciao!, they were a long-time AdSense partner of Google’s, with whom we always had a good relationship. However, after Microsoft acquired Ciao! in 2008 (renaming it Ciao! from Bing) we started receiving complaints about our standard terms and conditions. They initially took their case to the German competition authority, but it now has been transferred to Brussels.
Microsoft fires back, telling Google to stop bellyaching and that it’s quite normal for competitors to be involved in such complaints. It also calls out what it perceives to be Google hypocrisy here:
Google’s public response to this growing regulatory concern has been to point elsewhere—at Microsoft. Google is telling reporters that antitrust concerns about search are not real because some of the complaints come from one of its last remaining search competitors.
Google hasn’t been shy about raising antitrust concerns about Microsoft in the last few years, either.) This is the way that competition law agencies function: They look to competitors in the first instance to understand how particular markets operate, the practices of dominant firms and the competitive significance of those practices.
Microsoft acknowledges that it’s been trying to influence the relevant regulators with its opinions of Google:
Over the past few months Microsoft, too, has met with the DOJ and the European Commission. The subject of our meetings has been the competition law review, now completed, of the search partnership between Yahoo! and Microsoft. As you might expect, the competition officials asked us a lot of questions about competition with Google—since that is the focus of the partnership. We told them what we know about how Google is doing business.
Microsoft goes on to complain of “Google business practices that tend to lock in publishers and advertisers and make it harder for Microsoft to gain search volume.”
What these regulators and competition authorities need to determine is whether Google is doing anything affirmative or specifically to harm competition or competitors. Has Google specifically sought to prevent this or that competitor from ranking in search results or otherwise “punished” particular companies as these complaints explicitly allege. Beyond this, the “lock in” that Microsoft complains of is belied to some degree by the company’s own aggressive toolbar and “default search” deals with major PC makers such as HP and carriers such as Verizon.
Microsoft does provide a concrete discussion of how Google Book Search may well run afoul of anti-trust rules, but the company doesn’t further elaborate this “lock in” claim.
Microsoft is gaining search volume and reach through its now approved search deal with Yahoo. If Google weren’t dominant — if search share were more evenly distributed — that deal would never have been approved because it effectively removes a competitor (Yahoo) from the market, with all the related concerns about pricing and so on. Those same arguments were made effectively against Google’s earlier but aborted search-ads deal with Yahoo.
The MicroHoo search deal is being permitted because of Google’s market share, to enable more competition. In other words, by making the search market less competitive, in the form of the Microsoft-Yahoo combination, it becomes, paradoxically, more competitive. There’s truth in this argument, as a practical matter, because search is a game of scale, but there’s equally something cockeyed about it from an abstract legal standpoint.
Google has grown to this position of dominance because it has been the best and most effective search engine in the market. Competitors would undoubtedly disagree but consumers have voted. Craigslist is far from the most functional online classifieds marketplace, but consumers continue to use it. In other words, consumers may act in the market in ways that are “irrational” or defy expectations in some cases. But in Google’s case consumers have made their choice freely without coercion or manipulation.
Google has also created other products that people use and which themselves reinforce Google’s search brand and usage. There’s nothing inherently anti-competitive about putting a search box in GMail or on the home-screen of an Android handset. Microsoft has, until Bing, failed to gain traction in search because its product was, frankly, inferior. Bing is a strong offering and that has shown itself in market share gains, which have partly harmed its partner Yahoo.
It may be quite legitimate as a “policy matter,” however, to argue that once a single company reaches market share percentage or penetration level X regulatory bodies should step in to ensure that the market isn’t distorted by that dominance and that the company in question doesn’t abuse its position going forward. Once attained, power is very tempting to wield.
But that’s a different discussion than asserting company X (here Google) has ascended to its position or is maintaining its dominance through illegal means.