The Federal Trade Commission recently concluded a two-year of investigation of Google’s search ranking practices with a decision that they didn’t violate antitrust legislation. This is great news for American entrepreneurs and consumers. Hopefully the European inquiry finds similarly.
Google commands 70% of the online search marketplace. So the argument is that if Google awards its own services higher rankings in its search results than it gives competitors like TripAdvisor and TheFind, that unfairly disadvantages them in the marketplace.
This line of reasoning assumes that Google shouldn’t own its own search results because it is the dominant market power — an idea with troubling property rights implications. If market domination determines what you can do with your business, that means that if I own a store, I don’t get to choose what’s on my shelves once a certain percentage of the market shops there. Besides a being a basic violation of property rights, the biggest threat with FTC action against Google was government regulation of of internet search, as Doug Kellogg, Community Manager for the National Taxpayers Union, pointed out in the Daily Caller. And letting government choose how search engines can rank results would be a terrible move for consumers for two reasons. First, it would lead to a decrease in the quality of search results. Second, it would remove some of the incentive needed to innovate in order to dominate the search marketplace. Regulation would harm quality search results because regulators don’t have the specific, up-to-date knowledge nor the incentive to make good decisions about how to offer the search results searchers most want. The fact that the case was brought by competitors, and not consumers, is instructive.
It’s also totally unnecessary. Think about it: No matter how profitable Google finds promoting its products above those of competitors, if consumers don’t find those products more useful, they’ll start using competitive search engines. Therefore Google is very incentivized to provide the best results, whoever they belong to. That’s probably why the FTC found that Google had been acting in the best interests of its customers. How else (besides cronyism) will Google continue to own the majority of the search market?
In addition, regulation like this will disincentivize innovation in businesses that serve as a conduit between consumers and other businesses. If we penalize dominating a market or competing with the businesses you connect with consumers we disincentivize the consumer-benefiting innovations required to do so, making consumers ultimately poorer.
When you visit the FTC’s Bureau of Competition page, a banner at the top greets you: “Welcome to the Bureau of Competition.” The idea of government bureaucrats promoting competition would be hilarious if it weren’t so depressing.
Source: AFF Doublethink Online | James Velasquez
Source: AFF Doublethink Online | Joseph Hammond