July 2011

[By Geoffrey Manne and Joshua Wright.  Cross-posted at TOTM]

Our search neutrality paper has received some recent attention.  While the initial response from Gordon Crovitz in the Wall Street Journal was favorablecritics are now voicing their responses.  Although we appreciate FairSearch’s attempt to engage with our paper’s central claims, its response is really little more than an extended non-sequitur and fails to contribute to the debate meaningfully.

Unfortunately, FairSearch grossly misstates our arguments and, in the process, basic principles of antitrust law and economics.  Accordingly, we offer a brief reply to correct a few of the most critical flaws, point out several quotes in our paper that FairSearch must have overlooked when they were characterizing our argument, and set straight FairSearch’s various economic and legal misunderstandings.

We want to begin by restating the simple claims that our paper does—and does not—make.

Our fundamental argument is that claims that search discrimination is anticompetitive are properly treated skeptically because:  (1) discrimination (that is, presenting or ranking a search engine’s own or affiliated content more prevalently than its rivals’ in response to search queries) arises from vertical integration in the search engine market (i.e., Google responds to a query by providing not only “10 blue links” but also perhaps a map or video created Google or previously organized on a Google-affiliated site (YouTube, e.g.)); (2) both economic theory and evidence demonstrate that such integration is generally pro-competitive; and (3) in Google’s particular market, evidence of intense competition and constant innovation abounds, while evidence of harm to consumers is entirely absent.  In other words, it is much more likely than not that search discrimination is pro-competitive rather than anticompetitive, and doctrinal error cost concerns accordingly counsel great hesitation in any antitrust intervention, administrative or judicial.  As we will discuss, these are claims that FairSearch’s lawyers are quite familiar with.

FairSearch, however, grossly mischaracterizes these basic points, asserting instead that we claim

“that even if Google does [manipulate its search results], this should be immune from antitrust enforcement due to the difficulty of identifying ‘bias’ and the risks of regulating benign conduct.”

This statement is either intentionally deceptive or betrays a shocking misunderstanding of our central claim for at least two reasons: (1) we never advocate for complete antitrust immunity, and (2) it trivializes the very real—and universally-accepted–difficulty of distinguishing between pro- and anticompetitive conduct.

Continue reading →

Do-Not-Track is not inconceivable itself. It’s like the word “inconceivable” in the movie The Princess Bride. I do not think it means what people think it means—how it is meant to work and how it is likely to offer poor results.

Take Mike Swift’s reporting for MercuryNews.com on a study showing that online advertising companies may continue to follow visitors’ Web activity even after those visitors have opted out of tracking.

“The preliminary research has sparked renewed calls from privacy groups and Congress for a ‘Do Not Track’ law to allow people to opt out of tracking, like the Do Not Call list that limits telemarketers,” he writes.

If this is true, it means that people want a Do Not Track law more because they have learned that it would be more difficult to enforce.

That doesn’t make sense … until you look at who Swift interviewed for the article: a Member of Congress who made her name as a privacy regulation hawk and some fiercely committed advocates of regulation. These people were not on the fence before the study, needless to say. (Anne Toth of Yahoo! provides the requisite ounce of balance, but she defends her company and does not address the merits or demerits of a Do-Not-Track law.)

Do-Not-Track is not inconceivable. But the study shows that its advocates are not conceiving the complexities and drawbacks of a regulatory approach rather than individually tailored blocking of unwanted tracking, something any Internet user can do right now using Tracking Protection Lists.