The Question of Remedies in a Google Antitrust Case

by on July 1, 2011 · 0 comments

It remains unclear how interested the Federal Trade Commission (FTC) is in bringing a formal antitrust action against Google, but we at least know that inquiries have been made. I suspect these inquires are far more serious than whatever the agency is fishing for with its new Twitter inquires. After all, as I note in my latest Forbes column, “Google isn’t even a teenager yet (having only been founded in September 1998), but the firm’s rise has been meteoric and it has made a long list of enemies in the process. Practically every major player in the Digital Economy… is gunning for Google these days, both in the commercial and political marketplace.” In this sense, it’s not surprising the FTC might take a keen interest in the company with so many competitors complaining.

Still, I just can’t find much merit in an antitrust case against Google since, as I noted in my column, “The firm’s success seems tied to high quality products that users prefer over rival services. Importantly, barriers to entry are low: there’s nothing stopping new entrants from innovating and offering competing online services to match Google.”

Regardless, instead of arguing about the merits of an antitrust action against Google, let’s consider the more interesting, and I think intractable, question of remedies. Here’s what I had to say about that in my Forbes essay: Continue reading →

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Pamela Samuelson on codifying the Google Books settlement

by on June 28, 2011

On the podcast this week, Pamela Samuelson, the Richard M. Sherman Distinguished Professor of Law at Berkeley Law School, discusses her new article in the Columbia Journal of Law & the Arts entitled, Legislative Alternatives to the Google Book Settlement.  Samuelson discusses the settlement, which was ultimately rejected, and highlights what she deems to be positive aspects. One aspect includes making out-of-print works available to a broad audience while keeping transaction costs low. Samuelson suggests encompassing these aspects into legislative reform. The goal of such reform would strike a balance that benefits rights holders, as well as the general public, while generating competition through implementation of a licensing scheme.

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The FTC makes its Google investigation official, now what?

by on June 24, 2011 · 6 comments

[By Geoffrey Manne & Joshua Wright.  Cross-posted at Truth on the Market]

No surprise here.  The WSJ announced it was coming yesterday, and today Google publicly acknowledged that it has received subpoenas related to the Commission’s investigation.  Amit Singhal of Google acknowledged the FTC subpoenas at the Google Public Policy Blog:

At Google, we’ve always focused on putting the user first. We aim to provide relevant answers as quickly as possible—and our product innovation and engineering talent have delivered results that users seem to like, in a world where the competition is only one click away. Still, we recognize that our success has led to greater scrutiny. Yesterday, we received formal notification from the U.S. Federal Trade Commission that it has begun a review of our business. We respect the FTC’s process and will be working with them (as we have with other agencies) over the coming months to answer questions about Google and our services.

It’s still unclear exactly what the FTC’s concerns are, but we’re clear about where we stand. Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow. No matter what you’re looking for—buying a movie ticket, finding the best burger nearby, or watching a royal wedding—we want to get you the information you want as quickly as possible. Sometimes the best result is a link to another website. Other times it’s a news article, sports score, stock quote, a video or a map.

It is too early to know the precise details of the FTC’s interest.  However, We’ve been discussing various aspects of the investigation here and at TOTM for the last year.  Indeed, we’ve written two articles focused upon framing and evaluating a potential antitrust case against Google as well as the misguided attempts to use the antitrust laws to impose “search neutrality.”  We’ve also written a number of blog posts on Google and antitrust (see here for an archive).

For now, until more details become available, it strikes us that the following points should be emphasized: Continue reading →

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What’s really motivating the pursuit of Google?

by on June 14, 2011 · 3 comments

I have an op-ed up at Main Justice on FTC Chairman Leibowitz’ recent comment in response the a question about the FTC’s investigation of Google that the FTC is looking for a “pure Section Five case.”  With Main Justice’s permission, the op-ed is re-printed here:

There’s been a lot of chatter around Washington about federal antitrust regulators’ interest in investigating Google, including stories about an apparent tug of war between agencies. But this interest may be motivated by expanding the agencies’ authority, rather than by any legitimate concern about Google’s behavior.

Last month in an interview with Global Competition Review, FTC Chairman Jon Leibowitz was asked whether the agency was “investigating the online search market” and he made this startling revelation:

“What I can say is that one of the commission’s priorities is to find a pure Section Five case under unfair methods of competition. Everyone acknowledges that Congress gave us much more jurisdiction than just antitrust. And I go back to this because at some point if and when, say, a large technology company acknowledges an investigation by the FTC, we can use both our unfair or deceptive acts or practice authority and our unfair methods of competition authority to investigate the same or similar unfair competitive behavior . . . . ”

“Section Five” refers to Section Five of the Federal Trade Commission Act. Exercising its antitrust authority, the FTC can directly enforce the Clayton Act but can enforce the Sherman Act only via the FTC Act, challenging as “unfair methods of competition” conduct that would otherwise violate the Sherman Act. Following Sherman Act jurisprudence, traditionally the FTC has interpreted Section Five to require demonstrable consumer harm to apply.

But more recently the commission—and especially Commissioners Rosch and Leibowitz—has been pursuing an interpretation of Section Five that would give the agency unprecedented and largely-unchecked authority. In particular, the definition of “unfair” competition wouldn’t be confined to the traditional measures–reduction in output or increase in price–but could expand to, well, just about whatever the agency deems improper. Continue reading →

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Steven Levy on how Google works

by on June 14, 2011

On the podcast this week, Steven Levy, a columnist for Wired and author of the tech classic Hackers, among many other books, discusses his latest book, In The Plex: How Google Thinks, Works, and Shapes Our Lives. Levy talks about Googliness, the attribute of silliness and dedication embodied by Google employees, and whether it’s diminishing. He discusses Google’s privacy council, which discusses and manages the company’s privacy issues, and the evolution of how the company has dealt with issues like scanning Gmail users’ emails, scanning books for the Google Books project, and deciding whether to incorporate facial recognition technology in Google Goggles. Levy also talks about prospects for a Google antitrust suit and the future of Google’s relationship with China.

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The Google Buzz Privacy Settlement as a Possible Public Choice Study

by on April 4, 2011 · 3 comments

PaidContent.org has posted a chart showing “Who’s Getting Buzz Settlement Money.” This refers to the $9.5 million payout following the Federal Trade Commission settlement with Google a class action suit over its “Buzz” social networking service. Last week, the Federal Trade Commission entered into a consent decree with Google over its botched rollout of Buzz saying the search giant violated its own privacy policy. Google will also pay out to various advocacy groups according to the distribution seen in the chart as part of a separate class action. Payouts to advocates like this are not uncommon, although they are more often the result of a class action settlement than a regulatory agency consent decree. [Update/Correction 5:13 pm: I should have made it clear that this payout was the result of a class action lawsuit against Google and not the direct result of the FTC settlement. Apologies for that mistake, but still interested in the questions raised below.]

But that got me wondering whether this might make for good fodder for a case study by a public choice economist or political scientist. There are some really interesting questions raised by settlements like this that would be worth studying.

Continue reading →

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The FTC’s Google Buzz Privacy Settlement

by on March 30, 2011 · 3 comments

The FTC today announced it has reached a settlement with Google concerning privacy complaints about how the company launched its Buzz social networking service last year.  The consent decree runs for a standard twenty-year term and provides that Google shall (i) follow certain privacy procedures in developing products involving user information, subject to regular auditing by an independent third party, and (ii) obtain opt-in consent before sharing certain personal information. Here’s my initial media comment on this:

For years, many privacy advocates have insisted that only stringent new regulations can protect consumer privacy online.  But today’s settlement should remind us that the FTC already has sweeping powers to punish unfair or deceptive trade practices.  The FTC can, and should, use its existing enforcement powers to build a common law of privacy focused on real problems, rather than phantom concerns. Such an evolving body of law is much more likely to keep up with technological change than legislation or prophylactic regulation would be, and is less likely to fall prey to regulatory capture by incumbents.

I’ve written in the past about how the FTC can develop such a common law. If the agency needs more resources to play this role effectively, that is what we should be talking about before we rush to the assumption that new regulation is necessary. Anyway, a few points about Part III of the consent decree, regarding the procedures the company has to follow:

  • The company has to assess privacy risks raised by new products as well as existing products, much like data security assessments currently work. The company would have to assess, document and address privacy risks—and then subject those records to inspection by the independent auditor, who would determine whether the company has adequately studied and dealt with privacy risks.
  • Google is agreeing to implement a version of Privacy by Design, in that the company will do even more to bake privacy features into its offerings.
  • This is intended to avoid instances where the company makes a privacy blunder because it lacked adequate internal processes to thoroughly vet new offerings or simply to avoid innocent mistakes—as with the its inadvertent collection of content sent over unsecured Wi-Fi hotspots because the engineer designing its Wi-Fi mapping program mistakenly left that code in the system, even though it wasn’t necessary for what Google was doing. I wrote more on that here.

As to Part II of the consent decree, express affirmative consent for changes in the sharing of “identified information”: It’s  well-worth reading Commissioner Rosch’s concurring statement. Continue reading →

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App Store Wars: Apple, Amazon, Google, Microsoft & Dynamic Platform Competition

by on March 23, 2011 · 1 comment

Venture capitalist Bill Gurley asked a good question in a Tweet late last night when he was “wondering if Apple’s 30% rake isn’t a foolish act of hubris. Why drive Amazon, Facebook, and others to different platforms?” As most of you know, Gurley is referring to Apple’s announcement in February that it would require a 30% cut of app developers’ revenues if they wanted a place in the Apple App Store.

Indeed, why would Apple be so foolish? Of course, some critics will cry “monopoly!” and claim that Apple’s “act of hubris” was simply a logical move by a platform monopolist to exploit its supposedly dominant position in the mobile OS / app store marketplace.  But what then are we to make of Amazon’s big announcement yesterday that it was jumping in the ring with its new app store for Android? And what are we to make of the fact that Google immediately responded to Apple’s 30% announcement by offering publishers a more reasonable 10%-of-the-cut deal?  And, as Gurley notes, you can’t forget about Facebook. Who knows what they have up their sleeve next.  They’ve denied any interest in marketing their own phone and, at least so far, have not announced any intention to offer a competing app store, but why would they need to? Their platform can integrate apps directly into it!  Oh, and don’t forget that there’s a little company called Microsoft out there still trying to stake its claim to a patch of land in the mobile OS landscape. Oh, and have you visited the HP-Palm development center lately?  Some very interesting things going on there that we shouldn’t ignore.

What these developments illustrate is a point that I have constantly reiterated here: Continue reading →

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Court Rejects Google Books Settlement — Now What?

by on March 22, 2011 · 3 comments

Today, the U.S. District Court for the Southern District of New York rejected a proposed class action settlement agreement between Google, the Authors Guild, and a coalition of publishers. Had it been approved, the settlement would have enabled Google to scan and sell millions of books, including out of print books, without getting explicit permission from the copyright owner. (Back in 2009, I submitted an amicus brief to the court regarding the privacy implications of the settlement agreement, although I didn’t take a position on its overall fairness.)

While the court recognized in its ruling (PDF) that the proposed settlement would “benefit many” by creating a “universal digital library,” it ultimately concluded that the settlement was not “fair, adequate, and reasonable.” The court further concluded that addressing the troubling absence of a market in orphan works is a “matter for Congress,” rather than the courts.

Both chambers of Congress are currently working hard to tackle patent reform and rogue websites. Whatever one thinks about the Google Books settlement, Judge Chin’s ruling today should serve as a wake-up call that orphan works legislation should also be a top priority for lawmakers.

Today, millions of expressive works cannot be enjoyed by the general public because their copyright owners cannot be found, as we’ve frequently pointed out on these pages (1, 2, 3, 4). This amounts to a massive black hole in copyright, severely undermining the public interest. Unfortunately, past efforts in Congress to meaningfully address this dilemma have failed.

In 2006, the U.S. Copyright Office recommended that Congress amend the Copyright Act by adding an exception for the use and reproduction of orphan works contingent on a “reasonably diligent search” for the copyright owner. The proposal also would have required that users of orphan works pay “reasonable compensation” to copyright owners if they emerge.

A similar solution to the orphan works dilemma was put forward by Jerry Brito and Bridget Dooling. They suggested in a 2006 law review article that Congress establish a new affirmative defense in copyright law that would permit a work to be reproduced without authorization if no rightsholder can be found following a reasonable, good-faith search.

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Siva Vaidhyanathan on why we should worry about Google

by on March 8, 2011 · 1 comment

On the podcast this week, Siva Vaidhyanathan, professor of media studies at the University of Virginia, discusses his new book, The Googlization of Everything: (And Why We Should Worry). Vaidhyanathan talks about why he thinks many people have “blind faith” in Google, why we should worry about it, and why he doesn’t think it’s likely that a genuine Google competitor will emerge. He also discusses potential roles of government, calling search neutrality a “nonstarter,” but proposing the idea of a commission to monitor online search. He also talks about a “Human Knowledge Project,” an idea for a global digital library, and why a potential monopoly on information by such a project doesn’t worry him the way that Google does.

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