The EU Searches for a Monopolist, Finds Google

by on March 1, 2010 · 1 comment

Today’s The Wall Street Journal Europe published an editorial that Alberto Mingardi of Istituto Bruno Leoni and I penned about the competition complaints brought against Google in Europe.

The EU Searches for a Monopolist, Finds Google

If policy makers set the terms in a primitive year like 2010, nobody will have to respond to Google.


Google isn’t a monopoly now, but the more it tries to become one, the better it will be for us all. Competition works in this way: Capitalist enterprises strive to gain in profits and market share. In turn, competitors are forced to respond by trying to improve their offerings. Innovation is the healthy output of this competitive game. The European Commission, while pondering complaints against the Internet search giant, might consider this point.

Google has been challenged by a German, a British, and a French Web site, for its dominant position in the market for Web search and online advertisement. The U.S. search engine is said to be imposing difficult terms and conditions on competitors and partners, who are now calling regulators into action. Google’s search algorithm is accused of being “biased” by business partners and competing publishers alike.

Before resorting to the old commandments of antitrust, we should consider that the Internet world is still largely impervious and unknown to anybody—including regulators. We are in terra incognita, and nobody knows the likely evolution of the market. But one thing is for sure: Online search can’t evolve properly if it’s improperly regulated—no matter the stage of evolution.

While the exact form of “remedy” is anyone’s guess depending upon the petitioner and the whims of regulators, intervention would basically mean some kind of shortcut for Google’s competitors, such as regulatory guarantees of future search ranking or placement; limitations on future Google services that could undermine an emerging rival; oversight of certain pricing practices or advertising practices; coerced changes to the Google interface; or bureaucratic oversight of paid-vs.-unpaid search results. The net effect would be to rescue Google’s competitors from the requirement to compete, and to give them access to Google customers whom they didn’t conquer on their own merits.

Today’s search-engine capabilities help break down information bottlenecks, allowing ever-increasing access to countless HD-equipped Webcam broadcasters world-wide. Public policy is often schizophrenic, but using the language of monopoly to attack information services and communications is particularly perverse. Speech is the core freedom, and today’s competitive technologies, including search, vastly extend it for us all.

Google isn’t targeted by regulators in Brussels alone. It enjoys declining popularity in many capitals, from Beijing to Washington D.C. In the U.S., conservatives have been complaining about bias in Google’s search results, such as a purported deference toward Al Gore.

But so what? Let Google be the MSNBC of search engines. Somebody else can be Fox if we need it. It remains the case, as in the mid-1990s when Sergey Brin and Larry Page got started, that if you create a search engine, nobody can stop you. Nobody can stop Microsoft from creating one either. Oh, wait…

Everyone seems to think Google is theirs to regulate, that they have more of a right to prescribe Google’s algorithm or business policies than Google itself does.

In search, as in the media itself, competing biases are good; pretended or forced objectivity, not so good. The decisions about how to rank search or what to reveal in a search are properly a matter of Google’s own free speech, and it is not anyone else’s place or right to decide. Differences of opinion and preferences about rankings are properly to be dealt with by competition from Microsoft/Yahoo; the likes of Teoma, the “theory of everything” Steven Wolfram engine; or something we don’t know about yet being hatched in a dorm room. Other pressures include consumer demands, and Google’s own business partners. Monopoly leads to reduced demand, and if Google truly “monopolizes,” then its own business partners are hurt by its behavior and will defect.

The policy environment to foster is one that maximizes the possibility of rival search technologies emerging in response to inappropriate bias. Today’s approach is the opposite, to create a stunted search environment because everyone’s afraid or reluctant to create an aggressive new search algorithm—why invest, if marvelous success means regulation and confiscation? The search capabilities needed for tomorrow’s Internet won’t come to be if policy makers set the terms in a primitive year like 2010 and nobody has to respond to Google.

Various types of search already optimize for various types of biased results (or unbiased ones—bias or no-bias can itself be a competitive feature and will be unless regulators undermine the process). As centuries of experience with freedom of speech tell us, biases in information services are perfectly appropriate, perhaps even necessary in free societies. If regulators do not know this, they need to be removed from their jobs.

If a formal European Commission inquiry is set to start, it certainly needs to be a short one. Would that global recessions selectively dis-employed publicly funded regulators and academics who make a living by tearing down what others have created. Regulators rarely bring anything to the table but an appetite.

Mr. Crews is vice president for policy at the Competitive Enterprise Institute in Washington, D.C. Mr. Mingardi is director general of Istituto Bruno Leoni in Milan.

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