It may seem counterintuitive to some that Mr. Lee, whose free-market credentials are unimpeachable, would be at the forefront of such a hearing, but that line of thinking is based on an erroneous premise.
I, like Mr. Lee, am a conservative who believes in the power of the free market. I worked for President Reagan, and as the head of the Justice Department’s antitrust division, was responsible for ensuring that the antitrust laws were enforced to promote free markets. We understood then, as Mr. Lee does now, that in a truly competitive market, consumers, not a single dominant company, pick winners and losers based on where we spend our money.
The search engine is the means through which consumers sort through the millions of websites on the Internet to find what they want. Remarkably, Google controls 74 percent of U.S. Internet searches and well over 80 percent of search advertising dollars, meaning that Google has extraordinary power over which companies are found when you run a search and which companies you will never see.
That is why I was unsurprised when the chief executive officers of two successful Internet startups, Yelp! and Nextag, testified unequivocally under oath that they would not even attempt to start their companies again today given Google’s dominance of the Internet ecosystem. In the words of Jeremy Stoppelman, CEO of the popular user review website Yelp!, “with Google taking up so much of the real estate, there’s no way I would start fresh.”
When a single company dominates a market, it has the power to distort competition in its favor and against the interests of consumers. That doesn’t mean that “big is bad” - only that dominant companies like Google have a special responsibility to obey the law and not to engage in conduct that undermines competition or blocks the ability of others to innovate, as Google Chairman Eric Schmidt admitted under oath at the hearing.
Again, big is not necessarily bad, but there are troubling allegations that Google uses its market power to exclude competitors and potential competitors from the marketplace and to deprive consumers and advertisers of choice. Google has been accused, for example, of manually lowering competitors’ rankings on Google’s results page so that they are less likely to be found, jacking up the price of advertising for companies that Google perceives to be competitive threats, and excluding competing search engines from critical content like videos and books so that those competitors cannot provide the content that their users are looking for.
Whereas Google was once the gateway to the Internet where you would go to find whatever you were looking for, it is now the gatekeeper - that is, Google, not consumers working through the free market, decides which companies win and lose. If successful Internet entrepreneurs like the CEOs of Yelp! and Nextag would not start their businesses again today because of Google’s dominance, how many young would-be entrepreneurs have shelved their ideas in the face of such an entrenched power?
Antitrust laws exist to protect competition and consumers and, importantly for free market conservatives like Mr. Lee and me, by enforcing these laws we avoid government meddling in the market with new regulations.
Certainly the scrutiny to which Google is being subjected by Mr. Lee and his colleagues is to be applauded and as consumers and believers in the free market, we can only hope that Google gets the message that it, too, must live by the rule of law.
Charles F. Rule, head of the Justice Department’s antitrust division in the Reagan administration, is an attorney with Cadwalader, Wickersham & Taft. His firm represents Microsoft and is counsel of record for two companies currently engaged in antitrust litigation against Google, myTriggers and TradeComet.
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