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Google Monopoly Essay Sample

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Google is arguably the most popular search engine used on the internet. The company offers superior search results and clearly employs workers with innovative ideas that can keep the company ahead of the competition. However Google’s own mission statement requires that it “Do no evil,” meaning that it has made readily available the tools that have made the company successful. The Justice Department would like to categorize Google as a monopoly, but due to its open book reporting and its development of additional services, proving monopolistic status would be difficult and perhaps ineffective. A monopoly is defined as “a firm that is the sole seller of a product without close substitutes” (Mankiw, 507). Within recent years the major internet company, Google, has come under fire with speculation and outright accusations that it is a monopoly in the services it provides.

Google maintains that the company has direct competition and that because its practices and formulas are readily available to the competition, the company cannot be considered a monopoly. The Sherman Antitrust Act of 1890 issued a maximum threshold of 70% of shares in any given industry. While Google argues that it cannot be held responsible for their competitors’ inability to employ the techniques used by Google itself, they cannot argue with the fact that they hold 70% of the share of search advertising and 67% of general search share. If the government focuses on these numbers along with Google’s unprecedented growth each year, it could be deemed a monopoly. The question then becomes whether regulation or breaking up the company would be a wise decision.

Google is arguably the most popular search engine used on the internet. The company offers superior search results and clearly employs workers with innovative ideas that can keep the company ahead of the competition. However Google’s own mission statement requires that it “Do no evil,” meaning that it has made readily available the tools that have made the company successful. The Justice Department would like to categorize Google as a monopoly, but due to its open book reporting and its development of additional services, proving monopolistic status would be difficult and perhaps ineffective. A monopoly is defined as “a firm that is the sole seller of a product without close substitutes” (Mankiw, 507). Within recent years the major internet company, Google, has come under fire with speculation and outright accusations that it is a monopoly in the services it provides.

Google maintains that the company has direct competition and that because its practices and formulas are readily available to the competition, the company cannot be considered a monopoly. The Sherman Antitrust Act of 1890 issued a maximum threshold of 70% of shares in any given industry. While Google argues that it cannot be held responsible for their competitors’ inability to employ the techniques used by Google itself, they cannot argue with the fact that they hold 70% of the share of search advertising and 67% of general search share. If the government focuses on these numbers along with Google’s unprecedented growth each year, it could be deemed a monopoly. The question then becomes whether regulation or breaking up the company would be a wise decision.

1.0 ABSTRACT
Google is arguably the most popular search engine used on the internet. The company offers superior search results and clearly employs workers with innovative ideas that can keep the company ahead of the competition. However Google’s own mission statement requires that it “Do no evil,” meaning that it has made readily available the tools that have made the company successful. The Justice Department would like to categorize Google as a monopoly, but due to its open book reporting and its development of additional services, proving monopolistic status would be difficult and perhaps ineffective. A monopoly is defined as “a firm that is the sole seller of a product without close substitutes” (Mankiw, 507). Within recent years the major internet company, Google, has come under fire with speculation and outright accusations that it is a monopoly in the services it provides.

Google maintains that the company has direct competition and that because its practices and formulas are readily available to the competition, the company cannot be considered a monopoly. The Sherman Antitrust Act of 1890 issued a maximum threshold of 70% of shares in any given industry. While Google argues that it cannot be held responsible for their competitors’ inability to employ the techniques used by Google itself, they cannot argue with the fact that they hold 70% of the share of search advertising and 67% of general search share. If the government focuses on these numbers along with Google’s unprecedented growth each year, it could be deemed a monopoly. The question then becomes whether regulation or breaking up the company would be a wise decision.

2.0 COMPANY BACKGROUND
2.1 History
Google Inc is an American multinational corporation which provides Internet-related products and services, including internet search, cloud computing, software and advertising technologies. Google began in January 1996 as a research project by Larry Page and Sergey Brin when they were both PhD students at Stanford University in California. Page and Brin originally nicknamed their new search engine “Backrub”, because the system checked backlinks to estimate the importance of a site. Eventually, they changed the name to Google, originating from a misspelling of the word “googol” the number one followed by one hundred zeros, which was picked to signify that the search engine wants to provide large quantities of information for people. Advertising revenues from AdWords generate almost all of the company’s profits.

The company’s mission is “to organize the world’s information and make it universally accessible and useful”. The company offers online productivity software including email, an office suite, and social networking. Google leads the development of the Android mobile operating system, as well as the Google Chrome OS browser-only operating system. Google has increasingly become a hardware company with its partnerships with major electronics manufacturers on its high-end Nexus series of devices and its acquisition of Motorola Mobility in May 2012, as well as the construction of fiber-optic infrastructure in Kansas City as part of the Google Fiber broadband Internet service project. Google has been estimated to run over one million servers in data centers around the world, and process over one billion search requests and about twenty-four petabytes of user-generated data every day. Google.com site is the Internet’s second most visited website and numerous international Google sites as being in the top hundred, as well as several other Google-owned sites such as YouTube and Blogger.

The first funding for Google was an August 1998 contribution of US$100,000 from Andy Bechtolsheim, co-founder of Sun Microsystems, given before Google was even incorporated. Google’s initial public offering (IPO) took place five years later on August 19, 2004. The company offered 19,605,052 shares at a price of $85 per share. Shares were sold in a unique online auction format using a system built by Morgan Stanley and Credit Suisse, underwriters for the deal. The sale of $1.67 billion gave Google a market capitalization of more than $23 billion. The vast majority of the 271 million shares remained under the control of Google, and many Google employees became instant paper millionaires. In March 1999, the company moved its offices to Palo Alto, California, home to several other noted Silicon Valley technology startups. Google began selling advertisements associated with search keywords.

Google Inc. currently owns and operates 6 data centers across the U.S., plus one in Finland and another in Belgium. On September 28, 2011 the company has announced to build three data centers at a cost of more than $200 million in Asia (Singapore, Hong Kong and Taiwan) and has already purchased the land for them. For the 2006 fiscal year, the company reported $10.492 billion in total advertising revenues and only $112 million in licensing and other revenues. Google has implemented various innovations in the online advertising market that helped make it one of the biggest brokers in the market. Using technology from the company DoubleClick, Google can determine user interests and target advertisements so they are relevant to their context and the user that is viewing them. Google Translate, Google News, Google Fiber, Google Wave, Google Goggles, Google Wallet are other Google’s successful products.

3.0 HOW IT MONOPOLY THE MARKET
3.1 Market Definition
Market definition will be crucial in an antitrust case against Google. The relevant product market claims include services or commodities that are reasonably interchangeable by consumers for the same purposes, within an appropriate area of competition. This product interchange ability question focuses on the user’s point of view as to what is available in the market with comparable characteristics such as price, potential uses, and benefits. Functionally interchangeable products will be included in the same product market unless factors indicate that they are not actually part of the same market. The question of relevant market depends on the restraint at issue. If the focus were on Google’s competitive ranking algorithms, then the relevant market would be the internet search market, dominance of which Google can hardly deny. Shifting the focus to Google’s policies pertaining to advertisers and publishers changes the relevant market to that of internet advertising.

A legal monopolist is entitled to exploit a monopoly in order to maximize its profits. Simply charging high prices is not a violation. The probability of successfully monopolizing a market is usually assessed through market share, and the greater share a defendant initially controls, the greater the probability of achieving monopoly status. An antitrust complaint, therefore, must contain allegations specifying the market in which the defendant has attempted to create a monopoly and the alleged offender’s economic power in that market. Google may claim to be a small fish in the much larger advertising market. However, a market interchange ability analysis might suggest internet advertisers will largely not participate in other advertising methods in the absence of Google. There are simply things Google can provide to advertisers that no other program can offer. If Google were to suddenly terminate the Adwords and Adsense Programs, the internet advertising industry as a whole would be drastically impacted. Advertisers would have trouble finding suitable replacements for the Adsense program because Google controls the search market.

That is not to say that an advertiser could not achieve his goals elsewhere, but in terms of sheer traffic abundance, Google sits on the mother lode. Google has centralized all of their advertising networks. They offer a truly novel service, currently unmatched by anyone. Without Google Adwords, advertisers attempting to reach people in the search, mobile, media, and content networks would be forced to contract with multiple vendors. This merging of services plays an important role in gauging cross-elasticity of demand. If advertisers cannot readily seek alternatives to the Google service, then Google is free to charge whatever it wants to the detriment of consumers. Defining the relevant market narrowly permits an easy assessment of various statistics and figures. A narrow definition could include those online advertisers that offer pay-per-click (PPC) advertising across multiple internet mediums. There are very few companies that fit within this definition. Too narrow a market definition overlooks the millions of independent internet advertising deals that take place each year and the numerous advertising models that exist, of which pay-per-click is only one.

Private agreements between publisher and advertiser typically eliminate the middleman, allowing them to create custom-tailored deals with mutual gain. Such agreements may function more like property rentals, where portions of one’s web page real estate are rented out for a period of time. In a cost-per-impression (CPM) model, an advertiser pays for every 1000 ad impressions. The CPC and CPM models are the most popular, both of which Google offers. There are several internet advertisement models that Google does not offer. In the cost-per-action (CPA) model, an advertiser only pays for a predetermined action or trigger. For instance, if a user reaches the checkout page, that user is labeled as a conversion, and a fee is paid to the advertiser who referred him to the site. There are many more internet advertising models, but this article focuses primarily on the Sherman Act’s inability to foster competition and protect rights in the PPC and CPM markets, which are ruled by Google.

4.0 THE SHERMAN ACT
U.S. Antitrust law, rooted in equity, is well equipped to handle complex cases where monopolists are accused of abusing market power. The Sherman Act was enacted to prevent the artificial raising of prices by restriction of trade or supply. One policy of the statute is that good competition prevents monopolies and their ability to restrict output or raise prices. Many antitrust experts and scholars emphasize the need for sophisticated and balanced antitrust analysis in communications industries. The social consequences of running a monopoly are the same whether it was acquired lawfully or through various forms of illegal activities. In recognition of this, Congress drafted Section 2 of the Sherman Act, which forbids the “possession and wilful acquisition of monopoly power.” However, simply possessing monopoly power and charging monopoly prices is not enough to violate the Sherman Act. The offense of monopolization requires the wilful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historical accident. There is also an element of intent in a Sherman Act violation.

The intent for actual monopolization is easier to prove than attempted monopolization, because actual monopolization requires a showing of actual monopoly power. The former requires a showing of general intent to exclude competitors, where the latter requires a showing of specific intent to destroy competition or build a monopoly. The final requirement of a Section 2 violation is showing a dangerous probability of achieving monopoly power. This element cannot be inferred; it can only be shown by a rule of reason analysis. Following Sherman Act jurisprudence, traditionally the FTC has understood and courts have demanded that antitrust enforcement under Section 5 as a technical matter, the FTC does not directly enforce Section 2 of the Sherman Act but instead enforces the Act via its Section 5 authority requires demonstrable consumer harm to apply. But this latest effort reveals an agency pursuing an interpretation of Section 5 that would give it unprecedented and largely-unchecked authority.

In particular, the definition of “unfair” competition would not be confined to the traditional antitrust measures reduction in output or an output-reducing increase in price, but could expand to, well, just about whatever the agency deems improper. Most problematically, Commissioner Rosch has suggested that Section Five could address conduct that has the effect of “reducing consumer choice” without requiring any evidence that conduct actually reduces consumer welfare a theory that only a vanishingly few commentators essentially one law professor and one FTC lawyer have written the entire body of scholarship on this topic support. Troublingly, “reducing consumer choice” seems to be a euphemism for “harm to competitors, not competition,” where the reduction in choice is the reduction of choice of competitors who may be put out of business by a competitor’s conduct. Under Section 2 standards, the FTC would have a tough time winning its case.

This is because the agency doesn’t seem to have a theory of harm that reaches consumers and none of Google’s competitors that have been stoking the flames has offered one. Instead, all of the propounded theories turn on harm to competitors. But the U.S. has a long tradition of resisting enforcement based on harm to competitors without a showing of harm to consumers. If all that were required were harm to competitors, then all pro-competitive conduct would be actionable under the antitrust laws; for what is the aim and effect of competition if not the besting of one’s competitors? The competitive process is by definition one that can “reduce consumer choice.” This is why the great economist Joseph Schumpeter famously called the competitive process one of “creative destruction.” In fact, the theoretical case against Google depends entirely on the ways it may have harmed certain competitors rather than on any evidence of harm to consumer welfare. For example, Google’s implementation and placement within its organic search results of its own shopping results is alleged to make it difficult for competing product-specific search sites (like Nextag or Amazon, for example) to reach Google’s users.

Leaving aside the weakness of the factual allegation (I challenge you to perform a search for a product on Google that doesn’t offer up a mix of retailers, manufacturers, review sites and multiple product search engine results on the first page), it is hard to see how consumers are harmed here. On the one hand, users have easy access to competing sites directly from their browser’s address bar and, increasingly importantly, to more persuasive product reviews from friends and colleagues via social media. In this way even the basic factual predicate is faulty, and it’s not even clear that consumer choice itself is reduced if Nextag is absent from Google searches, as the site can be reached by, among other things, links from reviews, links from friends on social media, other general search engines, and every browser address bar. On the other hand, users are by no means foreclosed from access to actual products (and there is no evidence that I know of that consumer prices or supply are in any way affected) if any particular product search engine doesn’t appear in the top results.

Placement of Google’s own product search results in fact streamlines consumers’ access, and Google’s comprehensive and effective search engine ensures that its shopping results are probably better than anyone else anyway. The same is true for travel searches, maps, and the range of other complained-of results. Flight information and reservations, location information and maps are widely available online and off through myriad sources other than Google. The bottom line is that harm to competitors is at least as consistent with pro-competitive as with anti-competitive conduct, and simply counting the number of firms offering competing choices to consumers that happen to appear in the top few Google search results is no way to infer actual consumer harm. One of the most important shifts in antitrust over the past 30 years has been the move away from indirect and unreliable proxies of consumer harm toward a more direct, effects-based analysis. Like the now archaic focus on market concentration in the structure-conduct-performance framework at the core of “old” merger analysis, the consumer choice framework substitutes an indirect and deeply flawed proxy for consumer welfare for assessment of economically relevant economic effects. By focusing on the number of choices, the analysis shifts attention to the wrong question.

The fundamental question from an antitrust perspective is whether consumer choice is a better predictor of consumer outcomes than current tools allow. There doesn’t appear to be anything in economic theory to suggest that it would be. Instead, it reduces competitive analysis to a single attribute of market structure and appears susceptible to interpretations that would sacrifice a meaningful measure of consumer welfare (incorporating assessment of price, quality, variety, innovation and other amenities) on economically unsound grounds. It is also not the law. Commissioner Rosch has suggested that the Supreme Court in its 2007 Leegin decision provided a green light for consumer-choice-reducing antitrust theories without a showing of traditional (output-reducing) harm.

But as Josh pointed out, the Ninth Circuit has held (in last year’s Brantley v. NBC Universal decision, which Thom has also blogged about here and here) that Leegin more accurately holds precisely the opposite, and coupled with the Court’s 2006 Independent Ink decision, seems clearly to restrict, rather than authorize, a consumer choice claim: The Supreme Court has noted that both [reduced choice and increased prices] are “fully consistent with a free, competitive market,” [citing Independent Ink] and are therefore insufficient to establish an injury to competition. Thus even vertical agreements that prohibit retail price reductions and result in higher consumer prices are not unlawful absent a further showing of anticompetitive conduct.

Modern antitrust analysis, both in scholarship and in the courts, quite properly rejects the reductive and unsupported sort of theories that would undergird a Section 5 case against Google. That the FTC might have a better chance of winning a Section 5 case, unmoored from the economically sound limitations of Section 2 jurisprudence, is no reason for it to pursue such a case. Quite the opposite: When consumer welfare is disregarded for the sake of the agency’s power, it ceases to further its mandate. No doubt Beth Wilkinson could help make the rhetorical argument for a Section 5 case against Google based on a tenuous consumer choice theory. But economic substance, not self-aggrandizement by rhetoric, should guide the agency. Competition and consumers are dramatically ill-served by the end.

5.0 ISSUES IN GOOGLE MONOPOLY
5.1 Competitors
While every search engine offers some form of search advertising alongside their results, not every search engine advertising service compares to Google’s. Furthermore, there are other advertising networks available that are not run by search engines, for example, Facebook Ads. Facebook’s advertising platform reaches the site’s 500 million users, a number which stacks up against Google’s two-thirds of all U.S. search traffic. While Facebook does not offer a distribution network like that of Google Adsense, it has an advanced targeting system comparable to Adwords. Facebook may offer the best comparison in terms of sheer traffic potential and reach, but there are services that are even more similar to those provided by Google which warrant further consideration. BidVertiser is a popular PPC ad distribution network, servicing both advertisers and publishers. Naturally, it has a smaller market share than Google, thus a smaller pool of ads to choose from, lower payout rates, and less advertisers competing for keywords.

Publishers of BidVertiser get the benefits of a bidding-based system, and having a company to compete with Google Adsense. The search advertising program through Microsoft’s Bing and Yahoo!, which captures 33% of the U.S. online market, is another potential Google competitor. The program boasts a market “known for buying, not browsing,” and advanced ad targeting. However, the service suffers from a high standard of entry and a complicated sign-up process. The downfalls of entry to this program greatly decrease its cross-elasticity of demand. While the service is technically open to the public, screening procedures render this service unavailable to a large pool of publishers who run small web sites and advertisers with small budgets. These competitors may not be true alternatives, but they may play an important role in a relevant market determination when considering those products or services, which are comparable in terms of price, potential uses, and benefits.

5.2 Antitrust Standing
Section 15 of the Clayton Act provides in part that any person injured in his business or property by reason of anything forbidden in the antitrust laws may sue. This essentially authorizes federal antitrust actions by private plaintiffs. Although much has been postulated as to Google’s antitrust liability, few (if any) suits have actually been brought. The Federal Trade Commission and European Union have both investigated the search giant in the past, but the FTC dropped its investigation in 2007. The EU investigations continue, with a new investigation announced in late November 2010. As a threshold matter, to assert a claim under the federal antitrust laws, the plaintiff must have suffered “antitrust injury.” This means “injury of the type the antitrust laws were intended to prevent and that flows from that which makes the defendant’s acts unlawful.” Implicit in this definition are two separate conceptual issues. First, the claimed injury must be of a type that the antitrust laws were meant to discourage (e.g., a business’ lost profits from a reduced ability to compete or a consumer’s injury from having to pay an artificially inflated price).

Second, the plaintiff’s injury must have been proximately caused by the defendant’s antitrust violation, and not by some other act or event. A publisher whose account was terminated has an easy claim to injury; he can simply point to the account earnings that have been frozen. Competitors who find their search results ranking lowered unfairly may have more trouble claiming an injury because it may not be the direct result of anticompetitive conduct, i.e. speculative in nature. Harder still is an advertiser’s claim to injury, because it is speculative in
nature and further disconnected from any specific conduct by Google. The absence of noisy plaintiffs has not stopped analysts from speculating as to what a possible antitrust case against Google might look like. Nor has it stopped individual plaintiffs from bringing suit for individual claims, the accumulation of which could amount to class action levels or worse, be factored into a rule of reason analysis.

5.3 Advertiser and Publisher Rights
Advertisers and publisher should know certain information about their right in order to effectively monitor advertisement performance, dispute fraudulent claims, and improve their efforts. For instance, advertisers need to know where their ads are being shown. In traditional advertising models, when a user buys an advertisement, they know exactly where it will go and how many people are projected to see it. Advertisers need more information to effectively manage their campaigns. In addition to knowing where ads are being shown, an advertiser might want to know how much money is being paid out to publishers, and which publishers. A click from a low quality site may not be cost-effective to an advertiser. That advertiser should have the right to restrict future clicks from such low quality sites. If advertisers were more assertive of their rights, perhaps some of the complaints from advertisers would be quieted. Publishers in the Google Ad words program also need certain information. They need to know how much they are earning per click and why.

A good publisher wants to know his site is not being lumped in with other bad publishers, causing his payouts to drop lower than their potential. It is troublesome, if not impossible, to dispute payouts with Google because publishers are basically in the dark with regards to how much they could be making. Publishers should know how much revenue Google is keeping from them. Google only recently released such information, in the wake of ongoing antitrust scrutiny from the Italian government. Publishers are kept in the dark about more than just payout calculation. Google often bans accounts due to invalid/fraudulent clicks, although it claims “Clicks and impressions from known sources of invalid activity are automatically discarded.” Publishers and advertisers whose accounts are terminated have a right to know why, but users waive that right upon registration. 5.4 Defenses

The internet is open to the world. A strong defense for antitrust claims against Google is that there are no barriers to entry for internet companies, because anyone can purchase a domain name and setup a web site. This argument, while true and applicable to both internet search and internet advertising, overlooks the massive start-up and development costs required to build a search engine or advertising platform capable of competing with Google’s. Google has competitors, past and present. It will argue that it is a survivor in the market, having become so honestly, through efficiency and business acumen. The antitrust laws are designed to encourage efficiency there cannot be a violation for being the most efficient. They will say every company wants to outperform its competitors, and it should not be punished for doing so. This right is a cornerstone of capitalism, but is subject to the condition that it is not to be used as a cloak for anticompetitive conduct.

In U.S. v. Aluminum Co. of America (1945), Judge Learned Hand said that for a monopolist to fall within Section 2 of the Sherman Act, he must have the power and the intent to monopolize. No “specific” intent is required, however, since no monopolist monopolizes unconscious of what he is doing. In that case, the defendant positioned itself so that every time there was a demand for a new type of product, it was able to meet that demand. By doing that, the court reasoned, the defendant was erecting barriers to competition. According to the testimony given by the restaurant review site Yelp, after Google failed to acquire the company in 2009, the web monopolist started including Yelp reviews in its Google Places service, but was slammed for doing this by Stoppelman (Yelp). Google then removed Yelp reviews and when Yelp’s CEO complained about Google scraping Yelp’s reviews, the Company told him that if he didn’t like it, he could have his service results removed from Google’s entire search index.

That sounds like twisting arms and monopoly techniques to me – if you don’t play with Google and let your reviews being scraped you will disappear from our organic search?! The accusations are two-sided: Google uses its 65% search engine market share to lure consumers toward its own services and properties and steer away its competitors by not engaging in a ‘search neutrality’ approach. In the other side, Google uses the monetary funds generated by its dominant position in search and search related advertising campaigns to fund money-losing businesses to compete with others, like the notorious acquisition of the Android business. Google has already acquired travel data base information site ITA, which provides information that is bought by online travel website Expedia. It has started the acquisition of Motorola, which is estimated to give Google control over thousands of mobile-technologies, all coupled with patents that will be used to support Android.

If U.S. Antitrust Laws and Practices want to protect us as consumers, serve the interest of fair competition in business, then it has to promote accountability and democratic oversight over business actors that act on the abuse of near-monopoly powers, competitor bashing and predatory tactics. Ironically, As Google defends their position as not violating antitrust laws stating that the search display results pages or SERPS are all algorithmically derived and cannot be manually configured to favor or unfavor individual businesses. The New Yorks Times presented their findings to Google. Googler Matt Cutts, head of webspam, regarding the JC Penny situation and confirmed that the tactics violated the Google webmaster guidelines and shortly after, the J.C. Penney web site was nowhere to found for the queries they had previously ranked number one for. Matt tweeted that “Google’s algorithms had started to work; manual action also taken”. This statement by Matt Cutts, proves that there is a manual lever for the Google algorithm, significantly weakening the internet giant’s anti trust defense.

6.0 PROPOSED SOLUTION
6.1 Transparency
As discussed above, publishers and advertisers have a right to know certain information that is currently being withheld from them. Advertisers should demand that Google show them where their money is going, and how much of it Google is keeping. Publishers should know how much they could and should be making, and why that is the case. By forcing transparency on Google’s payout calculation algorithms, publishers and advertisers will be better able to make an informed decision. This solution is not without its problems, however. Google would probably like to show advertisers as much information as they can about their ads, to improve efficiency and performance, but that information does not just rise up out of thin air. It takes a team of coders to gather the information and display it in a way that makes sense to the average customer.

6.2 Monitor Algorithms
A highly technical problem may require a highly technical solution. The New York Times’ Brad Stone proposes the idea of appointing someone to monitor auction algorithms, ensuring fair play in organic or “algorithmic” search results. He concludes by saying, “Google started off saying they were going to treat everything on the Web neutrally. That is the basis on which they secured dominance. And now they’ve changed the rules.” The problem with such a solution is that it only addresses one aspect of the problem. Additionally, assuming a single person could even realistically make such a determination may be incredibly naive. The methods Google uses to rank web pages for display in search results, arguably the world’s most valuable trade secret since the Coca-Cola recipe, is unlikely to evidence anticompetitive effect by a simple line-by-line scanning of code.

6.3 Fines and Penalties
As a deterrence and punishment for prior conduct, fines and penalties may be assessed on companies who abuse their power. However, fines and penalties may be ineffective to ensure Google does not abuse its market power. A fine can only assess actual damages, not potential damages. Therefore, a fine might not influence Google’s future decision making. It would merely punish them for past decisions. Having fined technology companies like Microsoft and Intel in the past, the EU is not afraid to assess fines and penalties on potential monopolists. European policy is not against using fines to deter monopolistic behavior, but a possible fine should never be part of a cost-benefit analysis by a person making a business decision. Furthermore, a fine would not directly facilitate and protect competition, the ultimate goal of antitrust law.

6.4 Break up Googles
Dissolving Google would involve restructuring the world’s largest collection of information, placing thousands of jobs at risk, and tempting public revolt. Search Engine Land’s editor-in-chief Danny Sullivan with reference to FTC Commissioner Pamela Jones publicized concern over Google’s growing size and market power, suspects that “if Google is not violating any existing laws, powerful interests will ultimately decide new ones will be needed.” But dissolving the company could parallel the wasteful course of conduct. 6.5 Do Nothing

Antitrust cases can last decades, and conduct tending to unlawfully create a monopoly may often lose its effect before a judgment is rendered. Every technology has a “shelf life,” or a limited period of time during its life cycle, in which business gain can be realized. The internet’s open nature facilitates competition; the possibility of a sudden shift in market share should not be discounted. The problem may resolve itself, in which case any governmental or judicial interference would merely be a hindrance to the workings of a free market. This particular “solution” is favourable because it does not pose the risk of stifling Google’s natural development.

Furthermore, refraining from interference may actually serve public privacy interests because Google may be better suited to handle private information than their competitors. Consumers benefit because customer credit card data is stored with Google, a company people know and trust. Merchants benefit because they can accept credit card payments on their website while avoiding high start-up costs or deterring users from checking out. By probing into the anticompetitive nature of Google’s business decisions, the company may be less likely to take major technological leaps. 7.0 CONCLUSION

Google is a unique and innovative company, the likes of which antitrust regulators have never seen before. There is a great and justified temptation to investigate any company with so much market influence. Monopolies tend to destroy competition, which has a negative impact on the economy and goes counter to fair market notions. On the other hand, capitalists and laissez-faire idealists might prefer leaving the market alone, leaving the better man to reap his justly-earned monopoly profits. Proponents of a Google antitrust action may have trouble proving a violation of the Sherman Act. A Section 2 violation, which requires the “willful acquisition or maintenance of monopoly power,” will be difficult to prove because there are problems with market definition as well as standing. Furthermore, proving a violation under the essential facilities doctrine may not work because the scope of such a claim offers little remedy to monopolistic conduct in other sectors. An antitrust claim against Google is not completely farfetched however.

Persuasive evidence suggests Google may be engaged in some anticompetitive conduct, from algorithm impartiality to acquisitions of competitors, further conferring monopoly power. Google’s market power in the internet advertising and internet search markets provides the company with heavy control over advertisers and publishers, as well internet advertisers should demand certain rights from Google, including the right to know where their money is going and which ads a person is clicking on. Publishers need to know how much they could be earning, should be earning, and why- not just how much they earned. This information is available to Google in some form or another, yet they made a conscious (or unconscious) decision to exclude it. Google’s programs offer advertisers and publishers insight currently unmatched by anyone. However, that fact alone should not permit the company to withhold material information from their customers in the name of complexity, user interface design, or any other scapegoat.

There are also privacy concerns that arise in considering Google’s monopoly power, such as the inadvertent disclosure of sensitive information, and the risks associated with storing such information. With regard to privacy on Google, there are arguments on both sides of the debate. Inherent in rich information storage is the risk of becoming a target for hackers, but perhaps Google is best equipped to manage such risk. Google may have a monopoly over the internet advertising industry in the U.S., but that does not make it illegal or even necessarily bad. Even if a court found a violation of the Sherman Act, the best course of action may be to do nothing at all. Some minimal checks and balances on Google’s algorithms may be warranted to ensure fair play is taking place, but could be difficult to implement and may place the judiciary in a quasi-legislative position.

Assessing fees and penalties on the company may serve as a stern warning, but might not protect public interests well enough in the future. Dissolution might distribute power and temporarily create competition, but may not be worth the trouble. Be it solution or no solution, it is unarguable that Google has obtained considerable power, the maintenance of which is at least worth looking into. While a future without Google’s dominance seems improbable, antitrust laws are designed to give competition
a chance to foster along each step of the way. The policy and theory behind supporting a competitive market and promoting competition is to give companies a reason to be innovative, but Google already has such a reason. Without being innovative, and providing new products and new features, competition will have a chance to take the giant down.

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