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Target: Google

December 13, 2005

Tags Big GovernmentCorporate WelfareLegal SystemU.S. Economy

It
was only a decade ago that the Clinton Administration had decided that
Microsoft was an Enemy of the People and tried (mostly unsuccessfully)
to litigate the company into oblivion. While the principals in that set
of lawsuits have gone on to other things, the "anti-monopoly"
propaganda machines are turning their sights elsewhere. It seems that
Google, the powerful and innovative Internet search engine, now enjoys
the title of "Most Hated Company."

Now, if this were an article criticizing the 6.7 million "Hate
Google" links that have sprung up (yes, you can use Google to find anti-Google sites
), it would be quite short. Those people who don't like Google can use
Alta Vista, Yahoo, or some other search engine, and that should be the
end of it. And if they wish to spend a good part of their day blasting
Google on blogs or in emails, that is their business.

Google is no longer just a search engine of course. It offers
premium email, instant messageing with voice, online books and media,
maps and directions, web-use analytics, advertising programs, among a
hundred other fast-changing, super-innovative ideas. For years now, it
has been on the cutting edge, and the company shows no sign of slowing
down. The competition seems constantly on the defensive. Many people
believe that if the Windows OS is ever taken down a peg or two, it will
be because of some Google innovation.

Its success is driven entirely by the consumer's evaluation of its
quality. Google innovates but it is the market that renders the verdict.

When it comes to the law, however, I fear that we are not at the
end, but rather the beginning, and the people at Google should be
worried. If Microsoft's error was not being politically astute when the
Clinton Administration took aim at the software company, then perhaps
Google's big "mistake" is being aligned closely with the political
party that happens to be out of power.

According to CNN, 98 percent of political contributions
from Google employees went to candidates who were Democrats, and
Google's search policies are decidedly left-wing. (For example, Google refused to run an advertisement for Candice E. Jackson's book Their Lives, which is critical of Bill Clinton's behavior toward women.)

In the libertarian view of things, Google has (and should have) the
right to run those things they wish to run and extend its right of
refusal to whatever it chooses. The politics of Google, its CEO, and
its employees are irrelevant in the larger scheme of things and are
private matters. However, politicians are not the sort of people to
permit individuals to live and work as their conscience dictates, and I
would not be surprised if the Bush Administration decides to use
antitrust law (a term that in my view is an oxymoron) to punish the
company.

Granted, the suit would have no legal or economic merit (although one can say that about any
antitrust case), but searching 90-year-old grandmothers in wheelchairs
who are trying to board planes has no merit, either, yet the government
does it.

The vindictiveness against Google stems from the fact that people
choose to use that particular search engine more than they do other
searchers. Other people don't like the way that Google ranks websites,
which means that a site that someone may think is the Most Important
Website in the World is buried deep among the many other sites on the
same subject.

But the biggest current complaint against Google is that it is just
"too big." We hear things like "Google controls 80 percent of the
market" for search engines, yet that statement is nonsense. Google does
not "control" anything on the Internet. People have to choose to avail themselves of Google's services. No one is forced to use the Internet at all and, thus, can avoid Google altogether if that is their choice.

These things should be obvious to anyone, yet antitrust law is not
based upon what is obvious. In fact, antitrust law does not even
constitute good law, since the violations of the law, such as
"restraint of trade" or "monopolizing a market" are not readily
defined. "Recognizing" a "monopoly" depends upon how one chooses to
delineate the term.[1] That fact alone should make one recognize the political nature of antitrust "enforcement."

The vagueness of antitrust law makes it easy for government to heap
abuse upon those firms that are out of favor at any given time, as no
real legal proof is needed for the courts to act against the alleged
"monopolist." All that is needed is an allegation and a friendly judge,
and prosecutors and the news media will perform the rest of the job.

As Dominick Armentano, one of the world's best experts on the subject of antitrust, writes:

There is much historical evidence (especially at the state level) to
suggest that the laws were intended by business and agricultural
interests to restrict and restrain efficient competition, much like
tariffs and quotas still do in international trade.

But regardless of original intent, any objective study of antitrust
cases would reveal that the laws have never been used to protect
consumers from monopoly power. On the contrary, they have been used by
government and private plaintiffs (90% of all antitrust cases are
private) to attack and destroy successful companies while protecting
their inefficient competitors.

He continues:

It's no accident that in all of the classic antitrust cases in
business history, the indicted firms were expanding output, innovating
rapidly, and lowering their prices. Antitrust has never been consumer
friendly and the antitrust establishment's protestations to the
contrary simply won't wash with the facts.

Thus, if antitrust cases brought on by the government are overtly
political, then it would seem that Google could have problems. First,
as I already have pointed out, Republicans — who hold both the White
House and a majority of both houses in Congress — are not particularly
fond of Google.

Second, despite the millions of dollars that the company's leaders
and employees have raised for the Democrats, it is doubtful that many
Democrats would be willing to stand up for a firm that is accused of
being a "monopolist." After all, Bill Gates is rumored to be a Democrat
and Microsoft is located in the Seattle area, which is a Democratic
stronghold. Even though that was the case, no Democrat having real
political influence was willing to speak out against the Clinton
Administration's jihad against Microsoft and Gates.

Further evidence of Democratic cowardice in protecting business
figures accused of wrongdoing was the lack of support by politicians
for Martha Stewart. While Stewart has been a stalwart contributor to
the Democrats, no one from that party stood up for her when the Bush
Department of Justice tried and convicted her in federal court on very
flimsy charges. (Hillary Clinton even sent back a $1,000 contribution
that Stewart had sent her during her 2000 U.S. Senate campaign.)

On the Republican side, no one with influence has stood up for Kenneth Lay,
who was indicted last year on charges of "securities fraud," despite
the lack of real criminal evidence. Republicans might have sought Enron
money when it was a hot company, but it seems that everyone headed for
the exits when the firm financially unraveled.

  Big is not bad: $10

Yet, while Lay and Enron might be considered politically radioactive,
one must remember that it was politics, not law that drove the
indictments and prosecution of Lay and others with Enron. That is why I
am concerned about Google. Should the government decide to go after
Google for antitrust "violations," it will do so for purely political
reasons.

At the same time, however, Google will find that any political
capital it has tried to establish with the Democrats will come to
naught, as no self-respecting Democrat is going to stand up for a
"monopoly." (Remember that Enron also made large contributions to the
Democratic Party during the years of the Clinton Administration, but
when the company fell from grace, it suddenly was described as a
"Republican" firm.)

Such is the world of antitrust law. Because the law can be applied only
on a political basis, all government prosecutions of firms accused of
violating antitrust statutes are political by definition. While I hope
this is not the case, I do know that there exists almost no political
downside for an administration that pursues civil and criminal cases
against firms and business owners. Although the Bush Administration is
unpopular with large segments of the population (mostly for the failure
of war in Iraq), any action it takes against Google will win praise
from all sides — and the Bushies could use some political popularity at
the current time.


William Anderson, an adjunct scholar of the Mises Institute, teaches economics at Frostburg State University. Send him MAIL. See his Mises.org Articles Archive. Comment on the blog.

[1]
Former U.S. Supreme Court Justice Potter Stewart, in writing an opinion
about an obscenity case, said that while he could not define obscenity,
he would know it when he saw it. Things like "restraint of trade" and
"monopolizing markets" are even more vague than obscenity in Potterland.


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