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Understanding politics
I was wondering why there had been so much talk recently of ramping up antitrust attacks on Google. Now I know. This is the way politics works. See my letter on antitrust protectionism (pdf) if you need more.
Posted by Alex Tabarrok on July 9, 2009 at 07:35 AM in Political Science | Permalink
Comments
That's the same reason Microsoft worked so hard to kill Netscape. It took a while but they finally saw the writing on the wall. I think it's interesting that Google was one of the primary corporate sponsors of Firefox (which was built up from the original Navigator ashes).
Posted by: nelsonal at Jul 9, 2009 8:02:08 AM
The irony, in this particular case, is that the open-sourciness of ChromeOS will have substantial anti-monopoly effects.
Posted by: James Grimmelmann at Jul 9, 2009 8:36:02 AM
Milton Friedman in a 2005 Charlie Rose interview, "I used to believe that there was some virtue of an anti-trust action... And now I don`t really believe it. I believe now that the anti-trust actions have on the whole done more harm than good. That the only place where you have real monopolies is where government provides a monopoly."
Posted by: mgunn at Jul 9, 2009 8:42:22 AM
My question is this: what is the Google "monopoly"? What are they monopolizing? I think it takes a fairly broad market definition to include what an operating system does versus the Google's core business model-the search engine.
Posted by: Elliott at Jul 9, 2009 8:58:46 AM
Because many (most) people in this country are dip$#!+s. And, this is one of the best.
Posted by: Andrew at Jul 9, 2009 9:35:43 AM
Navigator sucked, according to my spouse, who worked with programmers who constantly complained about it. Now, it could be that they hated having to program for two systems and had to pick one, but none of them are really MS lovers, and now they prefer Firefox by a wide margin.
Posted by: Andrew at Jul 9, 2009 9:37:16 AM
If navigator sucked so badly, why were they able to charge $25-30 per copy? The only way M$ could beat them was to give away IE. (Which included preinstalling it.)
If Netscape sucked, IE sucked hard.
Posted by: Right Wing-nut at Jul 9, 2009 9:48:20 AM
Elliot,
It's not yet a monopoly, but the only monopoly that matters in computers is the middle man who delivers useful applications to consumers. Microsoft's Windows has been that monopoly, but it's far more efficient to deliver them to end users via the internet (effectively rendering PCs dumb termninals so the OS you're using only has to load a browser which can be done well for free these days). Applications delivered over the internet. Google and MS (and others likely Oracle will toss their hat into the ring too) are all racing to become that middleman and Google is well into the inside track (enough that MS will probably toe upto the "monopolizing behavior" to kill Google's current revenue, search preventing their investments in application delivery.
Posted by: nelsonal at Jul 9, 2009 9:55:13 AM
No Right Wing-Nut, I'm talking about the technical quality of the product. What you are describing is a Netscape market monopoly that Microsoft was trying to besiege.
Now, people didn't like that because MSFT had a OS monopoly. And, if they felt strongly about that, they could have addressed it instead of obstructing a superior browser product.
Posted by: Andrew at Jul 9, 2009 10:02:35 AM
I must be missing something. Most of the talk of allegedly anti-competitive, monopoly-like behavior on the part of Google has been about its search engine. This isn't to say that Chrome OS won't face the same sort of criticism, but it's not even going to be released for many months, and rightly or wrongly, the talk about Google as a monopoly has been building for a long time now. I understand why you're against anti-trust actions, but your claims about seem to mix up what has been the cause of the allegations thus far.
Posted by: Brian J at Jul 9, 2009 10:32:02 AM
I note the letter you drafted was not signed by anyone well known in IO, nobody from Harvard, Chicago (no, John Lott does not count), MIT and so on. This is hardly surprising - those are the guys who may have active or future consulting contracts / testimonies in antitrust cases. Am wondering however if you think this list weakens the point you are trying to make in the eyes of policymakers & makes it seem ideological to... President Clinton or others.
Posted by: sd at Jul 9, 2009 11:06:26 AM
The interesting thing is that it continues the pattern of attacking a company's new product that undermine's a competitor's monopoly because the accused company has a separate existing monopoly on an existing product, if you can call a search engine a monopoly and keep a straight face.
Posted by: Andrew at Jul 9, 2009 11:09:15 AM
I remember reading an article many years ago (maybe by Liebowitz or Margolis?) attacking the anti-MS lawsuit in which they pointed out the growing market share of Google and how it would be useful to have a strong MS search engine and portal presence to compete with them. Anyone remember that pre-Bing presence? Or know how/why it failed?
Posted by: Eric H at Jul 9, 2009 12:09:27 PM
Nelsonal,
Thanks for your response. My understanding is that Google is entering a market with Windows, Mac's OSX, Linux, etc. It appears that you are saying (and correct me if I'm wrong, I do not want to put words in your mouth), that by simply entering that OS market they are on the track to becoming a monopoly.
Is this in consideration of the number of other web products/services they offer? Or is it the assumption that because their search engine is so powerful, we can assume that their OS will be equally effective which, over time, will lead it to become the same giant in the OS market that it is in the search market?
What is the regulatory maxim here that we extend to other companies? Under what circumstances should we expect a company to become a monopoly, and does this compel regulatory authorities to preempt monopolistic potential? I'm not necessarily trying to make a point, more just trying to consider multiple angles.
Posted by: Elliott at Jul 9, 2009 12:19:06 PM
I don't remember that, but I was pondering the irony that whatever they were trying to do, aside from shakedown a profitable company, they didn't do. MSFT still has an OS monopoly. Their browser has been surpassed by free Firefox. Google is a viable competitor to MSFT's OS.
I guess one rationale was that computers were some monolithic entity and on-line was just a piece of the puzzle, and if MSFT got their foot in the door they would control that too. Apparently, the government thinks they succeeded because MSFT has never gotten anywhere on-line. Of course, everyone else knows it is because of business decisions. MSFT hasn't had a shortage of cash to invest in on-line strategies. The irony is that google has used on-line products to threaten the off-line territory dominated by MSFT and now the Feds want to hamstring Google.
Posted by: Andrew at Jul 9, 2009 12:24:06 PM
History of Bing, before it was Bing:
First it was MSN Search. It bought results from third parties like Inktomi and Altavista; on the whole its performance was mediocre. It was competitive with then-leader Yahoo!, but then in 2000 Google came storming in with Pagerank and a minimalist design and flattened the competition.
In 2004 Microsoft finally wised up and stopped using the engines of increasingly irrelevant and minor search providers. They began the transition to their own internally-produced search engine; as one might expect, this transition did not help with their attempt to compete with Yahoo! and Google.
In 2006 MSN Search was changed to Windows Live Search as part of a broader rebranding effort. Again, not helpful. Google, Yahoo, and Microsoft were all at this point firmly integrating their mail, search, news, and other online services. It didn't help that Google's Gmail was then stomping Microsoft's MSN Hotmail into the ground (anyone remember the excitement over the 1GB account limit and how long Hotmail took to catch up?). Microsoft's services generally fell into the portal trap of the dotcom era; slow loading, lots of graphical advertisements, unrememberable URL names, etc.
Then this year they rebranded it again to Bing. So much for brand awareness... anyway, its search is okay, but it still pales in usability next to Google (Google is now legendary for being increasingly obsessive about usability, since its technical advantage is decreasing as the others catch up. They focus-grouped 41 different shades of blue because they couldn't decide which one was better. The effort seems to be working, at least). Also, intrusive advertising.
Anyway, I'd interpret this differently (sorry Tyler). ChromeOS is unlikely to compete for the same markets Win7 (netbooks vs. consumer desktop+laptops). Windows performance on netbooks is unlikely to be decent for some time; The *nix developer community has been becoming more careful about power usage and performance across-the-board. Microsoft can optimize its OS power usage and low-power performance, but it can hardly demand the same of their third-party software developers. So Microsoft will continue to target people who intend to do more than surf the internet, and Google can go pick a fight with Red Hat.
Also, Microsoft's staggering >95% dominance of the consumer OS market is hardly similar to Google's 55% share of the Search market. Adsense has about 50% of advertisements on heavily trafficked sites.
Posted by: david at Jul 9, 2009 12:46:17 PM
Elliot
They're not after share in the OS market, they're goal has been to make the OS market irrelevant. Think of it this way, your computer and OS are increasingly irrelevant as it relates to your use of the internet. What happens when everything you do on a computer is on the internet? Google, MS, Apple (via mobile phones), and maybe Oracle (they probably won't commit to it) are all after ownership of the standards that define application delivery over the internet. MS real monopoly wasn't Windows as you think of it. No one bought windows in the same way one bought a Ford truck or GM car. You bought windows because that's where all the software ran. In the near future everyone anticipates that software will run on the internet which gives everyone a second chance to beat MS and therefor become MS. Google via gmail and google docs is quickly showing that they will be very competitive at this. Others are racing to catch up, and MS in particular is attempting to cut off Google's oxygen (search related money) allowing Google to invest heavily in internet application delivery. If they succeed in cutting off Google's revenues, Oracle probably wins by buying Google because they've been so successful at purchasing and running other tech firms (and would have plenty of cash to throw at finishing the job).
Posted by: nelsonal at Jul 9, 2009 1:33:56 PM
Elliott
The regulatory maxim used by the federal government's anti-trust division is the same as the government uses for allof its actions...might makes right. It certainly uses the rhetoric of consumer protection to hide this fact but the truth is consumers are never protected.
Mgunn's excellent post of a Milton Frieman quote says as much: "That the only place where you have real monopolies is where government provides a monopoly."
See the "Incredible Bread Machine" for a humorous critique or Dominick Armentano's "Antitust: The Case for Repeal" for a scholarly treatment.
Posted by: Brian at Jul 9, 2009 3:11:30 PM
Could someone please point me in the direction of the "antitrust attacks on Google"? I was not aware of anything in the courts.
Posted by: golddog at Jul 9, 2009 5:05:02 PM
I googled "antitrust attacks on google" and the only thing that came up is this post.
PS : I notice Tyler didn't sign the letter.
Posted by: Rama at Jul 9, 2009 5:45:26 PM
From a relevant NYTimes article:
http://www.nytimes.com/2009/05/18/technology/companies/18antitrust.html
"In the Microsoft case, the software giant’s monopoly in personal computer operating systems was not an antitrust problem. It was its corporate actions, including using contracts and bullying tactics to stifle competition, that broke the law, the federal courts ruled. Such strong-arm practices, legal experts say, have not been part of the Google story.
Unless Google is shown to engage in a pattern of anticompetitive conduct, the company is likely to face constant scrutiny, but not a major federal suit, antitrust experts say. Even with misconduct, they say, complex antitrust cases like the one against Microsoft take years to come to fruition. “There will be a lot of agonizing about Google, and it will raise concerns, but I don’t see a big Google case in the offing,” said Michael Katz, an economist at the Stern School of Business of New York University."
PS : Womdering whether companies can become " too big to be trusted ".
Posted by: Rama at Jul 9, 2009 5:53:08 PM
Rama,
Go to news and search "google antitrust". You will find lots of material. Including these:
U.S. launches formal investigation into Google's digital books settlement
http://www.latimes.com/business/la-fi-google3-2009jul03,0,5107105.story
Google Operating System Raises Apple Antitrust Issues
http://www.nytimes.com/2009/07/09/technology/companies/09apple.html
Google antitrust suit: Is there a case?
http://www.theregister.co.uk/2009/02/20/google_search_lawsuit_analysis/
Antitrust suit filed against Google
http://www.businessweek.com/the_thread/techbeat/archives/2009/02/antitrust_suit.html
and a lot more.
Posted by: Alex Tabarrok at Jul 9, 2009 6:15:27 PM
Thanks, Alex.
In fact my next post was after I did a better search and read the NY Times article.
Apologies for the earlier comment.
Posted by: Rama at Jul 9, 2009 6:38:47 PM
(anyone remember the excitement over the 1GB account limit and how long Hotmail took to catch up?)
Oh yeah.
I also remember when AlataVista came out and that was the amazing search engine.
Remember Pipeline and its graphical interface? AT&T Interchange? Oh heck yes, those were the days....
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