Antitrust Law's Requirements Aren't Always Clear

from the rule-of-law dept

As Google and Yahoo negotiate a possible search advertising deal, the New York Times wonders if it would put Google in hot water over antitrust concerns. With Google and Yahoo as the number one and number two players in the search marketplace, respectively, their combined market share would be in excess of 80 percent—close to Microsoft's Windows market share in the early 1990s. And that will inevitably invite heightened scrutiny from government regulators. The article ponders what Google would need to do to avoid antitrust problems, and concludes that basically, nobody really knows. We know that Google has to avoid "predatory behavior," but the experts the Times spoke with differed on whether a search deal would be anti-competitive. One scholar thought it would be, while others thought it could be structured so as to pass muster under antitrust law.

It seems to me that this is a serious problem. Well-designed law is transparent and predictable. Eric Schmidt should be able to talk to any competent antitrust lawyer and get at least roughly the same advice about what the law allows. Of course, this ideal is never achieved perfectly, but in many areas of law, it comes pretty close. Property law, for example, operates under well-understood, predictable legal standards. This allows companies, with the advice of counsel, to make business plans without worrying too much about the risks of an unfavorable legal ruling. When the law is uncertain, as with patents on software, it creates all sorts of problems because companies make their best guess about what the law requires, make business plans based on that, and then often they wind up in court and find out the judge has a different idea of what they should have done.

Too often, I think this is the case with antitrust law. Ed Felten (who will be my PhD advisor starting this fall) has a post on the lessons of the Microsoft antitrust case ten years after it was filed. Now, as a life-long Mac user and a fan of free software, I can certainly find plenty to criticize in Microsoft's actions, both legal and technical, during the 1990s. But the antitrust case still makes me uncomfortable because I don't think that if I had stood in Bill Gates' shoes between 1993 and 1998 that I would have been able to predict which business decisions would have ultimately been found to be illegal by the courts under antitrust law. Felten uses the words "kinder," "gentler," and "more moderate" to describe the new, post-antitrust Microsoft, but "kind" and "gentle" are hardly legal standards. Ordinarily, we expect—indeed, shareholders demand—aggressive pursuit of profits by publicly traded companies. Steve Jobs is a brilliant business man, but he's neither kind nor gentle. If the law is going to demand that Microsoft forego the aggressive pursuit of profit in favor of "kindness" and "gentleness," it had better have some pretty clear rules about how much moderation is required.

This is a particular reason for concern when we remember that antitrust law is often invoked for political purposes. A cynic might suggest that the reason Microsoft has received less antitrust scrutiny in this decade than the last is not because it is "kinder" and "gentler" but because it has hired better lobbying and PR firms to plead its case in Washington. Certainly, the commenters on Felten's blog have plenty of complaints about Microsoft's recent business decisions. And indeed, this is one area where Google's approach has been strikingly different from Microsoft's behavior in its early years. Microsoft mostly ignored the political arena in the 1980s and 1990s. In contrast, Google has been proactively building a lobbying empire to ensure that it will have plenty of ammo to use in future policy battles, antitrust or otherwise. That means that if people do start asking questions about monopolistic behavior on Google's part, Google will be able to dispatch their army of lobbyists to head off any moves toward litigation.

This is a savvy strategy for Google, but I think it's problematic for democracy and the rule of law. The law should be based on clear and objective standards, not who has the most influential lobbyists. If the New York Times article above is any indication, the law's requirements are anything but clear. And that's a serious problem.



Reader Comments (rss)

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  1.  
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    Evil Mike, May 23rd, 2008 @ 8:17am

    Ages...

    The difference, of course, between property law and our antitrust/patent laws...

    Antitrust and patent laws are very recent, barely a few centuries old; while our property laws are descended from Britain's property laws, which were in turn descended from Rome's property laws; making them more than two millenia old.

    That being said, it's obvious we'll have a good working patent system some time in the year 3800.

     

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  2.  
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    Evil Mike, May 23rd, 2008 @ 8:22am

    Democracy?

    "This is a savvy strategy for Google, but I think it's problematic for democracy and the rule of law."

    And, Mr Lee, we've never been a democracy.

     

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  3.  
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    Anonymous Coward, May 23rd, 2008 @ 8:33am

    Re: Democracy?

    Whatever it is the ancient greeks called democracy has long since been corrupted and co-opted into this 'democratic republic' or 'representative democracy' that we've established. In modern times this is what everyone refers to when they speak of democracy. Splitting hairs on that is little more than pretty squabling.

     

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  4.  
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    Zeal, May 23rd, 2008 @ 8:40am

    Operating System vs Web Page?

    Isn't the big difference between MS in the 1990's and Google today that there was significant product lock-in with an operating system?

    It would only take 1 misstep by google and everyone could point their browsers at a different search engine, but to change an operating system, you probably need a whole new computer.

     

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  5.  
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    sonofdot, May 23rd, 2008 @ 8:51am

    The law

    The law should be based on clear and objective standards, not who has the most influential lobbyists.

    That's an admirable dream, but sadly just a dream, because the American public keeps electing and re-electing the same money-grubbing jackasses.

    Since it seems most elected officials are just in it for the money, I think candidates for public office in this country should be chosen by lottery, from among all registered voters; if your number is chosen, you have to run, using public funds. Anyone who volunteers to run for public office should be immediately placed in prison.

     

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  6.  
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    Anonymous Coward, May 23rd, 2008 @ 9:13am

    Re: The law

    You don't make any sense at all. You can't fix the problem of inept officials by randomizing the choice of inept officials. Bobby-Joe isn't going to be any less corrupt or uninformed than Senator X, and at least Senator X knows how the system is *supposed* to run. And imprisoning anyone who honestly thinks they can do a better job is just dumb.

    Professional politicians and the self-concerned corruption they tend towards are a problem, but nothing you say here is even a reasonable step in the right direction.

     

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  7.  
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    MLS, May 23rd, 2008 @ 9:22am

    Patent v. Antitrust

    Being heavily involved in both areas of law I think it fair to say that our patent laws, whatever their downsides, are significantly more predictable that our antitrust laws. Patent law has remained fairly constant, albeit there are issues about its being extended to certain of the newer "technologies", whereas antitrust law appears to wax and wane depending upon who resides in the Oval Office and who heads up the Department of Justice.

     

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  8.  
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    angry dude, May 23rd, 2008 @ 9:52am

    Time to go to school for you indeed

    "Ed Felten (who will be my PhD advisor starting this fall)"

    Huh

    Same Ed Felten who was an Eolas expert in their patent fight againts MShit ?

    I hope Prof. Felten will teach you that so-called "software" patents and computer "hardware" patents are two mutually intertwined areas impossible to separate one from another, much less to define legally...
    Ever heard about Turing, little punk ?

    And BTW, why do you need your Ph.D in the first place ?
    To write a BS articles on techdirt ?
    You can do it now without a f****** Ph.D
    Save all the time and aggravation

    ciao lemmings

     

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  9.  
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    Richard Bennett (profile), May 23rd, 2008 @ 11:48am

    How to you keep your head from exploding?

    "...as a life-long Mac user and a fan of free software..." Huh?

     

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  10.  
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    Tim Lee, May 23rd, 2008 @ 11:59am

    Re: How to you keep your head from exploding?

    Mac OS X is full of free software.

     

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  11.  
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    Evil Mike, May 23rd, 2008 @ 2:31pm

    Re: Re: Democracy?

    Is that like saying "wishful thinking" republic? Or "mob rule" republic?

    The core of all accurate communication is agreed upon definition of words. Therefore, democracy != republic (or even "democratic/wishful-thinking" republic).

     

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  12.  
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    Simon, May 27th, 2008 @ 2:47pm

    Credit crunch

    I assume the advertising deal will be to sell adverts.

    I'm not sure how advertising exchange will looks to regulators, but I'd think it fairly innocuous in the grand scheme of things.

    Those who think switching from Google is as simple as pointing a browser at a different search engine probably don't have complex advertising campaigns with Google.

    Sure online advertising is easy to switch compared to many products one buys, but effective monopolies may still push up advertising costs unduly, and Google has all the best sites for putting adverts. The totality of the system has inertia - nothing like the desktop operating system market - although that is in part the online world moves at lightening pace compared to the desktop OS market.

    I suspect the kind of change we'll see will ultimately lead to delivering the most effective advert for any browser, so it may not be clear this is disadvantageous to advertisers.

     

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  13.  
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    Tack Furlo, May 27th, 2008 @ 3:25pm

    Re: Democracy?

    Actually, we haven't ever been a democracy. The United States is a Representative Republic, and it has been since the moment that Ben Franklin, John Adams, and a few other men (mostly rich white men, I should mention for fairness sake, though a couple were more like middle class) sat down in Independence Hall on the basic premise that 2 or 3 of them from each colony could speak for the thousands of people from each of those colonies. A true democracy (as defined by the Greeks, the only true democracy that has ever existed) requires that each and every citizen vote on each and every issue, and also, that each and every citizen be truly informed of the positions and stances of each and every issue before they vote on it. In the United States, we elect just over 500 citizens to go to Congress and do this on behalf of the over 350 million of us. Hell, on a good year, less than 150 million of us even vote to do that. The United States is about as much of a democracy as Rome, except that (for the last 50 years or so) we let every citizen vote, not just the white male ones.

    Until each and every one of the 350 million citizens in the united states votes on every single bill sent before congress, we are not, have not, and will never be a democracy. A democracy isn't just some great ideological concept. It's a form of government, just like an oligarcy (when a group of people rule, most often not elected), a monarchy (when a single person rules by hereditary rule), an empire (when an emperor, chosen by the previous emperor or else just ordained by some unknown celestial being, rules), a dictatorship (when a single person rules by brute military force - how a successor is chosen is of date unknown because no dictatorship has lasted more than 1 generation), and even communism (a form of government where the sole concept revolves around not a givernment, but a total lack of government, where everyone supports each other out of the goodness of their heart instead of for profit, as most other political systems work.) Democracy is, in the minds of most people, the best choice, but it is also the hardest to scale of any system of government. Dictatorship, an Empire, and Monarchy are by far the easiest to scale but without the perfect ruler they cannot last due to an eventual citizen's revolt. Communism is more or less the Utopian opposite of democracy, but it requires a 2 stage process to be implemented and to date no communistic government has ever proceeded past the first step, in part because communism relies on the entire world (and yes, eventually, any space colonies of earth) converting to communism to be achieved.

    Now that you have a basic civics lesson, try poking a hole in Tim Lee's actual argument instead of nitpicking with a statement which is actually perfectly valid. He's not saying it's problematic for the formation of democracy, but for the continued existence of it. In truth, he should have said "I think it's problematic for a continued representative republic and the rule of law" but nowadays it is considered to be acceptable English to call America a Democracy, even if it isn't one.

    And before you attack my nationality, I am a proud citizen of the Alabama State in the US. I like our form of government, even if it is in truth a republic, because it is much more stable than a true democracy would be. I just get really pissed when people make INCORRECT comments for the sake of being an asshole because their pea-sized brains can't find a point in the actual argument to find fault with.

     

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