Blog Post

The FTC, Google and anti-trust: Some thoughts

In Silicon Valley, we first fall in love with start-ups and their vision. Then a few years later when they are successful, we consider them to be geniuses. And when they become too powerful, they become evil. And after the too-powerful phase comes a swift fall from grace. We saw that happen with IBM (S IBM), Microsoft (S MSFT), Netscape and lately with Facebook (S FB) & Zynga (S ZYGA).

Google (s GOOG) is currently in Phase 3, aka its “evil phase,” and it looks like the Federal Trade Commission is doing its best to make sure that the final kick is delivered.

According to Reuters, four out of five FTC commissioners believe that Google has abused its dominance of the search business. This is not the first time we have heard that the FTC is investigating a growing pile of complaints, but this time the FTC might follow through, Reuters says.

The anti-trust complaint, if it comes, will be interesting to watch for a couple of reasons:

  1. Google is locked in a bitter fight with Apple, Microsoft and Facebook and would have to divert resources to the FTC challenge. It would be very distracting for the management.
  2. Google has never had to face adversity, and by extension, I don’t think the company culture is ready for such negative shocks to the system. If I remember correctly, during Microsoft’s tussles with the Justice Department, morale took a major dip.

Post and thumbnail photos courtesy of Flickr user Mark Strozier

13 Responses to “The FTC, Google and anti-trust: Some thoughts”

  1. Yes, Google is Big Government. Google has excessive market power and regulates the internet to its benefit.
    Here are a few ways Google is abusing its position.

    1. Search engine manipulation. Watch this video of last year’s hearings. It will amaze you.

    2. This one will really surprise you: Data mining and racial profiling

    3. Just plain old bad programming after data mining.

    4. Google is the First Company in History to have a Specific “NO Customer Service” policy.

    5. I will be filing my complaint to the FTC now.

  2. Anthony Kosner

    Om, I wrote about this today on my blog as well. I concluded by saying that the question for users, and by extension the F.T.C., is at what point Google’s power begins to diminish its utility. Google is a company of engineers, and they are constantly pushing tolerances. Regulation is just another envelope to push against, and it won’t ruin its business if they have to rein things in a little.

    • At least they aren’t bad as the low IQ, over excited, jealous much moron anti-Apple society thats just been waiting for them to fall.

      This is the most tiring group on the Internet… go back to your parent’s basement and leave tech talk to the adults.

  3. Zynga investors might have thought Zynga is the Pixar of the Web. But what we have learned by now Pixar has a very thoughtful organization structure down to where you run into each other to foster the creative process. Zynga seems to be more clobbered together.
    Which business is FB in ?

    How does Apple fit your process? So far it seems they have bypassed it. Which I also think is organizational driven, iPod doesn’t compete internally against iPhone, they work{ed} more as a whole. Which allow{ed} them to be disruptive to their own products. Or the whole is more than the sum of its parts (emergent system behavior).

  4. Brian Burk

    This is another example of big government. Why shouldn’t Google have the right to crush their competitors. I thought that was what our system was about. If someone has a superior product then users will find it and use it. If people do not like Google’s results they will move to another engine. If google is offering products at prices higher than other sites, then users will find out about these sites and go to them.

    Should the FTC now investigate Amazon as well because people use their service to find products less expensive than the local stores?

    • Nothing wrong with antitrust cases when the company in question is using their position to limit your choice and thereby limit competition.

      However its hard to see how a search giant abuses its position when it has no way to lock you into its search offering. Microsoft has previously had people locked into Windows, office and IE.

    • “Why shouldn’t Google have the right to crush their competitors.”

      Because there’s such a thing as unfair competition. If you and your competitor both own retail stores on the same block, and you sit across the street from your competitor and plink away at his customers with a BB gun as they enter his store, that is unfair competition. Business is not a war zone.

    • eric perlberg

      I don’t think you understand the case the FTC is contemplating. Others will know way more than I but I believe the charge is that Google uses its dominant position in search to put pressure on other companies to make them behave in a way that is not in those companies’ best interests. For example, Google Skyhook v Google.

      In the US you are allowed to have a dominant position in a market, say for example, search. Its not that Google is violating a law because its hugely successful. What you can’t do is abuse your dominant position by using it to force others to act outside their own best interests. That is what the FTC is looking into. Some of the comments here show a poor understanding of the law.