The Wall Street Journal (WSJ) reported yesterday that Republican Mike Lee, chair of the Senate antitrust committee, will open an inquiry into what transpired during the FTC antitrust investigation of Google. The committee may also look into White House meetings with representatives of the company during the course of the investigation.
Lee’s “preliminary inquiry” was apparently prompted by reports in the Wall Street Journal (WSJ), first about the presence of an internal FTC Bureau of Competition report highly critical of Google, and a follow-up WSJ article suggesting that there may be a connection between the agency’s decision not to pursue litigation and frequent Google meetings at the White House.
Google SVP of Communications and Policy Rachel Whetstone responded to suggestions that Google used its influence and prompted White House intervention in the FTC’s decision making with massive snark in blog post on Friday:
We understand you have a new found love of the regulatory process, especially in Europe, but as the FTC’s Bureau of Competition staff concluded, Google has strong pro-competitive arguments on our side. To quote from their report “… the record will permit Google to show substantial innovation, intense competition from Microsoft and others, and speculative long-run harm”
Both sides suggest that improper motivations and behavior are operating behind the scenes.
Rupert Murdoch, who owns the Wall Street Journal, has been a vocal and aggressive critic of Google and blames the company for the decline of newspapers. While Murdoch is not directly involved in the WSJ’s daily reporting the conspiracy theory allegations in the WSJ article on White House meetings with Google carry the whiff of political bias.
This is also unfortunately the case with Republican Senator Lee, a bitter Obama critic, who likely recognizes an opportunity to potentially embarrass the White House even as he appears to be doing his job. It is ironic that Lee and others like him, with their historical anti-regulation rhetoric, are now suggesting that there should have been stronger regulatory intervention in this case.
Yet the FTC competition report disclosed last week, juxtaposed with the tepid investigation outcome, does raise questions about the FTC investigation and its decision not to pursue stronger action against Google. The agency tried to dispel any appearance of impropriety with several statements explaining that the Bureau of Competition report was simply one among many the agency considered in coming to its decision.
The controversy clearly isn’t over and the FTC will be compelled to further explain the gap between the internal report recommendations and the investigation’s outcome.
Separate and apart from any allegations of behind-the-scenes influence, it’s important to remember that case law in the US would have made it very difficult for the FTC to prevail in the courts. Indeed, antitrust legal experts at the time were split on the potential success of bringing an antitrust case against Google. Europe, which still has an open antitrust inquiry against Google, isn’t constrained by comparable legal rules.
As Google in its blog post also points out, other countries and US state Attorneys General reached decisions similar to the FTC’s. By the same token the Bureau of Competition report does bring to light some Google behavior that is concerning and not consistent with its Google’s mantra about pursuit of the best user experience.
Indeed, this episode is something of a Rorschach test. If you already believe Google is a bad actor these reports confirm that. If not, you tend to give Google the benefit of the doubt. As with all such things, however, the truth probably lies somewhere in the middle.
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