Federal Trade Commission Chairman Joseph Simons did a masterful job at hedging when asked last week whether U.S. competition enforcers have enough authority to assess whether Google Inc. is anticompetitive.
Yes, he said. “We do have enough authority to determine whether it’s anticompetitive or not.”
Then came the “but.” Earlier in the day, the EU’s competition commission had slapped a $5.1 billion fine on Google for pre-installing its own search engine and web browser on Android phones, which the regulator said reduces the incentives for manufacturers to install competing apps and for users to seek them out.
Can U.S. antitrust regulators ding Google for the same reason?
“Their regulatory regime is a little different than ours,” Simons told Rep. Jan Schakowsky (D-Ill.) at a hearing before the House Energy and Commerce Committee. “Our antitrust regime requires that there be a harm to consumer welfare. So the consumer has to be injured.”
An injured consumer. Therein lies the difficulty for U.S. regulators in slapping corporate giants for behavior that looks like they’re trying to stamp out competition.
It was a problem in 2013 when the Federal Trade Commission dropped an investigation into Google for prioritizing its own services in search results. The Obama-era FTC said Google’s search algorithm “could be plausibly justified” as an innovation that improved the user experience even if it harmed competitors. The EU went on to fine Google $2.7 billion for the same behavior last year.
Finding consumer harm has also been a problem for the Justice Department in attempting to convince the courts that AT&T Inc.’s $85.4 billion purchase of Time Warner Inc. harms competition. The DOJ’s own economic expert Carl Shapiro acknowledged that the deal would save DirecTV subscribers $352 million annually, according to the court opinion allowing the deal.
Shapiro also claimed in pretrial filings that the tie-up would raise prices for subscribers of other pay-TV services such as Comcast Inc. or Dish Network by about $436 million a year. To get the net harm, he had to subtract the savings AT&T-Time Warner garnered from their marriage.
U.S. antitrust enforcers aren’t necessarily lying down on the job. The AT&T-Time Warner decision is on appeal, signaling that the DOJ is committed to its thinking that market dominance can harm consumers when the big guy exercises leverage over smaller companies that use its products or services.
The FTC is holding hearings this fall probing exactly the question that Schakowsky asked. Does antitrust law need a makeover? Maybe proving harm from simple pricing models has become too difficult in the era of Amazon.com, in which sheer size actually lowers consumer costs.
So yes, the U.S. can ask whether Google is anticompetitive. But it’s a lot harder to prove here than in Europe.
Simons said the FTC will “look closely” at how the EU is handling Google. “We’re very interested in what they’re doing.” That’s about all he can say.
Quote of the Week
“I have serious concerns about the Sinclair/Tribune transaction. The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”
— Federal Communications Commission Chairman Ajit Pai, recommending that an administrative law judge determine whether the Sinclair Inc.’s purchase of Tribune Media Co. is in the public interest.