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Google and the Limits of Antitrust: The Case Against the Antitrust Case Against Google


Geoffrey A. Manne


International Center for Law & Economics (ICLE)

Joshua D. Wright


Federal Trade Commission; George Mason University School of Law

March 24, 2010

Lewis & Clark Law School Legal Studies Research Paper No. 2010-19
George Mason Law & Economics Research Paper No. 10-25
Harvard Journal of Law and Public Policy, Vol. 34, No. 1, Winter 2011

Abstract:     
The antitrust landscape has changed dramatically in the last decade. Within the last two years alone, the United States Department of Justice has held hearings on the appropriate scope of Section 2, issued a comprehensive Report, and then repudiated it; and the European Commission has risen as an aggressive leader in single firm conduct enforcement by bringing abuse of dominance actions and assessing heavy fines against firms including Qualcomm, Intel, and Microsoft. In the United States, two of the most significant characteristics of the “new” antitrust approach have been a more intense focus on innovative companies in high-tech industries and a weakening of longstanding concerns that erroneous antitrust interventions will hinder economic growth. But this focus is dangerous, and these concerns should not be dismissed so lightly.

In this article we offer a comprehensive cautionary tale in the context of a detailed factual, legal and economic analysis of the next Microsoft: the theoretical, but perhaps imminent, enforcement action against Google. Close scrutiny of the complex economics of Google’s technology, market and business practices reveals a range of real but subtle, pro-competitive explanations for features that have been held out instead as anticompetitive. Application of the relevant case law then reveals a set of concerns where economic complexity and ambiguity, coupled with an insufficiently-deferential approach to innovative technology and pricing practices in the most relevant precedent (the D.C. Circuit’s decision in Microsoft), portend a potentially erroneous - and costly - result.

Our analysis, by contrast, embraces the cautious and evidence-based approach to uncertainty, complexity and dynamic innovation contained within the well-established “error cost framework.” As we demonstrate, while there is an abundance of error-cost concern in the Supreme Court precedent, there is a real risk that the current, aggressive approach to antitrust error, coupled with the uncertain economics of Google’s innovative conduct, will nevertheless yield a costly intervention. The point is not that we know that Google’s conduct is procompetitive, but rather that the very uncertainty surrounding it counsels caution, not aggression.

Number of Pages in PDF File: 75

Keywords: Apple, Carl Shapiro, error costs, exclusion, FTC, Federal Trade Commission, Frank Easterbrook, Larry Page, Linux, microprocessor, network effects, Ronald Coase, search engine, Sergey Brin, Sherman Act, Vons Grocery, William E. Kovacic, Yahoo

JEL Classification: K00, K21, L10, L12, L40, L42, O31, O33, O38

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Date posted: March 30, 2010 ; Last revised: October 27, 2012

Suggested Citation

Manne, Geoffrey A. and Wright, Joshua D., Google and the Limits of Antitrust: The Case Against the Antitrust Case Against Google (March 24, 2010). Lewis & Clark Law School Legal Studies Research Paper No. 2010-19; George Mason Law & Economics Research Paper No. 10-25; Harvard Journal of Law and Public Policy, Vol. 34, No. 1, Winter 2011. Available at SSRN: http://ssrn.com/abstract=1577556 or http://dx.doi.org/10.2139/ssrn.1577556

Contact Information

Geoffrey A. Manne (Contact Author)
International Center for Law & Economics (ICLE) ( email )
2325 East Burnside St.
Suite 301
Portland, OR 97214
United States
503-770-0650 (Phone)
HOME PAGE: http://www.laweconcenter.org
Joshua D. Wright
Federal Trade Commission ( email )
601 New Jersey Ave., NW
Washington, DC 20580
United States
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
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