Antitrust: Is Google the next Microsoft?
Published: 23 Jul 2007 17:36 BST
…argued for a forcible break-up of the software giant, and Netscape lawyer Gary Reback pressured antitrust regulators to assail Redmond. Oracle even hired private detectives to snoop through the trash of Microsoft's allies in the nation's capital.
"People said Microsoft was the new AT&T," said Ari Schwartz of the Center for Democracy and Technology, which has received money from Microsoft, AT&T and Google. "There is certainly a lot more scrutiny of Google now that they are the number-one player in this space and are acquiring other companies. Part of competition means people targeting the biggest player out there."
To be sure, the sentiment that Google could become the new Microsoft is not universally shared. What got the software company into trouble in the 1990s "wasn't Microsoft pushing its products — it was Microsoft making it harder for rival products to come onto the market," said Robert Lande, an antitrust law professor at the University of Baltimore. "Is Google doing anything to make it harder for rival products [to come to market]?"
Instead of Microsoft being a dominant company with no real rivals, the marketplace today is more akin to a dominant company facing a formidable upstart, said Lande, who has provided informal guidance to congressional staff on this topic. "If you watch the Olympics, it's the old athlete getting challenged by the young athlete," he said. "That's why we like it and that's why we're fascinated."
David Evans, a consultant with the firm LECG, hired by Microsoft, calculates that Google currently has a 27 percent share of the market for "publisher tools". But, if combined with DoubleClick, Evans says, the company would command 78 percent of the publisher tools market. (But it all depends on definitions: if regulators view the relevant market differently — say, to include non-internet forms of media — Google's market share would hardly be significant.)
Some analysts believe Google is encountering the same problem that Microsoft did when its own size and affluence begin to attract the attention of regulators. Political economists call it "rent extraction", meaning payments that people and companies make to avoid being victimised by politically harmful measures.
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George Mason University economics professor Richard Wagner says regulation and taxation are common forms of threatened political disfavour. An article by Wagner likens rent extraction to a legalised form of extortion. "For ordinary people, these kinds of activity are wrong," he wrote. "But, in politics, they are business as usual."
"If anything gets too big and too interesting, the federal government says: 'We're supposed to be a part of this — we're the federal government, after all'," said Jim Harper, a former Hill staffer who is the director of information policy studies at the free-market Cato Institute.
An awkward, arms-length alliance
One irony in the DoubleClick situation is that the same non-profit groups that have been agitating for years against Microsoft and its alleged privacy misdeeds have now found themselves making common cause with Redmond against a political adversary.
Epic and the CDD signed a joint complaint with the FTC against Microsoft's Passport service. The 2001 complaint charged that Passport in Windows XP will unfairly "profile, track, and monitor millions of internet users".
Now Epic and CDD are making the same complaint against Google. A complaint they and US PIRG, the federation of state public interest research groups, sent the FTC in April says: "The proposed acquisition will create unique risks to privacy" to "more than 1.1 billion internet users around the world."
Marc Rotenberg, Epic's executive director, notes that his organisation is independent and accepts no money from Microsoft. (An analysis performed by CNET News.com last year shows its budget was $1.1m in 2004 and it receives money from the Ford Foundation and the Open Society Institute.)
In the past, Epic has occasionally been able to cause technology companies nightmares by taking its case to the FTC. Its Passport complaint eventually led to Microsoft making sweeping changes. But the FTC dismissed a 2000 complaint against DoubleClick.
Microsoft has approached Epic about meeting on the topic of Google and DoubleClick, but…
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