<p>While Google was still in an antitrust lawsuit in Europe, it embraced its skyrocketing third quarter earnings this October. The share price soared to a four-digit number and does not even has a tendency to stop, despite the shadow of the antitrust case. It is a triumph of the giant in the expanding mobile industry, and also the fact that Microsoft, Yahoo and other competitors in the mobile market are not willing to see. With a powerful search engine and the massive revenue resulted from it in the past few years, Google has already broke into new fields outside the search market and funded new projects that is completely free to public. Mobile market is no exception. The market is thus becoming unprecedentedly competitive and prices are dragged down due to the free irresistible Android to consumers. But this price discrimination is not unfamiliar to us. This is almost the same story as Standard Oil in early 19th century’s robber baron era. Is Google really a 21st century version of Standard Oil? Is the antitrust law really effective in technology sector?</p>
<p>Unlike the oil industry, Google is in the high-technology sector, the engine of innovation [1] and the most popular investment destination in US. The issues there may have important implications for the broader domain of U. S. markets. </p>
<p>Most of the antitrust issues originated here from the antitrust law and definition of antitrust itself. What are these laws and why did they come into being?</p>
<p>The first is the Sherman Act of 1890 [2], the result of a public outcry over trusts, the robber baron monopolies in late 19th century. This law makes every contract in introducing restraint of trade and monopolizing the commerce a misdemeanor. Next came the Clayton Act [2] in the early 20th century, clarifying the Sherman Act in a more concrete way and resulting in a broad range of unlawful behavior including resale of products from retailers to manufacturers. Although more recent ones like the Robinson-Patman Act of 1936 further clarified the unlawful conduct in price discrimination, they are still based on the criteria of restraint of trade from Sherman Act.</p>
<p>However, these laws, from my perspective, do not provide clues of reasons behind these sections and so it is sometimes simply a dogma rather than an efficient stimulus to a competitive market. </p>
<p>Sylvester Petro, professor of labor policy in Wake Forest University, once commented on these antitrust law [3]: the Sherman Act itself, the basic antitrust law, has been and is being used, not to promote and maintain competition, but to discourage the abler firms from operating to the limit of their abilities. He further argued that there is clear distinction between monopolies in the descriptive sense of being the only producer and using force to exclude competition. Although this challenges the previous belief of the Supreme Court that Sherman Antitrust Act a “charter of freedom” [4], it reveals the potential logical gap between the goal of antitrust law and the actual implementation. The gap lies in the fact that being monopoly does not necessary mean exclusion of competition.</p>
<p>Besides, Alan Greenspan, former Chairman of the Federal Reserve, argued on this topic in his essay Antitrust in [5] that the current antitrust law tend to discourage certain businesses from introducing more efficient products or some cost-saving mergers that would otherwise be beneficial to consumers. He also suggested the antitrust law should not support competition as an end in itself but rather for its results low prices. Even though this argument further challenges the idea of competition, it also raised the important point that the consumers benefits and lower prices are the ultimate goal for the antitrust law to exist.</p>
<p>A recent similar case to Google is the Microsofts antitrust lawsuit in 2000. The issue at that time is about the bundling of Internet Explorer inside the Windows operating system. Netscape, Opera and other web browser producer claimed that the ease provided by bundling of Internet Explorer has prohibited their products from fair competition in browser market. The initial judgment is to split the company into two halves by strictly following Sherman Act and previous cases, which is similar to the situation of Standard Oil. However, Microsoft immediately appealed the decision [6]. </p>
<p>This is not surprising, from my perspective, since this decision had not taken into consideration the uniqueness of high-technology companies. Unlike Standard Oil, the software Microsoft designed is a whole rather than separate pieces. Breaking up Microsoft may introduce more competition, but this is at the cost of replacing a complete set of compatible software with a set of inefficient ones from different companies. This result may not benefit the actual consumers and may also eliminate the pace of software development in Microsoft. </p>
<p>Eventually, Department of Justice and Microsoft reached an agreement that Windows platform details like API be shared to the competitors [6]. This judgment was very important to all the audience in the technology community since it protects the interests of ordinary consumers and also keeps a more fair competition between Microsoft and struggling competitors. Following the settlement, consumers can still enjoy the breathtaking array of new products directly embedded in Windows and also the competitive market is still being preserved. If the 19th centurys trust cases are applied here, we as consumers may see a world overwhelmed with small software and the contribution of Microsoft in integrating tools together may not exist. It is also apparent that both Sylvesters and Alans suggestions are implicitly adopted in this lawsuit.</p>
<p>The antitrust issue in the technology world, in my opinion, should also be based on similar criteria as above: a combination of both the intention of excluding the competition and the consumers interests. The reason why any activity in excluding competition should not be accepted is that there is no social harm as long as everyone has an equal right to get into a market. This is because the social interests lies in the efficient production of goods. And as long as the market access is not limited, the nature of the market will bring about the most efficient approach. Even though in extreme case a monopoly may come into being due to its superior efficiency over competitors, monopoly in that sense does not actually has harm to the interests of consumers. Anyone else can still join the competition if they are competent.</p>
<p>Also the point of consumers interests are also very important because this is the end we are supposed to achieve. Without this point, any innovative products or services with a dominant popularity would face penalty or even be killed by Sherman Act before they were born. And this would result in a situation that there really are many competitions on obsolete inefficient products. That is also one of reason Oliver Wendell Holmes, Jr., Acting Chief Justice of the U. S. in the early 20th century mentioned [7] for why restraint of trade in Sherman Act sometimes is misleading when interpreted under common law.</p>
<p>This might contribute to the issue with the suspect technology monopoly Google due to its impressive nearly 80% share in search market. This large figure easily makes people relate that to an overwhelming dominance, a potential implication of restraint of trade. However, the reason behind the figure is more like the fact that the smart search engine and the impressive accompanying services than a coercive monopoly. The idea of funding free services from advertisement and marketing revenues actually benefits web-users in many aspects. The competitions are still continuing in a good market condition. So given that, even though Google is dominating, it is still far from an illegal trust.</p>
<p>Certainly, there is some concern over Googles control on the ranking of search results. As mentioned in [8], this might be a potential threat to fair competition since Googles services might appear above competitors. However, this is not an issue with its dominance and its monopoly in a descriptive sense and should be treated differently. In fact, the criteria being discussed above should still apply since the intentional control certainly hurts both consumers efficiency and fair competition. </p>
<p>Works cited:
[1]. Mariana Mazzucato, A Much-Maligned Engine of Innovation, The Financial Times, August 4, 2013
[2]. U. S. Department of Justice, Antitrust Division, Antitrust Division Manual, Fifth Edition, Chapter II, July 2013
[3]. Sylvester Petro, The Labor Policy of a Free Society, Chapter X XII, the Ronald Press Company, January 1957
[4]. U. S. Supreme Court, Appalachian Coals, Inc. v. United States, U. S. Reports, Volume 288, May 1933
[5]. Alan Greenspan, Capitalism: The Unknown Ideal, Signet, June 12, 1998
[6]. U. S. District of Columbia Court of Appeals, United States of America, Appellee v. Microsoft Corporation, Appellant, Volume 253, U. S. Courts of Appeals Cases, June 28, 2001
[7]. Perlie Fallon, Some Influences of Justice Holmes Thought on Current Law Monopolies and Restraint of Trade, Page 246, Dickinson Law Review, June, 1950
[8]. Jeffrey Katz, Google’s Monopoly and Internet Freedom, The Wall Street Journal, June 7, 2012</p>