Advertisement

Review of Industrial Organization

, Volume 46, Issue 1, pp 25–57 | Cite as

Economics and the FTC’s Google Investigation

  • Michael A. Salinger
  • Robert J. Levinson
Article

Abstract

We explain the issues in the Federal Trade Commission (FTC’s) antitrust investigation into whether Google’s use of “Universal” search results violated the antitrust laws and assess the role for economics in the FTC’s decision to close the investigation. We argue that the presence of the Bureau of Economics infuses the FTC with an economic perspective that helped it recognize that “Universals” were a product innovation that improved search rather than a form of leveraging. Labeling them as “anticompetitive” would have confused protecting competition with protecting competitors.

Keywords

Internet search Antitrust Market definition FTC Universal search Google Two-sided markets 

Notes

Acknowledgments

Salinger and Levinson were consultants to Google during the FTC’s investigation. This paper draws heavily on Salinger and Levinson (2013), for which Google provided financial support. The views expressed in this paper are the authors’ alone. We are grateful to Mike Baye, Susan Creighton, Joe Farrell, Franklin Rubinstein, Scott Sher, and Elizabeth Wang for helpful comments.

References

  1. Bergman, M. K. (2001, September 24). The Deep Web: Surfacing hidden value. Retrieved June 3, 2013, from BrightPlanet Web site: http://brightplanet.com/wp-content/uploads/2012/03/12550176481-deepwebwhitepaper1.pdf.
  2. Bush, V. (1945). As we may think. Atlantic Monthly, 176, 101–108.Google Scholar
  3. Carlson, J. A., Dafny, L. S., Freeborn, B. A., Ippolito, P. M., & Wendling, B. W. (2013). Economics at the FTC: Physician acquisitions, standard essential patents, and accuracy of credit reporting. Review of Industrial Organization, 43, 303–326.CrossRefGoogle Scholar
  4. Definition of: Surface Web. Retrieved February 3, 2014 from PCMag.com Web site: http://www.pcmag.com/encyclopedia/term/52273/surface-web.
  5. Definition of: Deep Web. Retreived February 3, 2014 from PCMag.com Web site: http://www.pcmag.com/encyclopedia/term/41069/deep-web.
  6. Edelman, B. (2010, November 15). Hard-coding bias in Google ‘algorithmic’ search results. Retrieved May 28, 2013, from http://www.benedelman.org/hardcoding/.
  7. Evans, D. S., & Schmalensee, R. (2007). The industrial organization of markets with two-sided platforms. Competition Policy International, 3, 150–179.Google Scholar
  8. Farrell, J., Balan, D. J., Brand, K., & Wendling, B. W. (2011). Economics at the FTC: Hospital mergers, authorized generic drugs, and consumer credit markets. Review of Industrial Organization, 39, 271–296.CrossRefGoogle Scholar
  9. Federal Trade Commission. (2013a, January 3). Statement of the Federal Trade Commission regarding Google’s search practices, In the Matter of Google Inc., FTC File Number 111–0163. Retrieved February 9, 2014, from Federal Trade Commission Web site: http://ftc.gov/os/2013/01/130103googlesearchstmtofcomm.pdf.
  10. Federal Trade Commission. (2013b, January). Statement of Commissioner Maureen K. Ohlhausen in the Matter of Google, Inc., Retrieved March 6, 2014, from Federal Trade Commission Web site: http://www.ftc.gov/sites/default/files/attachments/press-releases/google-agrees-change-its-business-practices-resolve-ftc-competition-concerns-markets-devices-smart/130103googlesearchohlhausenstmt.pdf.
  11. Fisher, F. M., McGowan, J. J., & Greenwood, J. E. (1983). Folded, spindled and mutilated: Economic analysis and U.S. vs. IBM. Cambridge: MIT Press.Google Scholar
  12. Google bomb. (n.d.). Retrieved March 6, 2014 from Wikipedia Web site: http://en.wikipedia.org/wiki/Google_bomb.
  13. Google, Inc. (2011, February 24). Finding more high-quality sites in search. Retrieved February 5, 2014, from Google Official Blog Web site: http://googleblog.blogspot.com/2011/02/finding-more-high-quality-sites-in.html.
  14. Google, Inc. (2013). Form 10-K for fiscal year ended December 31, 2012. Retrieved March 6, 2014, from U.S. Securities and Exchange Commission Web site: http://www.sec.gov/Archives/edgar/data/1288776/000119312513028362/d452134d10k.htm#toc.
  15. Google, Inc. (n.d. a). Block or remove pages using a robots.txt file. Retrieved January 31, 2014, from https://support.google.com/webmasters/answer/156449?hl=en.
  16. Google, Inc. (n.d. b). Google fun facts. Retrieved February 5, 2014, from Google Press Center Web site: http://web.archive.org/web/20090424093934/http://www.google.com/press/funfacts.html.
  17. Hayek, F. A. (1945). The use of knowledge in society. American Economic Review, 35, 519–530.Google Scholar
  18. Hayes, A. (n.d.). What exactly is a bot like Googlebot: Googlebot and other spiders. Retrieved January 31, 2014, from AFHX Mobile Design and Hosting Web site: http://www.ahfx.net/weblog/39.
  19. Jefferson Parrish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2 (1984).Google Scholar
  20. Kaiser, T. (2013, January 4). FTC, Google officially settle antitrust investigation; Microsoft Cries Foul. Retrieved February 9, 2014, from DailyTech Web site: http://www.dailytech.com/FTC+Google+Officially+Settle+Antitrust+Investigation+Microsoft+Cries+Foul/article29551.htm.
  21. Kendall, B., Efrati, A., Catan, T. and Ovide, S. (2013, January 5). Behind Google’s antitrust escape. Retrieved February 9, 2014, from Wall Street Journal Online Web site: http://online.wsj.com/news/articles/SB10001424127887323689604578221971197494496.
  22. Kramer, S. D. (2003, September 25). Google News creator watches a portal quiet critics with ‘Best News’ Webby. Retrieved June 3, 2013 from USC Annenberg Online Journalism Review Web site: http://www.ojr.org/ojr/kramer/1064449044.php.
  23. Salinger, M. A., & Levinson, R. J. (2013, June). The role for economic analysis in the FTC’s Google investigation. Retreived February 12, 2014 from Northwestern University School of Law Searle Center on Law, Regulation and Economic Growth Web site: http://www.law.northwestern.edu/research-faculty/searlecenter/events/internet/documents/Salinger_Economics_of_Google_and_Antitrust_Case_Searle_conference_version.pdf.
  24. Salop, S. C. (2000). The first principles approach to antitrust, Kodak, and antitrust at the Millennium. Antitrust Law Journal, 68, 187–202.Google Scholar
  25. Schumpeter, J. A. (1950). Capitalism, socialism, and democracy (3rd ed.). New York: Harper.Google Scholar
  26. Search engine optimization. (n.d.). Retrieved March 6, 2014, from Wikipedia Web site: http://en.wikipedia.org/wiki/Search_engine_optimization.
  27. Shelanski, H. A., Farrell, J., Hanner, D., Metcalf, C. J., Sullivan, M. W., & Wendling, B. W. (2012). Economics at the FTC: Drug and PBM mergers and drip pricing. Review of Industrial Organization, 41, 303–319.CrossRefGoogle Scholar
  28. Sherman, C., & Price, G. (2003). The Invisible Web: Uncovering sources search engines can’t see. Library Trends, 52, 282–298.Google Scholar
  29. Singhal, A. (2001). Modern information retrieval: A brief overview. IEEE Data Engineering Bulletin, 24, 35–43.Google Scholar
  30. Stigler, G. J. (1971). The theory of economic regulation. Bell Journal of Economics and Management Science, 2, 3–21.CrossRefGoogle Scholar
  31. Sullivan, D. (2001, March 4). Being search boxed to death. Retrieved June 3, 2013, from Search Engine Watch Web site: http://searchenginewatch.com/article/2065235/Being-Search-Boxed-To-Death.
  32. Sullivan, D. (2003, May 3). Where are they now? Search engines we’ve known & loved. Retrieved June 3, 2013, from Search Engine Watch Web site: http://searchenginewatch.com/article/2064954/Where-Are-They-Now-Search-Engines-Weve-Known-Loved.
  33. Sullivan, D. (2011, May 2). Google & the death of Osama bin Laden. Retrieved May 15, 2013, from Search Engine Land Web site: http://searchengineland.com/google-the-death-of-osama-bin-laden-75346.
  34. U.S. Department of Justice and Federal Trade Commission. (2010, August 19). Horizontal merger guidelines. Retrieved February 9, 2014, from U.S. Department of Justice Web site: http://www.justice.gov/atr/public/guidelines/hmg-2010.html#4.
  35. United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377 (1956).Google Scholar
  36. Werden, G. J. (1992). The history of antitrust market delineation. Marquette Law Review, 76, 123–215.Google Scholar
  37. Web Crawler. (n.d.). Retrieved February 4, 2014, from Wikipedia Web site: http://en.wikipedia.org/wiki/Web_crawler.
  38. White, Lawrence J. (2001). Present at the beginning of a new era of antitrust: Reflections on 1982–1983. Review of Industrial Organization, 16, 131–149.CrossRefGoogle Scholar
  39. White, Lawrence J. (2008). Market power and market definition in monopolization cases: a paradigm is missing. In W. D. Collins (Ed.), Issues in competition law and policy (pp. 913–924). Chicago: American Bar Association.Google Scholar
  40. Yahoo! Inc. (1997, March 25). Yahoo! ranks no. 1 in news. Retreived June 3, 2013, from Yahoo! Investor Relations Web page: https://investor.yahoo.net/releasedetail.cfm?ReleaseID=173352.

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Boston University School of ManagementBostonUSA
  2. 2.Charles River AssociatesWashingtonUSA

Personalised recommendations