Size Doesn't Matter: The Question Is Whether Google Hurts Consumers

With the Google Senate hearings yesterday, we noted that the inquisitors seemed to focus on the fact that Google is big as if that is a problem. Senator Franken specifically made that point: the "bigness" of Google is a concern. And, certainly, it is true that big companies tend to be more able to use their position to make decisions that are harmful to consumers. But that's a correlation, not a causal relationship -- and just because a company is big, doesn't mean it's automatically doing bad things. Mathew Ingram has the most insightful analysis I've seen so far of the hearings, in which he analyzes the points raised, and whether or not there's been any evidence of Google actually harming consumers. What struck me was how Senator Blumenthal specifically asked if Google would make its own product less functional. Why would it want to do that? That seems like the exact opposite of what an antitrust investigation should be about. As Ingram notes:

The hard part comes when Barnett says that Google’s dominance in these areas affects consumers because they will face higher prices and reduced innovation. This is the core of an antitrust case (which the Senate hearing isn’t technically part of, but which is currently underway at the Federal Trade Commission and possibly the Justice Department as well, since both share responsibility for antitrust). It’s not enough that a company like Google has a dominant or even monopolistic market position — as judge Learned Hand has written: “The successful competitor, having been urged to compete, must not be turned on when he wins.”

And it’s not even enough to argue that a company with a monopoly is using that position unfairly. It has to be proven that consumers or the marketplace as a whole are being harmed by that behavior, either through higher prices or reduced choice, or both.

The problem with a company like Google — as opposed to a company like Microsoft, the last major antitrust investigation in the technology sphere — is that users don’t actually pay for the vast majority of its products and services. Microsoft’s behavior arguably affected physical goods like computers and software, which people had to pay for. What does Google’s behavior affect? I’m not paying any more to use Google Maps than I would to use some other service, nor am I paying more to use Yelp because it has somehow been disadvantaged by Google’s attempts to “scrape” its content for local recommendations.

Certainly, "big" companies may become companies that abuse their position and harm consumers, but nowhere has anyone shown any actual evidence of harm. To date, the focus has basically been on the fact that Google is big... and on how some competitors don't like it that they can't keep up. But the evidence of higher prices? Just not there.

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Source: http://www.techdirt.com/articles/20110922/15150016054/size-doesnt-matter-question-is-whether-google-hurts-consumers.shtml

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