The web is all abuzz about possible antitrust implications concerning Google’s new personalized search (see, e.g., here and here), integrating search with Google Plus.  Here is Google’s description of “Search, plus Your World”:

We’re transforming Google into a search engine that understands not only content, but also people and relationships. We began this transformation with Social Search, and today we’re taking another big step in this direction by introducing three new features:

1. Personal Results, which enable you to find information just for you, such as Google+ photos and posts—both your own and those shared specifically with you, that only you will be able to see on your results page;
2. Profiles in Search, both in autocomplete and results, which enable you to immediately find people you’re close to or might be interested in following; and,
3. People and Pages, which help you find people profiles and Google+ pages related to a specific topic or area of interest, and enable you to follow them with just a few clicks. Because behind most every query is a community.

The linked articles raising antitrust concerns largely talk about things like leveraging monopoly power in search into social networks and so forth.  The usual arguments.  For example:

By making Google+ such a large part of search — as well as Picasa — Google certainly is toeing the line of a company using monopoly to extend its reach into adjacent markets. Consider Microsoft’s moves with Internet Explorer, which was bundled with Windows starting in 1998. Microsoft used its monopoly on PC operating systems to nudge into the browser market, where Netscape had overwhelming market share lead. How is what Google is doing different?

Let’s start with the obvious differences: (1) the DOJ had to prove anticompetitive effects in Microsoft; (2) Microsoft was unable to muster up an efficiency justification.  Discussions of antitrust implications of any business practice that don’t focus on competitive effects and efficiency justifications are non-starters.

So let’s start with the most obvious thing that should come to mind when watching the integration of general search with Google Plus.   Integration!  Personalizing search results makes (at least some!) users better off.  Users that prefer non-personalized results can have them too.  But the trend toward providing a deeper, better, and different forms of answers to questions posed in search queries is not a Google-specific thing.  Its an industry thing driven by consumer preferences on the web.  When Google or Facebook or Twitter is able to integrate functions of search and social networking to create something different and demanded by consumers, that consumers enjoy and derive surplus from, this is a competitive benefit.  Competitive benefits count in antitrust because they make consumers better off.  This is very basic. But worth repeating.

The antitrust question is whether, despite these obvious efficiencies, there is plausible evidence of anticompetitive harm — that is, harm to competition rather than individual rivals like Bing, Twitter, or Facebook.  My personal view — which I’ve written about at great length here, here, and here — is that there is no such evidence.  But for now, the critical point is that antitrust analysis counts the integration of these functions in a manner satisfying consumer preferences — and it seems obvious that this integration produces results that consumers want — as an important consumer benefit.  This is a feature and not a bug of antitrust law.   Antitrust law that ignores or is biased against the efficiencies of vertical integration, or the introduction of new products integrating previously separate functions (like personalized search, or improved search results with maps), is at significant tension with economic theory and is simply not compatible with a consumer-welfare based competition regime.

Filed under: antitrust, google, Internet search, technology

Judge Ginsburg and I are working on a project for an upcoming festschrift in honor of Bill Kovacic.  The project involves the role of settlements in the pursuit of the goals of antitrust.  In particular, we are looking for examples of antitrust settlements between competition agencies and private parties — in the U.S. or internationally — involving conditions either: (1) clearly antithetical to consumer welfare, or (2) that arguably disserve consumer welfare.  In the former category, examples might include conditions requiring firms to make employment commitments.  The second category might include conditions placing the agency in an ongoing regulatory role or restricting the firm’s ability to engage in consumer-welfare increasing price or non-price competition.

I turn to our learned TOTM readership for help.  Please feel free to leave examples in the comments here — or email me.  Cites and links appreciated.

Filed under: antitrust, doj, federal trade commission, scholarship, settlements

In yesterday’s Washington Post, Health and Human Services Secretary Kathleen Sebelius makes an impassioned plea for skeptics to reconsider the Affordable Care Act. Secretary Sebelius argues that the Act will bring down health care costs by, among other things, assisting those who cannot afford health insurance coverage. Although expanding health insurance coverage is a worthy goal, bringing more folks into the health care system could result in higher prices for health care services. The housing market provides a nice example: although subsidized mortgage rates allowed more people to own homes, more buyers eventually meant higher home prices.

Read the full piece here.

As in, “If the SEC doesn’t pull up its socks and do a serious cost-benefit analysis, it may discover that Business Roundtable has become a verb. As in, the court Business Roundtabled yet another SEC rule.”

Here.

Filed under: business, disclosure regulation

Tomorrow morning at 10:30 I’ll be on a panel at AALS discussing behavioral economics and antitrust law and policy.

The panel includes: James Cooper, Bruce Kobayashi, William Kovacic, Steve Salop, Maurice Stucke, Avishalom Tor and myself.  Its a really good group and I’m looking forward to the discussion.  Here are the session details:

The program will focus on the influence of Behavioral Economics on Antitrust Law and Policy.  Behavioral economics, which examines how individual and market behavior are affected by deviations from the rationality assumptions underlying conventional economics, has generated significant attention from both academics and policy makers. The program will feature presentations by leading scholars who have addressed how behavioral economics impacts antitrust law and policy.

In my presentation I’ll be discussing my work on the topic (co-authored with Judd Stone) and some extensions of that work.

See you there.

Filed under: antitrust, behavioral economics

I’ve been deeply saddened since I heard of the heartbreaking news about Larry. I had the privilege to be advised by Larry along my intellectual journey when studying in the US. Larry has set an example of what it means to be a passionate researcher and an enthusiastic educator, which will always remind me of how to be a professor in my lifetime.

Read the full piece here.

Iwas terribly saddened and, quite frankly, dumbfounded when I heard that Larry Ribstein had passed away. I had seen Larry approximately three weeks before when he gave a workshop at Yale and the last thought that would have crossed my mind would have been that I would be receiving such horrible news. At the time, Larry mentioned in his no-nonsense way numerous projects that he had in the works and how much he was looking forward to spending the Spring semester in New York. It is exceedingly difficult to accept that all of this will not happen.

Read the full piece here.

Summary

In recent months a veritable legal and policy frenzy has erupted around Google generally, and more specifically concerning how its search activities should be regulated by government authorities throughout the world in the name of ensuring “search neutrality.”  Concerns with search engine bias have led to a menu of proposed regulatory reactions.  Although the debate has focused upon possible remedies to the “problem” presented by a range of Google’s business decisions, it has largely missed the predicate question of whether search engine bias is the product of market failure or otherwise generates significant economic or social harms meriting regulatory intervention in the first place.  “Search neutrality” by its very name presupposes that mandatory neutrality or some imposition of restrictions on search engine bias is desirable, but it is an open question whether advocates of search neutrality have demonstrated that there is a problem necessitating any of the various prescribed remedies. This paper attempts to answer that question, and we evaluate both the economic and non-economic costs and benefits of search bias, as well as the solutions proposed to remedy perceived costs. We demonstrate that search bias is the product of the competitive process and link the search bias debate to the economic and empirical literature on vertical integration and the generally-efficient and pro-competitive incentives for a vertically integrated firm to favor its own content. We conclude that neither an ex ante regulatory restriction on search engine bias nor the imposition of an antitrust duty to deal upon Google would benefit consumers. Moreover, in considering the proposed remedies, we find that by they substitute away from the traditional antitrust consumer welfare standard, and would impose costs exceeding any potential benefits.

Danny Sokol posted some nominations for best Antitrust Article from a variety of antitrust experts.  I was supposed to include my nomination for that list but missed the deadline.  Turns out my draft list doesn’t have much overlap with the articles nominated over there, so I figured I’d share my whole list here with all of the normal caveats (i.e., I’m sure I’ve forgotten some very important articles!).  Alas, I’ve been giving some thought to the best, most influential, most enjoyable, or most important antitrust articles and books (and in one case, press article) over the past year and came up with the following list of my favorites:

• Louis Kaplow, An Economic Approach to Price Fixing, 77 Antitrust Law Journal, 343 (2011)
• Daniel Crane, The Institutional Structure of Antitrust Enforcement (Oxford University Press 2011) (I reviewed Crane’s book here)
• Michael Baye & Joshua D. Wright, Is Antitrust to Complicated for Generalist Judges? The Impact of Economic Complexity and Judicial Training on Appeals, 50 J. L. & Econ. 1 (2011) (SSRN version available here; reviewed by John Woodbury in the Antitrust Source here)
• Geoffrey A. Manne & Joshua D. Wright, Competition Policy and Patent Law Under Uncertainty: Regulating Innovation (Cambridge University Press 2011)
• James Keyte & Kenneth B. Schwartz, Tally -Ho!: UPP and the 2010 Horizontal Merger Guidelines, 77(2) Antitrust Law Journal 587 (2011)
• Joseph Farrell, Fox or Dangerous Hedgehog?  A Reply to Keyte and Schwartz, 77(2) Antitrust Law Journal, 661 (2011)
• Keith N. Hylton, Brown Shoe Versus the Horizontal Merger Guidelines, 39 Review of Industrial Organization 95 (2011)
• Herbert Hovenkamp, Innovation and Competition Policy (2011)
• Avi Goldfarb & Catherine Tucker, Substitution Between Offline and Online Markets, Journal of Competition Law & Economics (2011)
• Thomas Catan, This Takeover Battle Pits Bureaucrat v. Bureaucrat, Wall Street Journal (April 12, 2011)

Happy New Year TOTM Readers.

Filed under: antitrust