Joshua Wright headshot

Professor of Law
Antonin Scalia Law School

Joshua D. Wright is University Professor and the Executive Director of the Global Antitrust Institute at Scalia Law School at George Mason University. In 2013, the Senate unanimously confirmed Professor Wright as a member of the Federal Trade Commission (FTC), following his nomination by President Obama.

Antitrust

Antitrust Monopolization

Popular Media

Antitrust Karma, the Microsoft-Google Wars, and a Question for Rick Rule

The WSJ recently published the next installment of the Microsoft-Google antitrust wars.  A Google representative argues “competition is one click away”; Charles (“Rick”) Rule, Microsoft’s antitrust attorney, argues that Google’s conduct might harm competition.  Rule’s main point is summed up in the first line of his piece: “what goes around comes around.”  The longer version of the argument is as follows: (1) Microsoft was faced with antitrust allegations instigated by rivals that its business practices harmed competition; (2) Microsoft defended on various grounds, including that there was ample competition in high-tech markets; (3) Microsoft lost and new law was made; (4) Google is now faced with similar allegations, brought on and/or instigated by similar rivals (including Microsoft), and involving similar defenses; (5) fair play and consistency dictates that the same standard be applied to Microsoft and Google; (6) thus, Google is an antitrust problem and should lose a suit brought against it.  I will refer to (1)-(6) as the “antitrust karma” argument.

I’ve heard several variants of the antitrust karma argument, mainly from Microsoft lawyers and economists, though sometimes it is echoed by others.  The “antitrust karma” claim strikes me as a bit odd though, as well as incomplete and a bit of a distraction from the core antitrust focus of consumer welfare.  I certainly understand the “gotcha” appeal of arguments like this:

Google now finds itself in those same antitrust cross-hairs, accused of being today’s monopoly gatekeeper to the Internet. There are a growing number of complaints in the U.S. and Europe that Google has used its search monopoly to exclude actual and potential rivals, big and small. How exactly? Rigging clicks by lowering competitors’ rankings in Google searches is one way. Another is locking up critical content, like video and books, so that rival search engines are frustrated in trying to provide their users with access to that content. The result has been Google’s overwhelming dominance.  Ironically, many of the most ardent defenders of Google are the same individuals—such as Eric Schmidt, Google’s CEO who was an executive at Sun and later Novell—who devoted so much time, money and effort to pushing the frontiers of the law and government regulation against Microsoft a decade ago.

And the intuitive appeal of the “consistency” argument is also strong.  Who’s in favor of selective and variable enforcement?  For example, Rule argues:

Whether Google likes it or not, the Microsoft case resolved antitrust’s role in high-tech. And the last 10 years have shown that reasonable antitrust rules can be applied to prevent exclusionary conduct by dominant tech firms without destroying market forces. Complaints by leading Googlers, who were once strong proponents of those rules, that the same rules should not apply to Google are disingenuous at best.  The application of antitrust must be consistent. Failing to apply antitrust rules evenhandedly—particularly to politically well-connected monopolists like Google—would neither be just nor promote the cause of free-market capitalism.

All of this is well and good.  Inconsistency might be bad.  But it can also be good, for example, being consistently wrong is often worse than being right half the time.  Hypocrisy can be bad too, as a general matter.  So, perhaps Google wont win any public relations points by complaining about private rivals’ involvement in antitrust enforcement against it; but is that the issue?

What seems to be missing from Rule’s discussion, and from discussions I’ve seen that invoke “what goes around comes around” is an attempt to take on the substantive issues.  The argument that Google should be treated like Microsoft as an antitrust matter makes sense if two conditions hold: (1) the Microsoft case made consumers better off; and (2) the Google case is factually like the Microsoft case in ways that extend beyond superficial similarities like the invocation of “network effects” or the fact that both are in “high-tech” markets.  Geoff Manne and I discuss the second condition in this paper, and suggest that many of the issues, especially those about network effects, are quite different.  But what about the first?  It is not enough, on the substantive antitrust merits — that is, from a consumer welfare perspective — to argue for consistency.  That only makes sense if the Microsoft case made consumers better off.  Obviously, Rule knows this.  He’s one of the most highly regarded antitrust lawyers in the country for good reason.  Microsoft’s economic arguments against Google are one thing; but invoking the Microsoft experience in the name of consistency doesn’t work without a demonstration that consumers were left better off.  And I’ve seen what appears to be an unwillingness to come out and claim as much.

Perhaps I’ve just missed it.

That brings me to my question for Rick Rule (or any takers): did the enforcement against Microsoft, in fact, make consumers better off?  What evidence can you point to to persuade readers on that point?

I’m skeptical that Rule truly believes that consumer welfare increased as a result of the litigation against his client.  And I’m also skeptical that available data support that claim.  But I’m willing to be convinced.  And because his article invokes his personal experience with the case as relevant (and I agree), and has been a prominent advocate of “consistency,” Mr. Rule seems like the right audience for the question.  As I said, I’m willing to be convinced.  However, “what goes around comes around” isn’t going to cut it.  Karma is a lot of things, but it is not a convincing antitrust theory.

Filed under: antitrust, economics, error costs, google, monopolization, technology