Is Google-Motorola the Next Antitrust Case?

[Commentary] The Justice Department is going to court to stop the proposed merger of AT&T and T-Mobile USA. Will the pending union of Google and Motorola suffer the same fate?

At first glance, the two mergers appear to have little in common. AT&T and T-Mobile are in the same business, while Google and Motorola occupy different niches in the telecommunications ecosystem. But AT&T and Google share a common problem: Both are victims of bungled government regulation, and both need merger partners to sustain competitive momentum in the face of federal roadblocks. Indeed, it's unlikely that either would have risked such intense antitrust scrutiny if the government had been doing its job properly.

Justice apparently believes that the AT&T/T-Mobile merger would inevitably mean less competition -- and therefore higher prices and lower quality -- in the wireless carrier market. We're skeptical. For one thing, it's far from clear that T-Mobile is viable any longer on its own: Deutsche Telekom, the carrier's parent, is reportedly unwilling to make the huge investment T-Mobile needs to keep up with rivals. For another, carrier concentration varies from locality to locality, and some judicious divestiture of customers and spectrum would make a big difference -- which, one hopes, is all that the Justice Department is really after. In a perfect world, AT&T would be able to buy the spectrum it needs. However, the FCC has been slow in convincing broadcasters to give up some of their airwaves.

Google, for its part, faces a very different government-manufactured obstacle. The giant's Android operating system, which is licensed to a dozen equipment makers world-wide, is a runaway success. But, thanks to a government patent and copyright system that is ill-equipped to navigate the modern and complex issues of carving out rights in software, Google faces as-yet-unknown challenges to ownership of the intellectual property that makes Android tick.

[Hahn is director of economics at the Smith School, Oxford, and a senior fellow at the Georgetown Center for Business and Public Policy. Passell is a senior fellow at the Milken Institute]