Pearlstein hits back at Google on antitrust

Google has done a good job at reciting the predictable antitrust lawyer talking points (efficiency, good for consumers) to support the proposition that it should be allowed to buy any company not in their core business area. The problem for Google is that it is so good it now has what, for all intents and purposes, amounts to a monopoly in the key Internet portal market for web search. That means the law requires that it be treated differently. Not true in the case of many of the other acquirers it cites. Is this unfair? Does this punish a successful company? Yes and yes. But the basic premise of the anti-trust law is that this degree of unfairness is a reasonable price to pay to maintain robust competition in other markets.

In the short run, consumers may be denied the benefits of the new products or the lower prices that might result from such a non-horizontal merger. But that does not end the conversation in the case of a monopoly buyer, because there is a larger issue involved -- one that goes well beyond the competitive dynamic of the small market niche of the acquired company, which is the limit of most Hart-Scott-Rodino analyses. The point of the column was to suggest the proper analysis is now the larger market for Internet search and services, for which Google is a dominant portal. Google is not yet interested in joining a serious discussion of what the rest of us should do about its legally obtained monopoly. The company wants to grow and produce great new products and services and make more money -- all perfectly legitimate and healthy instincts. From an economy and industry-wide perspective, however, it would be better to let some other companies grow and some other companies come up with these great new products. Google's aggressive acquisition strategy, combined with its dominance, makes this unlikely. The tipping point has now been reached.