Seeking a level playing field...
You may have heard that a number of government officials are investigating whether Google has violated state and federal anti-trust laws.
Context & Ripple Effects
Antitrust scrutiny of Google was already unsettled in 2008, when trustbusters disagreed over the next move against the company. The 2011 investigations give Google’s rivals a formal venue to press their concerns about competitive conditions.
The inquiry arrives as Google broadens into payments, daily deals and new paid-search formats, making the rules governing its search and advertising businesses consequential beyond a single product line.
First-order effects
- Google faces coordinated state and federal scrutiny of possible antitrust violations, increasing the legal and policy pressure around its search and advertising conduct.
- Google’s rivals gain an opportunity to put alleged competitive disadvantages before investigators rather than contesting them solely in the market.
Second-order effects
- Advertisers and competing search services may face greater uncertainty over Google’s paid-search practices while investigators assess the company’s conduct.
- Google’s expansion into payments and daily deals gives regulators and competitors more adjacent businesses to examine through the lens of platform power.
Third-order effects
- If investigations establish limits on how a dominant search platform can treat rivals, competition policy may shift from policing individual products toward governing the gatekeeper’s treatment of adjacent services.
- The case is an early test of whether antitrust enforcement can address leverage across search, advertising and emerging transaction services as digital platforms diversify.
The trend: Digital-platform antitrust is moving toward scrutiny of how a search gatekeeper’s control of discovery and advertising shapes competition in adjoining markets.