Wednesday, 14 December 2005

Google in the antitrust cross-hairs

Guest commentary this afternoon from a new 'Not PC' guest writer, Barry Paul:
    Some libertarian commentators in the US are concerned that as Google has become extremely successful in its varied businesses, the company may become the inevitable target of an antitrust suit.
    William Anderson for example, writing at the Mises Blog, considers there may be political pressure by the Republican administration to punish Google -- now a publicly-listed company -- for becoming "too big," for which read "too successful."
    Google has become big due to innovative products that include its indispensable search engine, and the very blog platform on which you read this post. "Its success," notes Anderson, "is driven entirely by customers' positive evaluation of its quality -- Google innovates, but it is the market that renders the verdict." The market, so far, has been very happy thank you very much with what it has seen from Google, and it is this success that some are now saying needs to be punished with an antitrust action. Political pressure to bring an antitrust suit against any corporation is not based on anything even halfway clear or obvious.
    In fact, antitrust law does not even constitute good law: the "violations of the law" with which antrust concerns itself -- non-concepts such as "restraint of trade" or "monopolising a market" -- are not readily defined. As no real legal proof is needed for the courts to act against the alleged "monopolist", the vagueness of antitrust law makes it easy for government to heap abuse upon those firms that are out of favour at any given time; all that is needed for prosecutors to begin proceedings is an allegation and a friendly judge, and prosecutors and the all-too-predictable media frenzy will perform the rest of the job. Remember Microsoft?
    If all this seems rather distant from little 'ol New Zealand, consider that as recently as today Communications Minister David Cunliffe was still resisting industry pressure on him to force Telecom to 'unbundle' its local loop network despite strong lobbying by Telstra-Clear and telecommunications groups. However some agreement has been reached that Telecom will offer wholesale broadband services to rivals on the local loop to foster competition. Telecom must provide wholesale bit-stream services at viable rates otherwise the minister will "refer the matter back to the Telecommunications Commissioner. "
    Yes, Virginia, that is a threat.
    Kiwis generally like to give others a "fair go", but only until they believe that some large corporation or (horror) multi-national is controlling the market to the detriment of the public. The Telecom case above is our NZ version of antitrust action, political interference in the marketing policies of private companies.  

Linked Article: Target: Google  
 Related topics: Economics, Politics-NZ, Politics-US


  1. Good bloggin' Barry. I guess you're somewhat right about how Kiwi respect for an entity is inverse to it's size (pity the Gov seems to be an exceptional case...)

    So when do I get to be a guest writer?

  2. I'm not sure why you're mentioning Telecom in a piece about Google - Telecom's phsyical copper network was designed and built as a monopoly using taxpayer dollars and sold (cheaply) as a monopoly entity, rather than divided amongst its real owners (us). And logically enough its new owners continued to operate it as a monopoly, albeit much more efficiently. It should never have been created in the first place, but that's history now.

    On the other hand Google built it's own software and hardware platform using private money, and doesn't have a distribution monopoly of any form. And Blogspot was an acquisition which they still haven't fully integrated into the Google architecture.

    What's the connection?

  3. - AL, there certainly is a difference between the two, which is good to point out.

    However: "Telecom's phsyical copper network was designed and built as a monopoly using taxpayer dollars and sold (cheaply) as a monopoly entity" -- and that network now belongs to the owner.

    You can quibble at the ~way~ privatisation was done by Douglas and Prebble (as well you might), but the position of 'Not PC' is that it has been privatised, it should have been privatised, and it rightly belongs to those who paid for it. Indeed, fifteen years after privatisation, the Telecom of today is barely recognisable from the bumbling P & T of the bad old days.

    Anyway, I'll let Barry argue the point further.

    - Rick, you ask, "So when do I get to be a guest writer?" My answer: When sanity and horse sense are no longer highly valued here. :-)

  4. As it happens, AL, LibertyScott has a rant on this very topic here: Boycott Telstra Clear - hypocritical supporters of fascism. You can already guess what his attitude is going to be, can't you. :-)

  5. ty pc, and if Al wants ownership of the Telecom network again, then let him service the debt that was paid off from the sale too.

    There are competing networks to Telecom all over the place, the government through the Kiwishare regulates the price of Telecom's network, keeping the price of local line rental down - and as a result, squeezing out competition outside the main centres.

  6. From Barry:

    "Telecom was merely used as an example of an NZ antitrust action. I could have considered Air New Zealand - bailed out by the taxpayer instead of being allowed to fail / survive in the marketplace; or Timberlands - closed down by the Greens lobby; as instances of undue State involvement in private business albeit not exactly antitrust."

  7. Bah~!

    I'm as smart as any two horses. Maybe three. And I mean the front end too!


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