Inside Google

WASHINGTON, D.C. — Consumer Watchdog today called on the U.S. Department of Justice to launch a broad antitrust action against Google seeking remedial action that could include breaking the Internet giant into separate companies.

The letter from John M. Simpson, consumer advocate with the nonpartisan, nonprofit group, praised the DOJ for its opposition to the Google Books case and the Federal Trade Commission’s intense investigation of the proposed $750 million acquisition of AdMob. However, the group said it is time to move beyond a reactive approach and “actively restrain Google’s broader ability to abuse both users and advertisers.

“Such action could include breaking Google Inc. into multiple separate companies or regulating it as a public utility,” the letter said. “Google exerts monopoly power over Internet searches, controlling 70 percent of the U.S. market.  For most Americans – indeed, for most people in the world – Google is the gateway to the Internet. How it tweaks its proprietary search algorithms can ensure a business’s success or doom it to failure.”

Consumer Watchdog said Google subsidizes its other businesses by the monopolistic prices it is able to maintain because of its dominance in search.

Read Consumer Watchdog’s letter to the Justice Department here:
http://www.consumerwatchdog.org/resources/LTRjustice042110.pdf

Consumer Watchdog said the Justice Department could seek a variety of remedies:

— One possibility would be to break Google into different companies devoted to different lines of business.  Search could be separated from advertising.  Gmail and its new social networking service, Buzz, could be spun off as a separate entity as could YouTube, a Google acquisition that we believe should have been denied at the time of merger. Enterprise applications could be another separate business.

— Google’s importance as a gateway to cyberspace requires a maximum degree of openness and transparency with the potential for government regulation. Arguably Google’s monopoly position and importance to the Internet means that the company should be regarded as a public utility and regulated.  Regulations could be designed to open up Google’s ad platform to enable other competitors to compete.  Rules could be crafted to create greater transparency in the operation of Google’s ad platform to enable parties to negotiate more effectively – for example: by providing greater visibility into the maximum amount of the highest bid, how many search terms are shown per page, and how Google’s “quality score” is derived and applied.  Little, if any, of this information is currently public and openness would contribute to consumer choice and options as well as foster competition.

— Another remedy would be to force Google to disgorge its monopolistic gains through the imposition of financial penalties.  The payment would have to be significant enough to impact Google’s future behavior. Perhaps the amount could be tied to paying back consumers for monetizing their private information and content without compensating them.

“The pending actions in the Books case and AdMob deal are important and must be pursued to their conclusion.  It is, however, past time to act against Google’s monopolistic and pervasive power over the entire Internet.  Consumer Watchdog asks you to launch that action today,” the letter concluded.

Consumer Watchdog released its letter to the Justice Department today at a news conference “The Antitrust Case Against Google” at the National Press Club in Washington, DC.  In addition to Simpson, participants were Joseph Bial, special counsel at Cadwalader, Wickersham & Taft, who represents myTriggers.com and TradeComet.com.; Simon Buckingham, a New York based Internet and mobile entrepreneur; and Gary Reback, an attorney with Carrell & Ferrell and a founder of the Open Book Alliance.  They spoke offering their personal views and analysis.

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Consumer Watchdog, formerly the Foundation for Taxpayer and Consumer Rights is a nonprofit, nonpartisan consumer advocacy organization with offices in Washington, DC and Santa Monica, Ca.  Our Website is: www.ConsumerWatchdog.org.