Google: We Are So Not Antitrusty, Dude.

Dana Wagner, Google’s most antitrustworthy lawyer.

There’s an interesting debate going on between the editor of Wired and Google’s top antitrust lawyer on this question: is free an antitrust problem?

Wired’s Chris Anderson wrote a column saying that all those things Google gives away for free — search, gmail, maps, directory assistance, new cars — should raise antitrust concerns. How’s that? Anderson argues that because of Google’s dominance in the search advertising market, it can subsidize other products and drive competitors out of the market by offering them for free. It’s like the predatory pricing of the big bad Japanese chipmakers in the days of yore, he writes:

The analogy is something like the semiconductor battles of the 1980s, when Japanese companies were accused of "dumping" (selling for under cost) memory chips in the U.S. market to drive out U.S. competitors.

Google’s antitrust gunslinger responds, then we go to a neutral expert.

Google’s top antitrust lawyer Dana Wagner, no legal goober, answered with a blog post of his own. Wagner said there’s nothing to Anderson’s analogy, since Google isn’t planning grab market share and then start charging for its free services. Wagner writes there’s nothing wrong with companies subsidizing products:

No matter how successful or profitable the subsidizing product is, the fact remains that cross-subsidization itself has never been viewed as an antitrust problem.

Legal Pad called up Aaron Edlin, a Berkeley Law Professor who specializes in antitrust law, to settle the dispute. Edlin said that Google’s use of free services “neither should be nor is” an antitrust problem. Edlin said the way the antitrust problems get started in these types of situations is with predatory pricing where a company charges low prices to win market share and then raises them later, hurting consumers. For Google that would mean starting to charge for things like email or search — something Edlin said ain’t gonna happen. “By and large, that doesn’t appear to be Google’s strategy,” he observed.

— Zusha Elinson

Comments

[Donald Edmond, Esq.]

I understand the idea of cartel members engaging in business practices that are against their economic interests, but this isn't it. For example, remember the cigarette/movie theater cases where the defendants gave flimsy excuses for lowering prices (evading whether they were conspiring to do so)...but I cannot imagine how offering a good or service for free (even if you intended to charge for it later) would be a restraint of trade or abuse of natural monopoly since there is little to nothing keeping a competitor from offering a substitute at the same price (free) and attempting the same thing with regard to charging for it later. I do not subscribe to "free" being an antitrust issue. Reversing Dr. Miles and allowing minimum price agreements to be enforced by manufacturers...now that's an antitrust issue.

[Henry]

Wired’s Chris Anderson uses the semiconductor battles of the 80's - perhaps the Microsoft case of the 90's might have been more compelling.