Recently, Google, Inc. was under investigation for suspicion of violating U.S. Antitrust Laws. The investigation by the Federal Trade Commission (FTC) consisted of evaluating the company’s business practices related to patents on electronic devices and online search advertising (The Computer & Internet Lawyer, 2013). Google had acquired patents on applications from Motorola Mobility (MMI). These patents are necessary to ensure wireless connections and Internet activity for popular hand-held electronic or game consoles.
The success of Google in the market is being scrutinized about legitimate business practices. The use of internet search engines, like Google, do not cost consumers to use the service. Pike reports that two-thirds of the U.S. population use Google services and about eighty percent worldwide. Most of the revenue received by Google is in the form of sponsored advertising (2011). According to The Computer & Internet Lawyer, the FTC alleged that Google’s business practices could influence the cost of devices that rely on the MMI technology (2013). For example, most android devices use Google products by default, which could be questioned that Google has influence over the makers of these devices. It has also been suggested that Google favors the search results of those that are ad sponsors (Pike, 2011).
Guilty or Not-Guilty
The purpose of antitrust laws is to prevent monopolization provide structure for conduct (McConnell, Brue, Flynne, 2012). The Sherman Act of 1890 prohibited business monopolies and price fixing (p.375). Later in 1914, The Clayton Act elaborated more on the Sherman Act. This act outlaws price discrimination, prohibition of tying contracts, prohibits the purchase of stocks of competitors, and prohibits the formation of interlocking directorates (p.376). As Pike reports, antitrust laws are “to protect consumers by ensuring that market choice remain available” (2011).
Has Google violated these laws? Dominating a market does not necessarily equal a monopoly. While there are other companies in the market, such as Bing and Yahoo!, Google seems to be the most popular. What makes a monopoly illegal is when it was created through unfair behavior with the “power to control prices and exclude competition” (Pike, 2011). If the allegations of having control over Google products with the android market prove true, then Google would be guilty of The Clayton Act.
There are many search engines available in the market today. However, Google is rated as the preferred of choice. There is no cost to consumers regardless of the choice to search the Internet. However, consumers may be required to pay for the use of some applications available in the Google market. The Computer and Internet Lawyer reported that the FTC reached a settlement with Google in January 2013 and closed the investigation. The FTC concluded that any changes made by Google that might harm competitors could be justified with innovations that would improve Google products (2013).