Google, Microsoft and the Federal Trade Commission
The U.S. Federal Trade Commission’s (FTC) antitrust probe of Google has finally come to an end. After 20 months of lawyers, lobbying, and government bureaucracy a decision has been made by the FTC that has failed to provide the punishment Microsoft wanted for Google. In fact, the FTC chose not to levy fines nor did it order Google to stop filing injunctions against competitors that violate its patents deemed to be standard-essential patents. Google did agree to attempt to resolve future standard-essential patent disputes through a neutral third party prior to filing injunctions.
I am not going to bore you with the legalese surrounding the case, nor am I going to go into the specifics of the complaints made regarding Google’s search engine, its contracts with advertisers, or its process for determining which, if any, outside enterprises are allowed to license its patents. The complaint filed by Microsoft is another example of how corporations, government, and lawyers abuse the system in the name of antitrust and fairness.
The FTC is an unnecessary government agency that has been complicit in the abuse of the judicial process by corporations and lawyers. Microsoft is the corporation behind the complaint against Google because it is upset that Google filed and eventually won a lawsuit against Microsoft for violating several patents. The ruling did not sit well with Microsoft, so it filed a complaint with the FTC claiming Google has not made its standard-essential patents available to outside enterprises on fair, reasonable, and nondiscriminatory terms. Microsoft claims Google’s licensing fees are exorbitant compared to “industry standards” and has been unwilling to license its patents to all enterprises. It sounds like Microsoft objects to Google setting its own licensing fees and deciding for itself which outside enterprises are allowed to license its patents. Why shouldn’t Google be allowed to determine what it will charge for access to its patents? Google should be allowed to withhold its patents from its competitors if it determines that withholding its patents is in its best interest. Why shouldn’t a corporation be allowed to maintain a competitive advantage?
Microsoft is very upset that the FTC did not hammer Google for its actions. Microsoft’s displeasure over the FTC’s ruling is evident in a blog post by its Vice President and Deputy General Counsel, Dave Heiner, in which he wrote, “The FTC’s overall resolution of this matter is weak and frankly unusual.” Heiner went further by writing, “We are puzzled and concerned that the FTC did not follow its standard practice in exercising due diligence by obtaining feedback from the industry on the specific terms of Google’s promise before accepting it as a suitable resolution of this matter.” Heiner is upset that the FTC allowed Google to avoid fines and specific requirements going forward. I admit I do not know a lot about the FTC’s process for adjudicating complaints, but if indeed the FTC’s standard process includes seeking feedback from the industry (competitors of the accused) on the punishment that it is going to mete out that is very bizarre and evidence of a system that is ripe for fraud and abuse.
Microsoft is obviously upset that the FTC did not consult it before ruling on the complaint against Google. I would assume Microsoft devoted a great deal of time, money, and people to lobby bureaucrats and politicians to ensure Google received stiff punishment that required it to comply with strict regulatory requirements going forward, including significantly reducing its licensing fees and finally allowing Microsoft full access to Google’s YouTube in order to deliver a “high quality” YouTube app for its Windows smartphone. The corrupt, pay-to-play system did not work in Microsoft’s favor.
Antitrust laws have been corrupted because they have been hijacked by corporations, bureaucrats, and lawyers in order to avoid free market competition instead opting for litigation through the FTC. In Robert Levy’s book, How Corporations, Government, and Trial Lawyers Abuse the Judicial Process, he correctly asserts, “Antitrust laws have been co-opted by frustrated competitors who curry favor with bureaucrats to attack market leaders. In effect, antitrust is now a subsidy used to promote the parochial interests of politically favored companies.” Levy is explaining that larger corporations are unwilling to compete, so they opt for filing complaints to the federal government, then using their cash and influence to buy favorable outcomes that reward them and punish their competitors.
The FTC should not exist. The solution to complaints such as Microsoft’s is to take the government bureaucracy out of the equation. There is a court system that is capable of resolving legitimate antitrust disputes. Antitrust laws are supposed to encourage competition not prevent it, so why not let a court decide on important matters such as price fixing and dismiss frivolous lawsuits that are filed by corporations who are attempting to avoid free market competition through litigation. Besides, markets move much faster than the courts, so in the end consumers have the power to determine which products and companies will thrive and which will die.
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