Joshua Wright FTC Nomination Probably Makes Google Happy

This week, President Obama nominated Joshua Wright, a George Mason University School of Law professor, to serve on the Federal Trade Commission, replacing Commissioner J. Thomas Rosch. Rosch’s t...
Joshua Wright FTC Nomination Probably Makes Google Happy
Written by Chris Crum
  • This week, President Obama nominated Joshua Wright, a George Mason University School of Law professor, to serve on the Federal Trade Commission, replacing Commissioner J. Thomas Rosch. Rosch’s term will come to a close this month.

    Wright, an economist, in addition to being a law professor, has some ties to Google, as San Jose Mercury News columnist Chris O’Brien writes at Silicon Beat. O’Brien points out that Wright “has a history of receiving funding for his work from groups supported by Google.”

    Wright co-authored the papers “Google and the Limits of Antitrust: The Case Against the Antitrust Case Against Google” and “If Search Neutrality is the Answer, What’s the Question?” with Geoffrey Manne, executive director of the International Center for Law and Economics.

    Here’s the abstract for the first paper, published in March, 2010:

    The antitrust landscape has changed dramatically in the last decade. Within the last two years alone, the United States Department of Justice has held hearings on the appropriate scope of Section 2, issued a comprehensive Report, and then repudiated it; and the European Commission has risen as an aggressive leader in single firm conduct enforcement by bringing abuse of dominance actions and assessing heavy fines against firms including Qualcomm, Intel, and Microsoft. In the United States, two of the most significant characteristics of the “new” antitrust approach have been a more intense focus on innovative companies in high-tech industries and a weakening of longstanding concerns that erroneous antitrust interventions will hinder economic growth. But this focus is dangerous, and these concerns should not be dismissed so lightly.

    In this article we offer a comprehensive cautionary tale in the context of a detailed factual, legal and economic analysis of the next Microsoft: the theoretical, but perhaps imminent, enforcement action against Google. Close scrutiny of the complex economics of Google’s technology, market and business practices reveals a range of real but subtle, pro-competitive explanations for features that have been held out instead as anticompetitive. Application of the relevant case law then reveals a set of concerns where economic complexity and ambiguity, coupled with an insufficiently-deferential approach to innovative technology and pricing practices in the most relevant precedent (the D.C. Circuit’s decision in Microsoft), portend a potentially erroneous – and costly – result.

    Our analysis, by contrast, embraces the cautious and evidence-based approach to uncertainty, complexity and dynamic innovation contained within the well-established “error cost framework.” As we demonstrate, while there is an abundance of error-cost concern in the Supreme Court precedent, there is a real risk that the current, aggressive approach to antitrust error, coupled with the uncertain economics of Google’s innovative conduct, will nevertheless yield a costly intervention. The point is not that we know that Google’s conduct is procompetitive, but rather that the very uncertainty surrounding it counsels caution, not aggression.

    You can download the paper here.

    Here’s the abstract for the second paper, published in April, 2011:

    In recent months a veritable legal and policy frenzy has erupted around Google generally, and more specifically concerning how its search activities should be regulated by government authorities around the world in the name of ensuring “search neutrality.” Concerns with search engine bias have led to a menu of proposed regulatory reactions. Although the debate has focused upon possible remedies to the “problem” presented by a range of Google’s business decisions, it has largely missed the predicate question of whether search engine bias is the product of market failure or otherwise generates significant economic or social harms meriting regulatory intervention in the first place. “Search neutrality” by its very terminology presupposes that mandatory neutrality or some imposition of restrictions on search engine bias is desirable, but it is an open question whether advocates of search neutrality have demonstrated that there is a problem necessitating any of the various prescribed remedies. This paper attempts to answer that question, and we evaluate both the economic and non-economic costs and benefits of search bias, as well as the solutions proposed to remedy perceived costs. We demonstrate that search bias is the product of the competitive process and link the search bias debate to the economic and empirical literature on vertical integration and the generally-efficient and pro-competitive incentives for a vertically integrated firm to favor its own content. We conclude that neither an ex ante regulatory restriction on search engine bias nor the imposition of an antitrust duty to deal upon Google would benefit consumers. Moreover, in considering the proposed remedies, we find that by they substitute away from the traditional antitrust consumer welfare standard, and would impose costs exceeding any potential benefits. Emphasis added.

    You can download that one here.

    More recently (last October), Wright wrote a blog post (via Politico) titled, “ACS Blog Debate on Google: Retrograde Antitrust Analysis is No Fit for Google,” in which he said:

    The theoretical antitrust case against Google reflects a troubling disconnect between the state of our technology and the state of our antitrust economics. Google’s is a 2011 high tech market being condemned by 1960s economics. Of primary concern (although there are a lot of things to be concerned about, and my paper with Geoffrey Manne, “If Search Neutrality Is the Answer, What’s the Question?,” canvasses the problems in much more detail) is the treatment of so-called search bias (whereby Google’s ownership and alleged preference for its own content relative to rivals’ is claimed to be anticompetitive) and the outsized importance given to complaints by competitors and individual web pages rather than consumer welfare in condemning this bias.

    Wright is no doubt a guy Google would like to see on the FTC as it makes its decision on whether or not to pursue antitrust litigation against the company.

    Meanwhile, in Brazil, Google just won an antitrust battle, as a judge found that Google is not a monopoly.

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