
Ends, Means, and Antitrust - darwhy
https://stratechery.com/2017/ends-means-and-antitrust/
======
zeteo
> The United States and European Union have, at least since the Reagan
> Administration, differed on this point: the U.S. is primarily concerned with
> consumer welfare [...] The European Commission, on the other hand, is
> explicitly focused on competition

What is missing here is that the US has diverged from a previously common
interpretation. Between roughly 1890 (Sherman Act) and 1982 (Reagan
administration antitrust guidelines) the US authorities were mainly concerned
with competition too (breakup of Standard Oil: 1911; breakup of Bell System:
1984). As late as 2001 Microsoft had a serious brush with antitrust law for
anticompetitive practices [1]. There's a case to be made that the US is
currently just going through a lapse in enforcement.

[1]
[https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor...](https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp).

~~~
DannyBee
"Between roughly 1890 (Sherman Act) and 1982 (Reagan administration antitrust
guidelines) the US authorities were mainly concerned with competition too
(breakup of Standard Oil: 1911; breakup of Bell System: 1984)."

This is the wrong timeline. The spectrum shifted towards consumer welfare very
early on (right after standard oil), because they found the legal definitions
in the sherman act too broad to be useful (every contract is a restraint of
trade).

If you read the bell cases, etc that you cite, they were already focused on
consumer welfare.

This is because otherwise the bounds of antitrust are limitless. Every
competition between businesses harms a business :)

Also note: The AT&T case was settled. The _original_ case was filed in 1949,
not 1984. You can see this in the 1982 settlement, which is a modification of
the final judgment from 1956:
[http://web.archive.org/web/20060830041121/http://members.cox...](http://web.archive.org/web/20060830041121/http://members.cox.net/hwilkerson/documents/AT&T_Consent_Decree.pdf)

(a lot of folks are not aware of the 1949 case, it seems :P)

~~~
zeteo
> The spectrum shifted towards consumer welfare very early on

You seem unaware that Bork's _Antitrust Paradox_ only came out in 1978 [1].
Yes, it's not surprising that its views would appear in cases from the '80s.
Here's prof. Orbach in the _Washington Post_ on Bork's influence [2]:

> Antitrust was defined by Robert Bork. I cannot overstate his influence.
> [...] Antitrust [in 1960] was about protecting small businesses. [Bork]
> built a full framework about how antitrust should be more about economic
> efficiency than about helping small businesses. [...] He wrote a sentence:
> Congress enacted the Sherman act [ed - the main antitrust act] as a
> "consumer welfare prescription.” The Supreme Court adopted that sentence in
> 1979. That is the stated goal in antitrust today. It is a big deal. A huge
> deal. In antitrust, it’s operational. Robert Bork defined it.

> In antitrust, antimonopoly law, it is easy to think about why big is bad.
> The view is, "Big businesses are bad. We should protect small businesses. We
> should not have big businesses." So that’s what happened in the history of
> the Sherman Act, between 1880 and 1960.

[1]
[https://en.wikipedia.org/wiki/The_Antitrust_Paradox](https://en.wikipedia.org/wiki/The_Antitrust_Paradox)

[2]
[https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antit...](https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antitrust-
was-defined-by-robert-bork-i-cannot-overstate-his-
influence/?utm_term=.d89d3fa384d6)

~~~
DannyBee
"ou seem unaware that Bork's Antitrust Paradox only came out in 1978 [1]"

I'm quite aware.

" Antitrust [in 1960] was about protecting small businesses."

Citation?

I gave you a case from the late 40's that was about protecting consumer
welfare.

You give me a news article about a law professor who loved robert bork's work?

Look, Bork was influential for sure.

I can and have cited you cases where, over a short period of time, the supreme
court decided that the sherman act was unworkable (see all the various changes
around resale price maintenance, over the years as well), and started pushing
towards other theories for antitrust.

Contrary to these claims, it's not "Bork wrote a book, things changed
overnight". That's just a history rewrite.

Bork was the final nail in the coffin.

~~~
zeteo
> Citation?

How about Bork himself in 1963 [1]:

> The incipiency theory starts from the idea that it is possible to nip
> restraints of trade and monopolies in the bud before they blossom to Sherman
> Act proportions. It underlies the Clayton Act, the Robinson-Patman Act, and
> the Federal Trade Commission Act. [...] The courts have used the incipiency
> notion as a license for almost unlimited extrapolation, reasoning from any
> trend toward concentration in an industry that there is an incipient
> lessening of competition. [...] In case after case the FTC, for example,
> nails down its finding that competition is injured with the testimony of
> competitors of the respondent that his activities and aggressiveness may or
> have cost them sales. [...] When the head of the Antitrust Division or the
> FTC reports to a congressional committee, protocol requires that he wear a
> suitable number of bloody scalps of businessmen at his belt.

[1] [https://www.scribd.com/document/117500897/The-Crisis-in-
Anti...](https://www.scribd.com/document/117500897/The-Crisis-in-Antitrust)

~~~
DannyBee
Err, Bork was advocating for his view, so i'm not sure he's a good source?

Look, your argument amounts to:

For 60+ years, between 1920 and 1982, there was literally no legal theory
development in antitrust. No other cases, no thoughts by anyone, no articles.
Then suddenly, Bork came on the scene and redefined everything overnight!

Certainly that would have made my antitrust law classes a _lot_ shorter, but i
don't think it's reality :)

Let me try a different source for you

Here's what one of the authors of the act (Senator Hoar) had to say about it:
""... [a person] who merely by superior skill and intelligence...got the whole
business because nobody could do it as well as he could was not a
monopolist..(but was if) it involved something like the use of means which
made it impossible for other persons to engage in fair competition.""

Oh look, a consumer welfare argument.

Also, here's another case from the supreme court in _1940_ (Apex Hosiery Co.
v. Leader 310 U. S. 469) "The goal [of the sherman act] was to prevent
restraints of free competition in business and commercial transactions which
tended to restrict production, raise prices, or otherwise control the market
_to the detriment of purchasers or consumers of goods and services_ , all of
which had come to be regarded as a special form of public injury."

(emph mine). A very clear consumer welfare argument. They also cite supreme
court cases.

------
z1mm32m4n
The author fails to include and rebut a crucial point in the EU commision's
original article.

He equates the monopolistic wrongdoing with showing adds. The EU instead says
that it was Google showing adds for its own service.

\- First, Google dominated search and not shopping.

\- Then, Google used search to unfairly compete with shopping _by creating its
own service_.

The author leaves this point out, and I think it was central to the EU's
decision.

If some other company had created a comparison shopping service, and then paid
Google to show its service inside Google search results, this would be more
similar to the circumstances of the article's argument.

~~~
OzzyB
He did address this by simply stating the fact there is no actual "Google
Shopping", it's just a term, like "Google Hotels" or "Google Whatever".

In the end "Google Shopping" is just an Ad Block with a nomenclature of
"Google Shopping. They could simply remove this term and put the same ads for
Adidas shoes at the top of search results just like do for a myriad of other
products and search categories; would that be a problem?

I understand that Google probably has a different engineering platform to
present shopping ads/results as opposed to webpages, but is this really any
different from other kinds of scraping they perform? They also show song
lyrics and snippets from Wikipedia for example. They're scraping the web and
collating that info for users to search for.

I think the author made a good case, good read.

~~~
asr
One important point for everyone to keep in mind, whenever you read an article
about some years-long competition investigation, is that it is talking about
conduct that happened in the past. In this case, by internet standards, we're
talking about conduct that happened a long, long time ago (but, in this
galaxy).

When Google shopping was introduced it was a search product, actually, and was
not "just an ad." It only became an ad in 2012:
[https://en.wikipedia.org/wiki/Google_Shopping#Change_to_paid...](https://en.wikipedia.org/wiki/Google_Shopping#Change_to_paid_listings)

~~~
mst
Aha, thank you. In which case, I think the decision applies fine to the
pre-2012 form and the article's thesis applies fine to the post-2012 form.

------
IanCal
> Take travel sites: why shouldn’t Priceline sue Google for featuring ads for
> hotel booking sites above its own results?

If they're treating people equally, then that's not a problem. Priceline can
buy adverts like anyone else.

> Why should Google be able to make any money at all?

Google should make more money by being _better_ at hotel bookings and _better_
at product aggregation and _better_ at each of their other offerings. They
shouldn't make money purely because people already use google and google put
their (possibly sub-par) offerings right at the top. This would make it much
harder for anyone else in the field to come in and offer a better thing,
because a high proportion of people will never go down even lower on the first
page of results.

~~~
kuschku
A very good example of this is Google Maps vs. Here Maps.

I live in a city where Google Maps has, until one month ago, had basically no
traffic data, satellite imagery was from 2004, and even today still supports
no transit.

Here maps has up-to-date imagery of highest quality, has traffic and transit
data.

Yet, many people use Google Maps, even if that provides worse results, sends
them on roads that don’t exist anymore, etc.

When one recommends they switch, they say "but Google Maps is preinstalled,
installing Here Maps would be so much effort, and it doesn’t work with Ok
Google".

This is literally the effect shown IRL.

~~~
julienfr112
That's exactly the EU case agains Microsoft's Internet Explorer.

------
matt4077
This is a refreshingly well-reasoned article, in that it shows the actual
trade-offs involved, considers both sides to be legitimate, and tries to work
with each sides' strongest argument.

Compare and contrast with yesterday's discussions here, which were littered
with "These EU bureaucrats are STEALING!1! from US companies" and (fewer)
"Google is greatest danger since the dinosaur's extinction and needs to be
broken up"

------
asr
Re-posting this as a top-level comment:

The author's point about how Google Shopping is an ad is really not
worthwhile. When Google introduced shopping it was a search product, not an
ad.
[https://en.wikipedia.org/wiki/Google_Shopping#Change_to_paid...](https://en.wikipedia.org/wiki/Google_Shopping#Change_to_paid_listings)

The investigation was concerned with Google's introduction and promotion of
Google Shopping in its search results, not with whether it's a problem for
Google to show product listing ads.

~~~
Ajedi32
So would this mean that showing image results in Google's main search page is
also against EU rules, since "Google Images" (images.google.com) is also a
"search product" that Google is promoting over its competitors like Bing
(which also offers image search capabilities)?

~~~
julienfr112
Why not. Google Search is financing and providing users to Google Map. How
could you be competitive in the map market when you have a giant with
limitless ressource ? See street view, how could you finance that ? WHat is
the commercial viability of such a product ?

~~~
RestlessMind
Why should we consider a separate "map market"? For consumers, there might
just be an "information market. Sometimes an image would be the right form of
information; sometimes a map; sometimes a video etc.

Trying to cleave out different verticals from a search engine would be a major
disadvantage to consumers.

~~~
kuschku
I’ve written this in another comment before, but it explains why we should
separate them:

> I live in a city where Google Maps has, until one month ago, had basically
> no traffic data, satellite imagery was from 2004, and even today still
> supports no transit.

> Here maps has up-to-date imagery of highest quality, has traffic and transit
> data.

> Yet, many people use Google Maps, even if that provides worse results, sends
> them on roads that don’t exist anymore, etc.

> When one recommends they switch, they say "but Google Maps is preinstalled,
> installing Here Maps would be so much effort, and it doesn’t work with Ok
> Google".

Do you think this is an advantage to consumers, that they end up with the
worse product?

------
awinter-py
Surprised nobody has interpreted search engine spidering bandwidth as a form
of public good. There's a limit to the amount of spidering that can happen.
It's okay if 10 or a 100 companies do it, but if everyone had to do it, the
web's access pattern would be exponential and overwhelming.

There's a class of consumer who is technically willing and able to operate
their own spider but accepts the lesser convenience of a web search because
they recognize it would take down the internet if everyone spidered all the
time.

Also surprised the article doesn't mention omnibar search. By defaulting this
to G, G is 'abusing' browser dominance to reinforce search dominance.

~~~
xiaoma
> _" the web's access pattern would be exponential and overwhelming."_

It might well be overwhelming, but it wouldn't be exponential. There are a
maximum of N choose 2 connections between N nodes. That number only grows
quadratically as N increases, while exponential growth would outstrip
quadratic, cubic or _any_ polynomial growth for large values of N.

------
phkahler
I object to using the term "virtuous cycle" to describe positive feedback.
Actually I object to the term "positive feedback" when talking to non-
engineers because it can be misconstrued as imposing a judgement on it. But
calling it virtuous? I suppose from the business point of view it's a really
good thing. "reinforcing cycle" IMHO is more accurate.

~~~
TeMPOraL
I hate the terms "virtuous cycle" and "vicious cycle" with passion. Just name
the damn things correctly (positive/negative feedback loop), or at least refer
to their behaviour (reinforcing / dampening).

And in general, I think basics of feedback loops should be taught in primary
school. I am scared by the fact so many regular people don't comprehend these
basic concepts (which is often evident in discussions, when you see people
missing _obvious_ consequences of their ideas because they don't get the
concept of feedback).

~~~
sratner
"Virtuous" and "vicious" cycles both refer to positive feedback, and differ
only in value judgement they imply, so arguably the value judgement is the
entire point of using these terms. I can't think of a common use term for
negative feedback off the top of my head.

~~~
yorwba
> I can't think of a common use term for negative feedback off the top of my
> head.

"self-defeating"?

~~~
andrewla
And "self-limiting", maybe, for a "bad" value judgement.

------
dgdas9
This is the really problematic assumption the EU made:

*'Comparison shopping services' are fundamentally different from general purpose search engines.

If we take the Comission's POV, yes Google entered a new market and used their
dominant position in an existing market to unfairly compete, breaking anti
trust law (though wether that's for the benefit of the consumer or not is a
fair question as well).

But I don't think they are different markets. If when you search for a web
page google shows you the best result, why shouldn't it search for the
best/cheapest online retailer? It's searching for the most relevant 'thing' on
both cases.

~~~
TeMPOraL
I'm inclined to agree, at least a bit. They might be reasonably different
markets _now_ , but they _should not be_ in the future.

I think all the following searches:

    
    
      - web search for "location X"
      - map search for "location X"
      - current weather in location X
      - businesses of type Y near location X
      - cheapest offers for item Z near location X
    

are all examples of something conceptually the same. I want to be able to make
those queries over one interface, and with minimum (i.e. zero) steps between
query results and actual information I'm looking for.

As it is, when I search for "cheapest item Z near X", getting links to price
comparison services makes about as much sense as if I googled for something
and the results were links to search results of Bing, Yahoo and DDG.

\--

I appreciate how today those markets may seem different, and I also don't want
to see one company dominating most on-line activity, but I also want _more
integration and interoperability_. There needs to be a balance here.

~~~
zAy0LfpBZLC8mAC
> I want to be able to make those queries over one interface, and with minimum
> (i.e. zero) steps between query results and actual information I'm looking
> for.

Especially with computers, why would that require that they are a single
product?

It should be technically outright trivial to have specialized search providers
that feed into a common user interface, where earch provider can be swapped
out as you prefer.

Isn't that a bit like saying that you don't want ten kinds of wall sockets in
your house, therefore, your electricity should be supplied by the company that
sells you all your appliances, so you only need to have one type of sockets?

~~~
TeMPOraL
This has been happening for the past two days in those Google/EU threads.
Please help me.

How does "and I also don't want to see one company dominating most on-line
activity, but I also want more integration and interoperability" imply that I
_want_ one company to handle all of this?

I try to explicitly state in each comment that I _don 't_ want that one-
company solution. In fact, I very much want what you described - more
interoperability through standardization, not through monopoly. Apparently
though my comments aren't clear, given that I've been get exactly the same
response for days now. Surely I must be making them hard to read somehow.

Could anyone help me discover what's wrong with that particular comment, and
in general in what way my comments could be improved so that they more clearly
transmit my intent?

~~~
zAy0LfpBZLC8mAC
Hehe, yeah, your comment felt a bit ambiguous.

> They might be reasonably different markets now, but they should not be in
> the future.

I think that's what made me think you thought it needed to be a one-company
solution.

Manufacturers of vacuum cleaners and computers are not in the same market, in
the sense that is relevant here, even though both plug into a wall socket. A
market is not defined by a common interface, but by whether or not you compete
for the same customers. A flight search service is as much a substitute for a
mobile phone price comparison service as a vacuum cleaner is for a computer,
therefore, those products are not in competition, therefore, they are not in
the same market, they are merely technically in some ways similar products
with partially overlapping interfaces.

~~~
TeMPOraL
Thanks. The definition of "the same market" you provided sounds very sensible,
and so I retract my belief that those searches should be "the same market"
(which is what is relevant to tge EU ruling). I still think they fit the same
interface, in the "wall socket" sense.

------
executive
> The second reason is even more problematic: “Google Shopping” is not actual
> a search product

[https://www.google.com/shopping](https://www.google.com/shopping)

------
wand3r
I disagree with some of the arguments but reach a similar conclusion:

Google is a monopoly, is a bad actor and this ruling is not a useful solution.

I think the government needs to break up the cable & telco rent companies.
Conversely, I blame the market for empowering Google to this level and the
market needs to fix it or accept the tradeoffs. I think the price is too high,
but I'm in the minority of DuckDuckGo users who limit chrome / gservice usage.
Even I touch some part of it daily as it is nearly impossible not to. I'm not
as dogmatic as RMS so using some useful parts sometimes is fine, but the issue
is almost all core services are being leveraged by almost everyone all the
time and that is dangerous if simply begause it's a single failure point

------
crdoconnor
"The United States and European Union have, at least since the Reagan
Administration, differed on this point: the U.S. is primarily concerned with
consumer welfare, and the primary proxy is price. In other words, as long as
prices do not increase — or even better, decrease — there is, by definition,
no illegal behavior."

Giving it away for free was precisely the definition of illegal behavior last
time:

[https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor...](https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp).

~~~
fixermark
Yes, but you'll note that those arguments did not ultimately hold water on
appeal, Microsoft was never broken up, and the case was eventually settled.

~~~
crdoconnor
That's not what happened at all:

[https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor...](https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp.#Appeal)

Microsoft not being broken up wasn't about them not being guilty. It was about
prosecution (under the new GWB administration) seeking a lesser penalty.

~~~
fixermark
Actually, it was about courts deciding the liability scope was too wide and
could harm innovation, as per your linked source.

"Although the D.C. Circuit found that it was possible to examine high-tech
industries with traditional antitrust analysis, the court announced a new and
permissive liability rule that repudiated the Supreme Court’s dominant rule of
per se illegality for tie-ins, due to the court’s concern for the dynamic
effects that a per se rule would have on innovation."

Ergo, the tie-ins were found to have happened by point of fact but not found
to be illegal by re-interpretation by the courts of the illegality of tie-ins.
The Justice Department then reached a settlement (the win on their side being
that they wouldn't have wasted the years of prosecution).

This goes a way towards explaining why there hasn't been a similar Microsoft-
scale antitrust case since the Microsoft case in the US.

------
kuschku
Basically, the issue here is comparable to Net Neutrality. Google Search is a
utility.

It treats most sites the same, but provides an advantage for some that
cooperate with it or are owned by it, just like Zero Rating happens in the ISP
situation.

And, just like in the ISP situation, users (at least in the EU) can easily
switch at basically zero cost (in fact, switching ISPs actually gives users a
bonus usually, many ISPs give you actual cash for switching to them).

Now, the question is why Google should be able to change the ordering in the
search. I think they shouldn’t.

What should be done is that Google replaces, or expands, the existing search
result for Google Shopping, for example, with the rich content they used to
show at top.

Same with all other of their content.

In a next step, they should allow competitors via an API to also provide
embedded content. A user can then scroll through the search results, and below
the amazon result is a horizontally scrolling list of results from Amazon, the
Google Maps and the Here Maps results both have miniature maps, etc.

This allows rich content, easier finding of results, it ensures a fair market,
and it ensures that users can easier find out where Google’s content is
sourced from (very often the Google Knowledge Graph rich text snippets quote
wikipedia without attribution)

This is, basically, just applying the principles of Net Neutrality to Google.

~~~
Eridrus
> Now, the question is why Google should be able to change the ordering in the
> search. I think they shouldn’t.

This is such an odd argument. It assumes that search is a largely solved
problem.

But search is not solved, and the web (and human knowledge) is an evolving
corpus.

> A user can then scroll through the search results, and below the amazon
> result is a horizontally scrolling list of results from Amazon, the Google
> Maps and the Here Maps results both have miniature maps, etc.

And this is even weirder. Who actually wants this?

~~~
kuschku
> This is such an odd argument. It assumes that search is a largely solved
> problem.

No, it’s pretty simple. The search ordering algorithm should get as inputs
only your query, and the linked page.

Currently, Google manually special-cases a handful of pages. That should
simply end.

> And this is even weirder. Who actually wants this?

As I explained in another comment, I live in a city where Here Maps is vastly
superior to Google Maps (Google Maps has maps material from ~2009, and, until
2 weeks ago, their satellite imagery was from 2004, so they frequently route
you to non-existing roads, or so on, and they have no transit integration and
bad traffic data, while Here Maps has data for roads and satellite from this
week, and has transit integration), yet everyone uses Google Maps, simply
because it is already preinstalled and shows up first in Google Search,
despite worse results.

So, for at least a city of 280k people, Here Maps should probably show first.
Or at least be equally integrated as Google Maps is.

Because currently the worse product is winning just because it is bundled.

------
yuhong
I wonder why the EC would not want a good enough solution where Google
Shopping results will not take more than one row and comparison shopping
services would appear on at least page two (or maybe even page one)?

------
foota
I think we'll see Google integrate their product search results into the main
web search results.

