The ‘trust busters’ versus Google

When I started working in Washington in the early 1980s as a lowly research assistant, I spent many days burrowed in the dusty stacks at the Library of Congress searching for reams of statistics and sources and historical facts. I remember toiling for hours to find the answers to many questions. How many senators voted for the 1978 tax bill? How much have gas prices risen and fallen over the last several decades? Which states have the highest employment and population growth since 1950?

Those under the age of about 40 probably have no idea what life was like before the age of internet search engines. First there was America Online, and then many others, and then along came something called Google. What is underappreciated about a company like Google is that almost everyone in the world now can find information that one time took hours, if not days, to discover before the internet.

But that is not even the most remarkable part of the Google search engine. The most remarkable thing about Google, and this still makes me shake my head in wonder, is that all of the information in the world is now a click away, and it does not cost anything. It is free and instantaneous. What used to take hours now takes seconds.

I probably use Google an average of 25 times a day, for maps, consumer guides, airline flights, sports and stock updates, and more. How much would I be willing to pay to get this information if it charged me for each search? I would say about $5 to $10 on average. So, conservatively estimated, I probably save $100 to $250 a day, thanks to online search engine services that I get for free. Now multiply that by, say, one billion users worldwide, and it may be that no company in the history of mankind has created more consumer surplus than Google. The number has to be in the trillions of dollars. What a corporate villain!

There are many other competitor search engines like Bing or Yahoo, and dozens of specialty search platforms, including Ask and Duck Duck Go, to name a few. The Chinese are also furiously trying to crack the market. This is becoming a crowded space with lots of options. I often switch over to other search engines when I am not happy with the finds that Google presents me or when I suspect it is guiding me in a direction I do not want to go. Bing often finds sources that Google does not.

But despite all the competition out there, Google remains amazingly dominant. An estimated 80 percent to 90 percent of searches conducted in the United States are done on Google. The company holds astounding market power and profitability, and it employs thousands of Americans in very high paying jobs. It is kicking China and Europe in the rear end. Has there ever been a greater American success story?

Leave it to the government and the lawyers to swoop in and find some harm from all of this. Last week, 50 state attorneys general announced an antitrust investigation against Google. The company allegedly is engaged in monopolistic pricing practices when it comes to online advertising, a market which is about 40 percent controlled by Google.

Now both Republicans and Democrats in Congress are also piling on and have demanded that Google turn over to the feds all sorts of proprietary information about its mergers and acquisitions and business practices. If I were the chief executive of Google, I would tell Congress to take a long walk off a short pier. There also are all sorts of sophisticated arguments that Google is “fixing its search” results so you only see what it wants you to see, and that it is involved in “pay to play” activities requiring firms to pay Google a fee to get their names high on the search list and so on.

My Heritage Foundation colleague Diane Katz has written a fabulous economic rebuttal to the flimsy monopoly claims of the state attorneys general. I would simply add that international trade and technology have made early 20th century Sherman Antitrust Act rules completely obsolete. The government now employs a bewildering logic, when you cut through all the legal gobbledy gook, that it will permit companies to be successful, but not too successful. The companies that are the villains are actually not the ones making big profits but the ones making big losses.

I talked to several of the Republican attorneys general and asked why they are using the force of government to bring to heel a “Made in the United States” company that provides me and 200 million other Americans with invaluable services. The universal response has been that Google is engaged in anti-consumer monopolistic behavior. Huh? I am no lawyer, but how can a company that has many competitors, that is in the wild west of technology with quicksilver innovations happening every day, to which there are few barriers to entry, and which charges consumers the outrageous price of zero, be a monopoly that is hurting consumers?

It is true that some of its business practices are designed to starve smaller internet companies of revenues, or that bundle services, in the way that McDonalds bundles hamburgers with its fries and a coke. This increases their sales. I have a question for the attorneys general. So what? If consumers are not happy with Google, they can take their searches elsewhere. Many small and large businesses are infuriated that they have to pay a bribe to Google to get noticed by its billions of users.

Well, it is the Google search engine. Google built it. This is not a public utility. If Google wants to direct consumers to Company A, instead of Company B, that is its business. If it wants to tell people that orange is green, red is purple, and two plus two equals five, that is its prerogative too. Consumers are not as stupid as the lawyers think they are. We can police these policies ourselves by running into the arms of Google competitors. Consumer Reports and the Better Business Bureau and the Heritage Foundation and those in the media can and should serve as whistleblowers and expose activities that may mislead consumers or provide unreliable information that jacks up prices.

Google is certainly no angel. There are real concerns about its relationship with the Chinese military and the sharing of vital technologies. Its corporate culture and practices appear to discriminate against those with a conservative viewpoint. But using outmoded 20th century trust busting allegations against Google is a solution to a nonproblem. The attorneys general with whom I spoke sincerely believe that their lawsuits are serving the public. This says a lot about the sad state of legal and economic training in the modern era that trust busting is back in vogue. They are using the fearsome power of government to take away the profits of Google and its millions of shareholders.

The solution to any misdeeds or anti-consumer activities by Google is to stop using Google. It is easy. Just stop clicking. Unlike the real monopolies that are destroying the nation, such as the public school system, Google may be on its way to becoming a trillion dollar company, even as its prices continue to fall. It succeeds for one reason. There are hundreds of millions of people like me who derive great benefit from Google.

Stephen Moore is a distinguished visiting fellow at the Heritage Foundation and an economic consultant with FreedomWorks. He served as an adviser to the 2016 Donald Trump campaign. His latest book with Arthur Laffer is “Trumponomics: Inside the America First Plan to Revive Our Economy.”