Consumer Law

Is Google Immune from the Texas Attorney General's antitrust investigation?

By Paul Levy

by Paul Alan Levy

Last Friday, Danny Sullivan broke the story that the Attorney General of Texas is investigating whether Google violated the antitrust laws by deliberately depressing the search rankings of certain commercial web sites whose services seek to compete with Google.   Since then, several bloggers have reacted with outrage or alarm.   Despite my respect for several of these voices, I am less than impressed by some of the legal arguments advanced by Eric Goldman on his Technology and Marketing Law Blog, and seconded elsewhere, suggesting that Google might be immune from liability even if, in fact, the evidence adduced in the investigation suggested that Google deliberately reduces the search rankings of some competitors.

For example, Eric Goldman argues that Section 230 of the Communications Decency Act  would protect Google against antitrust liability.   Eric is the leading commentator on Section 230 and I hesitate to say he is wrong, but he devotes his discussion to the filtering provision, section 230(c)(2), which seems inapplicable for several reasons.   First, the provision only relates to actions ?voluntarily taken in good faith to restrict access to or availability of material? that the filterer ?considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.?  It is not at all clear to me that Google can argue that these alternate commercial sites meet that standard; nor would Google, I suspect, argue that it is deliberately ?restricting access? to the materials.  Moreover, this provision protects only ?good faith? filtering decisions.  Suppose that Google deliberately jiggered its search algorithm to harm competitive web sites; or suppose that it labeled certain web sites so that, after application of the normal algorithm, search ranking for those sites was automatically moved down 20 places (that is, the highest they could appear would be on the third page of rankings).   Google would have a hard time arguing that such filtering decisions were taken in good faith.  Eric Goldman does not invoke the more familiar aspects of section 230, and for good reason:  in the language of the section 230 cases, on such facts Google would itself be responsible for what is illegal about the algorithm or its application.  Google would be the information content provider.  Thus it could not claim protection under sections 230(c)(1) and (230(e)(3).

And although I agree with Eric Goldman that First Amendment considerations have to be taken into account, I doubt that the First Amendment would be an obstacle to antitrust liability, assuming that the facts were as hypothesized above.  For example, First Amendment petitioning activity can lead to antitrust liability under the Noerr-Pennington sham exception.    On the hypothetical facts put forward above, the opinion claim would be a sham, advanced to cover a deliberate decision taken to harm a competitor.  Consumers expect Google?s search results to reflect an unpaid, natural result, not one configured to exclude those who haven?t paid to be included by allowing themselves to be bought out by Google.  I rather doubt that a consumer fraud claim would be subject to a First Amendment defense, even though ?speech? is involved.  And it seems to me that such an antitrust proceeding would be comparable to a consumer fraud claim.

Nor do I agree with Eric Goldman?s concern that the remedy issue poses insuperable obstacles, on the theory that the Attorney General (or the court) would have to tell Google how to operate its search engine.  Assuming the fact-finding hypothesized above, the order to Google would be to discontinue the specific ?fix? found to have been built into the algorithm or to have been superimposed upon it.  Perhaps, down the line, the process of monitoring whether the order had been obeyed could raise some issues.  But, for example, when a company is found to have been engaged in monopolistic practices, the remedy requires the company to discontinue those practices; it does not entail  judicial supervision of the other aspects of the company?s business.

Beyond the legal arguments, some bloggers have argued that Google couldn?t be guilty of the antitrust violations under investigation, either because such violations would be squarely antithetical to the neutrality of its main business asset, a search engine that has achieved exceptional levels of consumer trust, or because some would-be competitors who have claimed to have been frozen out are just too small to be worth Google?s attention.  The AG, his critics conclude, must just be grandstanding with his eye on re-election.

Is there some danger that the Texas AG is grandstanding in initiating an investigation?  Yes, and the analysis put forward at Groklaw (and also cited by Mike Masnick on Techdirt) makes interesting reading.   And as some have noted, such scrutiny could raise dicey trade secret issues, to the extent that the inquiry provides a legitimate basis for outside examination of the Google algorithm.  Disclosure of that information would be highly destructive, because it would make it easier to game the search process (not that an Attorney General would ever be guilty of a leak).

On the other hand, Google is by far the dominant search provider in the United States, with well over half the market share.  In traditional antitrust analysis, Google?s huge market share creates a significant possibility that it could leverage its market power to harm competitors, thus subjecting Google to scrutiny over the possible exercise of the power that flows from the domination of a market.  And beyond that, given how huge it is, Google is legitimately the basis of extra scrutiny. 

Despite its pleasing slogan, Do No Evil, Google is neither our friend nor our enemy ? it provides a number of very useful services, and because of its success in creating useful products it has become a company with enormous sway, and with the ability to exercise that sway well or badly or both.  The fact that its products are so useful is no guarantee that the company will not risk some of their usefulness to obtain other objectives ? sometimes companies fall victim to bad judgment. 

Given its size and huge potential clout, Google should be held to a high standard.  Many otherwise independent voices are taken out of the picture by Google's extensive funding of non-profits, as well as by its hiring of some of the best independent advocates.  We should be grateful that public law enforcement authorities remain free to institute investigations, in appropriate cases,  about whether that power is being misused.  Thus Google?s public response to the news of the inquiry ? welcoming the questions and expressing confidence about the outcome ? strikes a much better note than much of what I am seeing in blogging reaction.

Full post as published by CL&P Blog on September 08, 2010 (boomark / email).