Google and the Art of War

Published On 09/10/2012 | By Katrina Evans | Consumer protection, Enforcement

Sun Tzu: Whether to concentrate or to divide your troops, must be decided by circumstances

Google is busy fighting a war on multiple fronts, with antitrust investigations ongoing in the US, the EU, India, Argentina and South Korea.     Google has also recently settled privacy actions with the US FTC for a $22.5 million, although the settlement is itself the subject of a legal challenge (see report here).  It may also be required to defend its recent acquisition of Frommers, while Foundem – a British search engine company – has warned that Google faces a “tsunami  of follow on litigation” if it doesn’t alter the display of its search results as part of a negotiated settlement with the European Commission.

In a rare moment of reprieve, Google has recently successfully defended a private action claim in Brazil, brought by Buscapé – a shopping comparison website (see report here).  The Brazilian Court held that Google is not a monopoly (Bing, Yahoo and Ask are among the alternative search engine providers) and is free to develop an algorithmic formula that displays results in an order determined by its own quality and relevance criteria.

Sun Tzu: Just as water retains no constant shape, so in warfare there are no constant conditions

Helpfully for Google’s ongoing campaign, Marie-Josée Loiselle –  an associate researcher at the Montreal Economic Institute – has published an economic note titled, “Flawed Competition Laws – the Case of Google” (see article here).  The article critiques the assumption, all too easily made, that market share = market power.  She cautions against allowing “regulatory capture” whereby a competitor seeks to challenge the market leader via legal or political means, instead of focusing on improving its own product.

Particularly with respect to high tech sectors, Ms Loiselle also argues that market dominance can be transitory. By the time a judgement is handed down, the supposed “dominant” company  may have long fallen out of fashion (think AOL, Polaroid or MySpace).  In the free search engine market, companies compete on quality and it is extremely easy for customers to switch to an alternate website.

Google would undoubtedly agree that market conditions in the online space are constantly in flux.  It might find some support for this position in recent reports that Facebook intends to develop a competing search business.  Similarly, Apple has developed its own version of Google Maps for the new iPhone OS6 (though this venture has not been well received by the market).  Some commentators agree that such market developments could aid Google in its talks with the FTC as they serve to dilute Google’s perceived dominance  (see for example the report here).

Sun Tzu: There is no instance of a country having benefited from prolonged warfare

Ms Loiselle’s article concludes that lawsuits, such as the one contemplated in relation to Google, “distract innovative companies and force them to spend considerable sums defending themselves for years on end before courts in several countries”.  No doubt, Google (along with many commentators) would agree.

Photo credit: istolethetv / Foter / CC BY

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About The Author

is a solicitor at King & Wood Mallesons, Melbourne, specialising in competition law, consumer protection and nerdy fantasy/sci-fi references.

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