Internet Search Engines: Microsoft Redux

2. Internet Search Engines: Microsoft Redux Conference of Western Attorneys General July 13, 2011 Gary L. Reback

4. Microsoft Decision Engaged in a series of actions designed to protect its monopoly power from a variety of threats from partial substitutes • Hurt competitors but did not completelyexclude them; • “Confused and frustrated” consumers; • “Distorted competition”

5. Microsoft Tactics Using monopoly power over OS platform to retard competition from niche “middleware” competitors 65 F. Supp. 2d at 79 • Penalizing competitors by denying their products the most effective means of access to customers and otherwise preventing their prominent display • Preferencing its own product by bundling it into the monopolized OS platform and by requiring that it be maintained in a more prominent position 65 F. Supp. 2d at 73

11. Rationale for Penalizing Google • Has little or no original content; • Functionality largely duplicates what Microsoft is offering; • Is filled with paid links that inflate the importance of sites paying for them by driving traffic to their sites; • Frequently promotes illicit websites that sell illegal drugs, knockoffs of branded goods and pornography; • Collects and uses private information about users without informing and obtaining consent

17. Market Definition “The Department’s investigation revealed that Internet search advertising and Internet search syndication are each relevant antitrust markets and that Google is by far the largest provider of such services, with shares of more than 70 percent in both markets.”– USDOJ Press Release, November 5, 2008 “However, the evidence in this case shows that the advertising space sold by search engines is not a substitute for space sold directly or indirectly by publishers or vice versa... Google, through its AdWords business, is the dominant provider of sponsored search advertising”– FTC Statement, File No. 071-0170, December 20, 2007

18. Market Definition:Europe “Google is in a very strong position in the search ad segment with market shares ranging from 50-80% in the various Member States... [Even] [i]f search intermediation and non-search intermediation were to belong to the same product market, Google’s search ad offering would still hold such importance for many advertisers and publishers that it would not be possible to exclude that... Google would have a sufficient degree of market power to foreclose rivals in the ad serving market.” - DG Competition Decision in Google/DoubleClick, Case No. Comp/M.473

19. Google Search Advertising Monopoly • Entered the market through patent infringement • Secured monopoly by demanding exclusivity • Maintained monopoly by demanding exclusivity in the face of strong objections by publishers Microsoft violated the law “by enticing firms into exclusivity agreements with valuable inducements that only Microsoft could offer and that the firms believed they could not do without...” 65 F. Supp. 2d at 80

21. Google Organic Search Monopoly Maintained by using market power to • Penalize niche competitors by making their sites harder to find • Preference its own properties by placing them in a more prominent position • Misappropriate competitors’ content

27. Comparison Shopping Engines Bizrate TheFind Nextag Shopwiki Shopping.yahoo.com Pricegrabber Shopping.com Shopzilla

36. Preferencing “So when we rolled out Google Finance, we did put the Google link first. So, It seems only fair right, we do all the work for the search page and all these other things, so we do put it first. Um, uh, but that has actually been our policy, since then, because of Finance. So for Google Maps again, it’s the first link. So and so forth, and after that, it’s ranked by popularity.” – Marissa Mayer, Google Seattle Conference on Scalability (YouTube.com, June 23, 2007)