April 22, 2010
California-based Consumer Watchdog is calling on the U.S. Department of Justice (DOJ) to launch a broad antitrust action against Google. Such actions, the group says could include breaking the Internet giant into separate companies.
In a letter to Attorney General Eric Holder, John M. Simpson, consumer advocate with the nonpartisan, nonprofit group, praised the DOJ for its opposition to the Google Books case and the Federal Trade Commission's intense investigation of the proposed $750 million acquisition of AdMob.
However, the group said it is time to move beyond a reactive approach and "actively restrain Google's broader ability to abuse both users and advertisers."
"Such action could include breaking Google Inc. into multiple separate companies or regulating it as a public utility," the letter said. "Google exerts monopoly power over Internet searches, controlling 70 percent of the U.S. market. For most Americans -- indeed, for most people in the world -- Google is the gateway to the Internet. How it tweaks its proprietary search algorithms can ensure a business's success or doom it to failure."
Consumer Watchdog said Google subsidizes its other businesses by the monopolistic prices it is able to maintain because of its dominance in search.
Consumer Watchdog recommended a variety of remedies:
• One possibility, it said, would be to break Google into different companies devoted to different lines of business. Search could be separated from advertising. Gmail and its new social networking service, Buzz, could be spun off as a separate entity as could YouTube, a Google acquisition that the consumer group says should have been denied at the time of merger. Enterprise applications could be another separate business.
• Google's importance as a gateway to cyberspace requires a maximum degree of openness and transparency with the potential for government regulation. Consumer Watchdog argues that Google's monopoly position and importance to the Internet means that the company should be regarded as a public utility and regulated. It recommends designing a variety of regulations to open up Google's ad platform to enable other competitors to compete. Consumer Watchdog also says rules could be crafted to create greater transparency in the operation of Google's ad platform to enable parties to negotiate more effectively -- for example by providing greater visibility into the maximum amount of the highest bid, how many search terms are shown per page, and how Google's "quality score" is derived and applied. The group says little, if any, of this information is currently public and contends openness would contribute to consumer choice and options as well as foster competition.
• Another remedy would be to force Google to disgorge its "monopolistic gains" through the imposition of financial penalties. Consumer Watchdog points out that the payment would have to be significant enough to affect Google's future behavior and suggests tying the amount to paying back consumers for monetizing their private information and content without compensating them.
"The pending actions in the Books case and AdMob deal are important and must be pursued to their conclusion," the letter concluded. "It is, however, past time to act against Google's monopolistic and pervasive power over the entire Internet."
In a statement distributed to the news media, Google spokesman Adam Koracevich said "we totally understand that with size and success comes scrutiny. "But he suggested that little could be done to assuage the consumer group. "Given their track record, even if we broke Google in half tomorrow, Consumer Watchdog would probably insist that we split halves into quarters."
