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No Fair Play In Microsoft's Complaint Against Google

Posted By Diane Katz On April 6, 2011 @ 10:30 am In Economics | Comments Disabled

Microsoft has filed a complaint with the European Commission (EC) alleging unfair business practices by Google.

The EC is the very same government body that hounded Microsoft for years on antitrust allegations, culminating in the company’s loss of intellectual property and billions of dollars in fines. That Microsoft now seeks assistance from its former persecutor reflects the degree to which government regulation has supplanted market competition as the weapon of business rivals.

In a March 30 blog on the company’s Web site, Microsoft officials expressed “concern” about Google’s alleged “broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative.” According to Microsoft [1], Google has “engaged in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.”

Specifically, Microsoft claims that Google is restricting access to YouTube and advertising data and monopolizing Web site search boxes.

In other words, Microsoft wants the EC to force Google to share the products and services that has made it so popular. Not so long ago, Microsoft rightfully fought EC edicts to share its Windows operating system with covetous competitors.

Google, too, has run to government for regulatory muscle against the competition. In 2007, for example, the company complained to the U.S. Justice Department that Microsoft’s Vista search tool limited consumer choice, thus violating a 2002 antitrust settlement.

Regulators, of course, are ever eager to intervene. The EC, in particular, wields broad regulatory powers over virtually every aspect of Internet service. Ironically, as pointed out by The Wall Street Journal [2], this expansive authority was cemented by court rulings in the commission’s earlier pursuit of Microsoft over the “dominance” of its Windows operating system.

In the U.S., the Justice Department and Federal Trade Commission have also been stalking Google over antitrust allegations by rivals, but they have so far refrained from opening a formal investigation. However, government officials did object to Google’s ambitious plans to post millions of books online. (A copyright settlement between the company, authors, and publishers was halted by a federal judge last month.) Google is also awaiting government approval on its proposed acquisition of a software firm specializing in searches of airline flight schedules—a deal that Microsoft is battling via government bureaucracy to block.

All of which reflects poorly on both companies. As commercial giants, they should be brawling in the marketplace instead of exploiting government’s regulatory powers to achieve a competitive advantage.

In the technology sector, in particular, “market dominance” is a phantom concept. In no time at all, a supposed behemoth can be undercut by an inventive start-up. (Witness Groupon’s plucky rebuff of Google’s acquisition offer, for example.) That precariousness is precisely what drives creativity and innovation—with manifold benefits to consumers. But in seeking protection from competition, the Microsofts and Googles of the world effectively become creatures of government—their success a product of regulation, not ingenuity or utility. Notwithstanding all the rhetoric about protecting “consumer choice,” such intervention inevitably harms consumers more than it helps.

It hardly matters whether Microsoft or Google prevail in the latest antitrust dust-up in Europe. So long as both companies put their futures in the hands (or fists) of government, neither one will survive victorious in the end.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/04/06/no-fair-play-in-microsofts-complaint-against-google/

URLs in this post:

[1] According to Microsoft: http://blogs.technet.com/b/microsoft_on_the_issues/atom.aspx

[2] The Wall Street Journal: http://online.wsj.com/article_email/SB10001424052748703806304576234074125166728-lMyQjAxMTAxMDAwMTEwNDEyWj.html

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