For Google and Pending Amazon Antitrust Suits, the Consumer Welfare Standard Will Still Decide

By Robert Bork Jr., September 12, 2023

September is wishing well month for progressive antitrusters. Federal Trade Commissioner Lina Khan is expected to soon file her long-awaited antitrust lawsuit against Amazon, Khan’s obsession since she was a law student and first made her case against the online retailer in a law review piece. Today, DOJ antitrust chief Jonathan Kanter – who as a private lawyer represented Microsoft, Yelp, and News Corp., long touting the need for an antitrust suit against Google – is getting his day in court against the search giant.

To be candid, I watch all of this with a bit of nostalgia myself.

In my career, I only worked on one short project for Google. That was in 2012, when I helped my father, shortly before his death, complete a paper with J. Gregory Sidak that analyzed Department of Justice and European Union investigations of Google’s search practices. Then, as now, not far behind public-spirited regulators were powerful competitors like Microsoft and Yelp. Then, as now, a case is being made that Google is using its dominant position to squeeze out competitors.

Sidak and my father argued that far from being an abusive monopoly, Google had created a two-sided market that offered great value to consumers and advertisers alike.

The investigations “demonstrate competitors’ efforts to compete not by investing in efficiency, quality, or innovation, but by using antitrust law to punish the successful competitor,” Bork and Sidak wrote. “The Chicago School of law and economics teaches that antitrust law exists to protect consumers, not competitors. Penalizing Google’s practices as anticompetitive would violate that principle, reduce dynamic competition in search, and harm the consumers that the antitrust laws are intended to protect.”

This sounds a lot like Google’s attorney, John Schmidtlein, who in this morning’s opening hearing before federal Judge Amit Mehta, said: “Plaintiffs’ claims seek to distort search competition by hindering Google and its ability to compete. All in the hopes that forcing people to use inferior products in the short run will somehow be good for competition in the long run.”

The issue in 2012 revolved around an arcane dissection of digital logarithms. Today, the government is focusing on Google’s payments to Apple and other vendors to install the search engine on their products. Schmidtlein noted, as Google has long maintained, that consumers can switch engines – from Bing, to DuckDuckGo, to Yahoo – with a click. He also noted that consumers have come to rely on specialty searches, from Amazon, to Wayfair, Walmart, Overstock, TripAdvisor, Booking.com, Hotels.com, Expedia and others.

The Antitrust Education Project will keep an eye on developments in this case and looks forward to seeing what FTC comes up with in its developing case against Amazon. The word on the street is that FTC staff is afraid that its Amazon case is weak and is chasing its collective tail to try to come up with convincing arguments that won’t be thrown out of court, as Khan has been four times before.

The good news is that while the progressive antitrusters want to discard the venerable consumer welfare standard, it remains the reigning standard by which a federal court today will decide this case and the soon-to-be-launched one against Amazon. If the court agrees with Schmidtlein that the effect of this lawsuit will be to promote competition by forcing people to use inferior products, Google should win this case.

More to come …