Google Was 3 Hours Away From DOJ Antitrust Charges

turnkeylinux writes "Google Inc. and Yahoo! Inc. called off their joint advertising agreement just three hours before the Department of Justice planned to file antitrust charges to block the pact, according to the lawyer who would have been lead counsel for the government. 'We were going to file the complaint at a certain time during the day,' says Litvack, who rejoins Hogan & Hartson today. 'We told them we were going to file the complaint at that time of day. Three hours before, they told us they were abandoning the agreement.'"

Could be fun

[Xest]

I can't help but think you could make a game of this.

Announce something to get the government's back up, wait until they've done loads and loads of preparation then rip their opportunity from under them just before they get chance.

The only downside is it's a waste of tax payers cash, not that most public sector jobs aren't a waste of tax payers cash anyway though.

Re:Could be fun

[camperdave]

Announce something to get the government's back up, wait until they've done loads and loads of preparation then rip their opportunity from under them just before they get chance.

4. Access their research through Freedom of Information policies.
5. Devise ways of sidestepping their arguments.
6. Profit!!!

Why would Google acquire that dinosaur?

[GMonkeyLouie]

Honestly, if I were Google, I would only be trying to buy Yahoo for Flickr, which seems extremely synergistic with Google's current offerings.

Yahoo's search tech is archaic and inferior, Yahoo's e-mail is not up to par with GMail, and most Yahoo site features are irrelevant and poorly executed on their site.

Both sites have a daily reach of about 30%, maybe they just want to make Yahoo.com redirect straight to Google. That would be good for a laugh and some ad revenue.

Re:Could be fun

[homer_s]

Of course, that is assuming that there is some need to break up a 'monopoly' in the first place.

The other assumption is that there is a defined circle outside of which no competition takes place. Competition does not just exist within an industry; it exists across industries. The airlines have to compete with Webex. Google has to compete with NBC.

Re:Where did it go?

[digitig]

The free market that is...

It has never existed, and hopefully never will. Its only advantage is doctrinal purity for some economists who don't like dealing with the messiness of the real world. There would be no advantages for any society that implemented it, and significant disadvantages because it has no effective way of managing the many cases where the cost of an action is not borne by those who benefit from the action. Mixed economies are the only pragmatic economies; the real debate is just over what the precise mix should be.

What's his name

[Enderandrew]

Who was the douche that threw his company under the bus, calling out Yang and saying Yahoo was stupid for not immediately selling out to Microsoft? He didn't care about the future of Yahoo as a company. He wanted a quick payout of his stock. He threw a fit, started a huge fight with the board, made Yahoo look bad, and not only is the future of Yahoo in question, but his own stock has plummeted. Now a Microsoft deal may happen, but for far less. The bitching caused the stockholders to lose their ass, and their company. I say that is a job well done.

Re:Microsoft

[starfishsystems]

Might be to advance the perception of fairness, nobody is immune, let the courts decide, stuff like that.

And actually, in the long run, that may bring out the best. The difference may be subtle, but I see a difference in how Google and Yahoo responded here in comparison to how Microsoft has historically responded to such moves. Google and Yahoo respectfully withdrew once it became certain that they were on a collision course with public authority. I believe the record is abundantly clear that in cases of conflict with public interest, Microsoft, historically, has pushed ahead with its agenda to the fullest extent possible, sometimes (as in the EU antitrust case for example) past the point where legal avenues have been exhausted.

Correct me if I'm wrong, and watch for changes in this distinction, but I'd like to think that in the long run a pattern will become evident in which corporations that play fair are rewarded and those which don't lose the advantage.

Re:The DOJ won't help

[MosesJones]

So the third option is

3. Have Yahoo team up with an already convicted monopoly (MS) to help stop Google becoming an monopoly

Making MS stronger doesn't exactly help the consumer or do anything to weaken MS' already existing monopoly on the desktop (as found by the previous DoJ investigation).

Rock, Hard place, Alaska in February

Re:They'll have problems from now on.

[molotovjester]

Yes and no -

Marketing a product that has so much brand recognition that you can spend/focus less on brand awareness and more on getting customers in the door is wonderful (and much more quantifiable).

But when your brand name or product becomes synonymous with the type of product itself, then, in the case of a Q-Tip, your product name no longer sells itself, but instead sells every cotton swab in the industry.

Re:The DOJ won't help

[rhsanborn]

Microsoft has a desktop monopoly, and the government says that Microsoft has certain responsibilities not to abuse that monopoly. They don't have any goal to take actions to actively weaken the monopoly, and they don't have any goals to stop Microsoft from growing in other sectors (like advertising) in which they do not have a monopoly.

Re:Could be fun

[Anonymous Coward]

(on a side note: for those who thought Google was any less predatory than Microsoft, think again...)

It's amazing the stupidity of the average slashdotter. That's why I love this place, I guess.

Just to remind you, Microsoft bundled IE with Windows when it had a monopoly on Windows. And, just to remind you in case you forgot, there's nothing illegal about having a monopoly. It just means you outcompeted everyone else. What is illegal is abusing that monopoly.

Let's look at TFA:

The never-filed government complaint would have charged that the agreement violated Sections 1 and 2 of the Sherman Act, Litvack tells the Am Law Daily in one of his first interviews since the companies canned the venture. Section 1 bans agreements that restrain trade unreasonably. Section 2 makes it unlawful for a company to monopolize or attempt to monopolize trade.

So they were basing this on the idea that this would restrain and monopolize trade, so it sounds like all Google did was to make a bigger monopoly and there's a law against that. They didn't abuse any monopoly, which is what Microsoft did.

But let's look closer. Google's deal with Yahoo was actually proposed as a joint venture whereby Yahoo was supposed to profit as well, and furthermore, Yahoo had the option to back out of the deal and use Google only to the extent they wished.

So, if you want to compare Google to Microsoft, let's try to come up with an analogy that would, maybe, make your complaint not sound like the ramblings of a 4 year old. Perhaps if Microsoft and Apple penned a deal to put Windows on the Mac because Apple wasn't selling as many Macs as they wanted because the market preferred Windows.

Anyway, my point is simply this: There's a clear difference between what Google did and what Microsoft did. Google offered to sell its products to its competitors at a rate that was apparently fair enough that they considered it. Microsoft tried to destroy its competitors by abusing an existing monopoly in an unrelated space.

Personally, I think it might be a good thing that the DOJ stopped this (though maybe not if MS now buys Yahoo and guts them), but if you can't see there's a difference between getting a monopoly by being better than your competition and abusing a monopoly because you can't compete in a space, then maybe you should avoid posting things like the above that make you sound like an idiot.

Anyway, let me leave you with one final tidbit from the article:

Litvack acknowledges that Microsoft Corporation and other companies lobbied the department to block the agreement, both publicly and and in private meetings. Litvack insists, though, that Microsoft's lobbying had no bearing on his recommended course of action or on the division's ultimate decision. Microsoft was represented by Cadwalader, Wickersham & Taft.

Sure, I believe that.

Re:Could be fun

[ShatteredArm]

True, to a point. Monopolies are only problematic when the barriers to entry are large. It would be silly, for example, to break up a trust that is limited to the greeting card industry--even if they did decide to ramp up their prices, someone else could easily come in and undercut them. It's a little different, on the other hand, if the startup costs and/or time is sufficiently large. I think we often overstate the power of monopolies to control the markets, though.

I would argue that the AIG support has nothing to do with a monopoly. They don't have a monopoly, and their competitors are at least as viable as they are, they've just been able to convince politicians that it'll hurt too many of their counterparties should they fail. This behavior can certainly encourage monopolies to form, though.

no government intervention leads to corruption

I'm not sure what would lead you to this conclusion. Government is a party in corruption, and in the absense of government there can't be corruption. If you look at a corporation as a quasi-government, then yes, that corporation can have corrupt people in power, but that will be in the interests of the shareholders to prevent (if the executives weren't given special legal protection from shareholders). Governments and corporations operate more or less the same way, except corporations actually have a fiduciary obligation to the shareholders.

More pragmatically, though, there are good reasons for regulation, but those regulations should be designed to provide (a) transparency and (b) accountability. Free markets require, in addition to competition, correct information in order to operate correctly, so you can't have corporations blatantly lying about their financial data.

Foreign markets.

[MMInterface]

I think one thing you are overlooking is foreign markets. Yahoo has a larger market share for some of its services in some nations outside the US: for example, Yahoo Search in Japan. When you look at that market it almost seems like the consumer prefers some of these "inferior" services. The most popular sites there don't usually resemble the clean minimalist design that Google services tend to have. That is until you consider that they are usually viewing the mobile site on their cellphone, and services like web mail are often used quite differently. Even really closed services that run contrary to Google's philosophy continue to do quite well there: iMode.