FTC Poised to Help Google's Rivals, Not Consumers

The Obama administration is well-known for its heavy-handed regulatory overreach, and letting government decide winners and losers instead of the free market. No better example of the Obama administration’s contempt for free enterprise is at the Federal Trade Commission (FTC), which is currently considering how to proceed with its investigation into whether Google uses its position in Internet search to steer users to the company’s preferred services and away from those of its competitors. And while the agency ponders whether to bring a formal complaint against the company, there's a real danger that it may confuse aiding Google's competitors with serving consumers.

These competitors seek to gain ground on Google not by creating innovative new products, or providing better services or advancing innovation, but rather by trying to convince the iron hand of government to squeeze them until they are sufficiently distracted from competing. Rather than trying to beat them in the marketplace, their cynical tactic is to gain a type of economic rent-seeking (when one entity appeals to the power of the government to gain a greater market share rather than focusing its efforts on providing better products or services at lower prices than its competitors). Resources are spent, but no new wealth is created.

Ultimately, this approach leads to government redistribution of wealth from successful companies to their competitors, even as it ignores the harm to consumers, such as higher prices and the stifling of new innovation. In today’s tech space, for instance, Google’s competitors lobby the government to impose limits on Google’s ability to make money. Some have advocated for increased regulation of Google’s practices; others argue for a costly, innovation antitrust lawsuit. In both cases, Google’s competitors would gain market share not by providing products or services consumers want and are willing to pay for, but by convincing the government to do the dirty work for them.

Antitrust reviews, and other similar government investigations, have become a feeding frenzy for rent seekers. It’s the worst form of policymaking: the government picks the winners and losers, but the real losers are the public. This scenario effectively puts that state in control of the pace of innovation, with government officials empowered to impose arbitrary restrictions on market participants, restrictions which consumers don’t want and haven’t asked for.