If nothing else, the Federal Trade Commission’s leaked-but-not-yet-declared war against Google provides a good opportunity to review how the agency’s internal machinery operates. Here are some basic points about what Google (and the rest of us) can expect going forward:
1. This won’t be like the Microsoft case
There are already suggestions that Google will be for the FTC what Microsoft was for the Justice Department’s Antitrust Division back in the 1990s. There’s an important distinction, however. The DOJ still operates under the jurisdiction of the federal courts. It had to bring a case against Microsoft before a district court for trial. In Google’s situation, the company faces both investigation and trial before the FTC. As an “independent” agency, the Commission appoints its own trial judges and conducts both the trial and the initial appeal. Google won’t be permitted to plead its case before a regular Article III court for several years.
2. The FTC Has Already Made Up Its Mind
Technically, the FTC is preparing to open a formal investigation of Google to determine whether any laws were broken. In reality, FTC Chairman Jon Leibowitz and his colleagues have already decided that Google is guilty — of what they aren’t quite sure yet. In FTC investigations, officials determine guilt before formulating the actual charges. The subsequent investigation is intended to (1) uncover information that can be used to publicly damage the defendant, (2) fatigue the defendant into signing a “consent order” that relieves the Commission of any duty to publicly prove its case, and (3) justify the expenditure of funds on outside consultants.
3. The FTC Is Writing Law, Not Enforcing It
In Microsoft, the DOJ had to rely solely on the Sherman Act, which punishes the vaguely defined offense of “monopolization.” The FTC can pursue similar arguments against Google, but the Commission has a broader weapon known as Section 5 of the Federal Trade Commission Act — which outlaws any “unfair” act that affects competition. As Congress never defined “unfair,” it is wholly within the Commission’s discretion to decide, after the fact, what acts are illegal. Thus, it can retroactively decide Google was wrong and punish the company accordingly.
4. The Commission Will Prevail — At Least Initially
As noted above, the FTC both prosecutes and tries cases. The judge is a career civil servant who is supposed to be impartial. And, in fact, these judges have ruled against the Commission at the trial stage on a handful of occasions. That’s largely irrelevant, however, since the first appeal from the trial judge is heard by the FTC members — the same people who approve the investigation, complaint, and prosecutors. The FTC has never ruled against itself in an appeal. And why would they?
5. The Ends Justify the Means
Once the FTC goes after a company, all bets — and constitutional principles — are off. If the FTC feels their trial judge won’t give them a favorable initial decision, the commissioners will simply get rid of the judge. The FTC has done this at least twice in recent years under the auspices of Chairman Leibowitz. There are no Fourth Amendment protections in FTC cases, so the Commission will be able to freely rifle through Google’s files — including access to individual customer accounts — in order to find anything that might be of value. There are also no penalties for prosecutorial misconduct, so even if FTC lawyers brazenly and publicly break the law, there will be no fear of reprisal. Everything is on the table when the FTC decides it’s in the right.
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Google is currently my favorite company in America. I hope they weather this storm better than Microsoft did after their anti trust case. If I had my way Google would leave USA tomorrow with a proud annoucement that the federal government can go fudge itself.
If Google made the decision to relocate outside of America and stop servicing American customers, I bet the public uproar would be enough to shut down the FTC for good.
THANKS for the excellent summary.
You show us yet another executive agency (unelected and not accountable to the people) which contains its own “court.”
Do we know if the FTC, like numerous other agencies, also has its own police force? Should Eric Schmidt be expecting SWAT teams with battering rams and sawed off shotguns, or is that kind of activity reserved for collecting student loans?
I find it ridiculously hypocritical of the government to be arresting mobsters, when it engages in mobster behavior itself. “Nice little search engine you have there; be a shame if anything happened to it. (Sniffing) Do I smell smoke?”
The fundamental difference between mobsters and state government is that the state government uses much more violence and is much more successful.
What’s really surprising is that Google does contribute to PACs and does lobby, which Microsoft did not – until after the case was brought. Now Microsoft lobbies.
Did Google not spend enough? Or is lobbying losing its punch?
Government bureauthugs.
Perhaps there’s a coalition of sorts working in the background, a group of other tech companies jealous and/or opportunistic for Google’s market share? Wasn’t the president over in California a couple months ago having dinner with some of these “titans” of industry…?
As undoubtedly scummy as Spookle is, the FTC is that much worse.
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