Analyst: Google case 'very hard to prove'

The Justice Department has sued Google for antitrust violations, alleging that it abused its dominance in online search and advertising to stifle competition and harm consumers. (Oct. 20)

Video Transcript

ELEANOR FOX: So the complaint says consumers are harmed because meritorious rivals who want to offer them something can't do that, and that consumers lose choice. They also claim that Google's quality has gone down as a result of its monopoly. It clutters the space with more ads.

And it claims that innovation is harmed in general. This is very hard to prove. 80% of search-- the network effects. People want their friends to be on the same network. They want their buyers and suppliers to be on the same network. And Google will say, and it got that way through good works. And the government will say, no, look at all these other things you did. It's not good works.

But, yeah, that story could be for or against them. One way of looking at it is the firms really do have power. And they use power, and they use the power to entrench themselves and to keep out the rivals. And that hurts consumers.

The other way of looking at it, which is the Google way, is to say the firms don't even have power. They're facing huge amounts of competition. Competition is a click away. And leave the firms alone to do what they do so well, which is innovation.