Is Google Too Big?

The Washington Post’s Steven Pearlstein wants the federal government to rein in Google. In a widely-read column,
the business columnist argues that Google has become too big, moving
into e-mail, video, Web browsers and a whole range of mobile and
computer software products. “Where I have a problem,” Pearlstein writes, “is in allowing Google to buy its way into new markets and new
technologies, particularly when the firms being bought already have a
dominant position in their respective market niches.”

He largely
views Google’s acquisitions as a way to squelch competition and prevent
the “next round of creative destruction.” He urges regulators to
aggressively enforce anti-trust laws to protect innovation.

The column made a splash in the blogosphere but, more surprisingly, garnered a response from Google itself. Reacting to the column, Don Harrison, Deputy General Counsel at Google, writes:

law is designed to protect consumers, not competitors, and our
acquisitions have created great things for consumers. Our 2004 acquisition of Keyhole led to Google Earth, which for the first time provided free satellite imagery for consumers. Our 2005 acquisition
of a small company called Android–and our investment in the
technology that Andy Rubin was developing–later led to the creation
of the Android mobile operating system, which has injected more
competition and openness into the smartphone space.

So whose side did the tech bloggers take? By and large, Google’s. In a post for Gigaom, Matthew Ingram says Pearlstein’s interpretation of anti-trust laws is much too broad:

when do we decide how big companies are allowed to become, or whether
they should be able to enter new markets? Antitrust laws were designed
to prevent companies from using their monopoly power to negative effect
in specific markets, not simply to keep companies from becoming large.
But Pearlstein seems to be arguing that they should be broadened to
cover any big company that buys other big companies

Meanwhile, Sam Diaz at ZDNet attacks Pearstein’s depiction of acquisitions, saying they don’t necessarily squelch research and development:

buy other companies all the time. And in the fast-paced culture that is
Silicon Valley, sometimes it makes more sense to buy a company that’s
developing a core technology than to throw those same investment dollars
into R&D for the sake of creating something that’s already being
created, just for the sake of competing with that same startup down the
road. Google’s doing plenty of innovation.

For further, Pearlstein-bashing, see Larry Dignan‘s self-labeled “rant” on anti-trust. Of notice, Pearlstein’s detractors are all of the Silicon Valley variety. Perhaps his ideas will gain more acceptance in Washington where he writes? We’ll see.

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