Friday, January 4, 2013

Did Google win against the FTC?

Today's headlines is that "Google won a major victory  when the Federal Trade Commission said the Internet giant did not manipulate search results to promote its own products unfairly, after an 18-month investigation that struck at the heart of Google's business and ultimately endorsed one of its key strategies for maintaining its industry dominance. "

Did they really win? 

Thirty years ago IBM won a major victory with the FTC.  They did this by hiring a small outside company to provide the operating system and using microprocessors from a small chip company for their new Personal Computers .  Today IBM has mostly abandoned the low end computer business. Microsoft and Intel are very large and powerful companies.  When the FTC came calling if IBM decided to split into a large computer company (what they are today) and a small computer company (think Intel, Microsoft put together) there would have been two powerful companies.  Since a companies beholden to the stockholder, having stock in both of these companies would be much better then having stock in only one of them.

Just look at Microsoft.  They "won" their antitrust law suite.  They are now struggling.  Most of the struggles are similar to IBM's struggles.  New, growth technologies are being hamstrung by the big revenue generating technologies.

The canary in the coal mine:

I think that FTC antitrust reviews are a canary in the coal mine.  When the FTC comes calling, it highlights that companies are getting to big to be flexible.  A company that has an FTC review should seriesly consider breaking in two (or as AT&T did, break into eight).  The sum of the parts can be much more flexible then the whole.  Providing a better return for investors and more job opportunities to employees.

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