Google Tries to Stay 'Calm' on Anti-Trust

Eric Schmidt's telling other moguls in Sun Valley that the search giant's not worried

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Eric Schmidt tried to keep things positive during his chat to moguls at the 29th annual Allen & Company conference in Sun Valley, Idaho. The Google executive chairman talked up the company's new social network, and waxed optimistic about their so-far failed attempts to forge closer partnerships with Facebook and Twitter. "We hope to have a new and different agreement, but at the moment we are disconnected," he said.

When the subject turned to Google's recent run-in with regulators, Schmidt kept it brief. Jessica Vascellaro at The Wall Street Journal reports:

Mr. Schmidt said antitrust probes from the European Commission and the FTC, which began a formal review of Google's business practices last month, haven't affected business beyond a few internal meetings about how to deal with it. "We are calm about this. There is not a lot of drama," he said, repeating his regular refrain that Google has long expected scrutiny from regulators.

Keeping calm sounds like a good strategy. As Schmidt enjoys the Idaho sunshine, at least one columnist is standing up for Google. Vivek Wadhwa at The Washington Post wants the government to stay out of innovation's way with their FTC probe. The FTC is investigating Google as well as Twitter over allegations of anti-trust and privacy violations, respectively. If history has taught us anything, Wadhwa says, it's a waste of time:

But government intervention here is misguided. These investigations, and whatever results from them, won’t level the playing field. They will only stifle innovation and yank lawyers out of unemployment lines.

The technology sector moves so quickly that when a company becomes obsessed with defending and abusing its dominant market position, countervailing forces cause it to get left behind. Consider: The FTC spent years investigating IBM and Microsoft’s anti-competitive practices, yet it wasn’t government that saved the day; their monopolies became irrelevant because both companies could not keep pace with rapid changes in technology--changes the rest of the industry embraced. The personal-computer revolution did IBM in; Microsoft’s Waterloo was the Internet. This--not punishment from Uncle Sam--is the real threat to Google and Twitter if they behave as IBM and Microsoft did in their heydays.

Wadhwa is referring in part to the U.S. Senate's investigation into Microsoft in 1998. When Google, Facebook and Apple executives went to Capitol Hill recently to be grilled about their privacy practices, we pointed out that the government is inevitably more interested in innovation than they are anti-trust, and tech companies would probably escape any serious scrutiny. This conclusion sort of supposes that free markets work everything out eventually.

Surely, Wadhwa would agree. While his request for Washington to keep their nose out of Google's business plan sounds a little too much like Adam Smith at times, Wadhwa does make a good point about oversight in the ballooning valuations of tech companies for fear of a new tech bubble:

Government has no place in this technology jungle. It shouldn’t be trying to tell Silicon Valley how to develop its products or how to make money. Instead, the role the government should play is to keep the poachers in check. It needs to take a close look at the secondary markets, which allow private companies to sell their stock to uninformed investors. This, in turn, has caused the valuations of companies that are now going public to become inflated beyond all reason, and created a bubble that, when it inevitably bursts, will hurt the entire technology industry. That is the real worry--not whether YouTube ranks higher than Vimeo on Google’s search results or whether you use Flickr or Instagram to share photos on Twitter.

The last we heard from the FTC, subpoenas were on the way to Google executives. Schmidt can stay calm for now, but eventually he will have to answer their questions, regardless of what free market advocates think.

This article is from the archive of our partner The Wire.