Is There Really An Antitrust Anachronism?
L. Gordon Crovitz, a Wall Street Journal commentator, has a piece in the paper this morning, “The Antitrust Anachronism,” discussing the proposed Microsoft-Yahoo! search deal. Crovitz sees the deal as an arrangement between two weak 2-3 competitors against a dominant Google and clearly sees the deal as pro-competitive. Crovitz seems to conclude that antitrust regulators should simply exit the field in markets like search—he calls the Sherman Act “a legal relic”—and notes the ways in which benefits to consumers can be delayed as regulators review deals.
This misses of course one key point: absent antitrust review of search deals, this deal would not be taking place. This deal is only possible because the prior proposed deal between Google and Yahoo!—a 1-2 deal—was effectively blocked by precisely the same antitrust review process that Crovitz decries. (Disclosure: I consulted for the opposition to the Google—Yahoo! deal.) Absent that review, Google and Yahoo! would have done their deal and Microsoft would have been left on the sideline.
You can criticize whether the regulators should have blocked the Google-Yahoo! deal. That view would seem consistent with most of what Crovitz says about the difficulties of regulating these highly dynamic markets and the hope that Schmupeterian competition will suffice. But what we cannot do—and this I think is the error implicit in Crovitz’s piece—is to criticize the business review process for Microsoft—Yahoo! when it was precisely that process for Google-Yahoo! that made the new deal that Crovitz likes possible. Do reviews, don’t do reviews, but no selective criticism of this review without acknowledging the role that the review process played in creating the foundation for this deal. No reviews at all would have meant Google-Yahoo!, not Microsoft-Yahoo!.
I say all that while sharing Crovitz’s instincts that this deal probably improves competition in the search market. My expectation, without a lot of analysis to be sure, is that the regulators will approve this deal after doing the appropriate regulatory due diligence. But they seemingly were going to challenge Google-Yahoo!— as I thought that they should—and that is the deal that Crovitz needs to be prepared to defend if he really thinks antitrust is an anachronism.