The recent Consent Decree between the Department of Justice and Google sets a useful precedent for allowing, even requiring, oversight of Google, but it does not go far enough. It seems to embrace a flawed view of consumer welfare, and it therefore permits things in the name of consumer convenience that are harmful to competition. As importantly, it fails to understand the tremendous power of a search engine's owner to deny competitors fair access to consumers that both are seeking to serve.

The Decree therefore misses the greatest risks of the ITA acquisition and misses the points that the DoJ should have been seeking to regulate. This acquisition is not about a line extension of a software vendor into a new line of business, where the vendor and its current customers both want their profitable relationship to continue; it is about vertical encroachment by a search company into precisely those lines of business that searchers were trying to locate.

The acquisition will inevitably be extremely damaging to hotels, airlines, and travel service companies, of course. By extension, the principles embraced in the Consent Decree will allow Google to move into the sale of additional goods and services, and if these extensions are created organically rather than through acquisition, this consent decree may even be read as permitting the extensions to proceed without further review. These extensions would allow Google to create almost unlimited new revenue streams, from the direct sale of goods and services, by preferentially positioning its sites selling those goods and services above those of any and all competitors and weakening or destroying the competitive process.

Google would be able to use these additional revenue streams to cross-subsidize still more preemptive line extensions, and would be able to damage still more software vendors, including previously unassailable players like Microsoft and Amazon.

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