Can Competition Result From Mergers?

There have been a number of folks—not least the lawyers at Google—worrying that the potential Microsoft/Yahoo merger might reduce competition, or give consumers fewer choices, or just plan be bad for the internet (whatever that means). Basically, these are all code-words for antitrust concerns. Now, as a card-carrying antitrust skeptic (for more, see here), I’m obviously not moved by any of these fears. But aside from generalized opposition to government intervention, it’s important to remember that, in many cases, mergers actually make the marketplace more competitive. And that certainly seems to be the case with Microsoft and Yahoo. Here’s the Wall Street Journal:

[S]ome of the potential deals — such as a Microsoft-News Corp.-Yahoo combination or the proposed Yahoo-AOL agreement, which Yahoo hopes will help fend off an offer from Microsoft — could wind up spreading the power rather than consolidating it.

The piece (which is worth reading in full) goes on to note that “Google now dominates the market for paid search advertising — and its potential new agreement with Yahoo would only add to that dominance.” Now, that’s not necessarily a reason to oppose a Google-Yahoo deal, should one come about. But it certainly detracts from the Google-good/Microsoft-bad attitude that seems so prevalent in discussions of these matters.

As I pointed out recently in the American Spectator, Google has succeeded in marketing itself in such a way that it’s often perceived as especially benevolent. But no matter how much one likes its products – and I like and use quite a few of them myself – one shouldn’t conflate capable product design with any larger goodness. They, like Microsoft and many other organizations in the online search market, are players in the competitive marketplace like any other, and thus most of what they do is designed to further their own competitive interests. There’s nothing wrong with that! But there’s nothing particularly special about it either.