The Issue of Consumer Welfare in the Government Complaints against Google & Facebook

• Published date: 01 March 2022
• Date: 01 March 2022
• DOI: 10.1177/0003603X211067115

https://doi.org/10.1177/0003603X211067115

The Antitrust Bulletin

2022, Vol. 67(1) 12 –22

© The Author(s) 2022

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DOI: 10.1177/0003603X211067115

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Article

The Issue of Consumer Welfare in

the Government Complaints against

Google & Facebook

William S. Comanor* and Donald I. Baker**

Abstract

Although the Consumer Welfare doctrine has served as an important feature of antitrust liability since

the 1980s, the Department of Justice (DOJ) and Federal Trade Commission (FTC) have downplayed

this factor in their respective Google and amended Facebook complaints. Each complaint makes a

general reference to this issue, but with few detailed factual allegations. A complicating factor is that

the defendants have gained dominant market positions by providing valuable digital services at little

or no direct charge to consumers. In this paper, we emphasize that the services offered by the two

platforms embody quality as well as price dimensions, both of which can affect consumers positively.

Indeed, quality product dimensions may become even more important to consumers in a zero price

environment. We construct a simple economic model using privacy as a significant quality attribute

through which these issues can be explored, and then draw some appropriate policy conclusions.

Keywords

consumer welfare, quality competition, Facebook and Google, antitrust standards

I. Introduction

The doctrine of Consumer Welfare has been an important feature of antitrust liability for four decades.

Since the path-breaking volumes of Robert Bork and Richard Posner in the 1970s,1 a finding of harm

to consumers has generally been assumed a necessary component for successful antitrust litigation.

While the DoJ Google and the FTC Amended complaints2 include references to this issue, the agencies

are confronted with the reality that the defendants gained their dominant market shares by providing

valuable services at little or no direct charge to consumers. As could be asked when the Google com-

plaint was filed: “What is the consumer harm when Google’s search service is free?”

*UCLA Fielding School of Public Health, Los Angeles, CA, USA; Formerly Director, Bureau of Economics, Federal Trade

Commission, Washington, DC, USA

**Baker & Miller PLCC, Washington, DC, USA; Formerly Assistant Attorney General, Antitrust Division, US Department of

Justice, Washington, DC, USA

Corresponding Author:

William S. Comanor, University of California, Santa Barbara, Santa Barbara, CA 93106-9210, USA.

Email: comanor@ucla.edu

1067115ABXXXX10.1177/0003603X211067115The Antitrust BulletinComanor and Baker

research-article2022

1. RobeRt H. boRk, tHe AntitRust PARAdox (new YoRk, bAsic books, 1978); RicHARd A. PosneR, AntitRust LAw (2001, 1st

ed., cHicAgo, univeRsitY of cHicAgo PRess, 1976).

2. U.S. et al. v. Google LLC, Complaint Dkt. (D.DC, 2020) (Google complaint); Federal Trade Commission v. Facebook, Inc.,

Amended Complaint Dkt. (D.DC. 2021) (Facebook amended complaint).