Posted by Don Harrison, Deputy General Counsel

As we’ve said before, we understand that as Google grows, we’re going to face more questions about how our business works. We recognize the responsibility we have, and we are always open to hearing ideas about how we can improve.

Washington Post columnist Steve Pearlstein writes today about Google’s acquisitions and antitrust law, and I thought I’d share a few reflections on his article:

All companies make “build vs. buy” decisions. Pearlstein writes that he has no problem with Google growing naturally, but that we shouldn’t be allowed to make acquisitions in new spaces. This isn’t how we -- or most companies -- approach these decisions. Sometimes it’s possible to develop a new product in-house; other times a company decides it can bring a new product to market faster by acquiring another company. Microsoft acquired Powerset in 2008 and then incorporated its search technology into Bing. Amazon acquired Zappos in 2009 instead of developing its own shoe-selling site. The Hart-Scott-Rodino legal process ensures that acquisitions like these aren’t implemented if they threaten competition or consumers, and the process works well.

We’re competing against other companies for acquisitions. Pearlstein expresses concern that Google’s acquisitions preclude the possibility that a company might instead be purchased by Microsoft, Apple, or Facebook. But those companies not only have substantial cash or equity that they use to make acquisitions, they also regularly compete against us and other companies to acquire leading startups. In 2007, Google bought DoubleClick, but then Microsoft spent twice as much for its display ad company aQuantive and Yahoo bought ad exchange Right Media. All mature companies regularly acquire companies to make big bets on new spaces.

Acquisitions are typically good for consumers and the economy. Antitrust law is designed to protect consumers, not competitors, and our acquisitions have created great things for consumers. Our 2004 acquisition of Keyhole led to Google Earth, which for the first time provided free satellite imagery for consumers. Our 2005 acquisition of a small company called Android -- and our investment in the technology that Andy Rubin was developing -- later led to the creation of the Android mobile operating system, which has injected more competition and openness into the smartphone space. For startups, getting acquired is often the path to success (especially given the difficult IPO market), so stopping large companies from making acquisitions would only deprive startups of another potential bidder and investors of a potential return on their invested capital. You can’t be both pro-economic growth and anti-acquisitions.

Courts and regulators recognize efficiencies in mergers into new spaces. They also have approved many deals where the leader in one category acquired the leader in a separate category. That includes Oracle’s acquisition of Siebel, Amazon’s acquisition of Audible, and Adobe’s acquisition of Macromedia. Each company was #1 in its respective field, and each merger was approved.

These aren’t easy issues -- and we don’t envy the government regulators who have to grapple with them! But most observers would agree that the antitrust laws are pretty durable and the courts have done a good job applying the law to new products and technologies. For our part, we’ll continue to make sure that our business practices reflect our commitment to compete fair and square.