Gary Reback yesterday tackled the issue of the Obama administration’s possible new stance on antitrust in a piece that attempted to refute the previous two posts that Forbes has put out on Christine Varney’s appointment as Assistant Attorney General for Antitrust.

The general fear, and one that I share as well, is that Christine Varney’s strong anti-Google attitude will eventually lead towards a gargantuan move by the government to break up the search giant, much the same as what was done to Microsoft during the last wave of notable antitrust litigation.

This is certainly a reason for concern. Varney hasn’t been quiet at all in her hate-on for Google.

“For me, Microsoft is so last century. They are not the problem,” Varney said at a June 19 panel discussion sponsored by the American Antitrust Institute, according to Bloomberg. The U.S. economy will “continually see a problem – potentially with Google” because it already “has acquired a monopoly in Internet online advertising,” she said.

I talked about all the things that were wrong with that statement in a post I made to my personal blog back in February:

So, if we assume that Ms. Varney actually knows the meaning of monopoly as a term (and was just posturing in her statements to the media), then Google is quite safe.

Google is by far not the only purveyor of advertisement on the web.  Certainly, they dominate the market because they are by far the most dominant website on the Internet. You can’t separate their ads from their website.  You cannot give half the Google database of search results to a different search engine. It doesn’t work like that.

Meanwhile, Google isn’t inhibiting innovation.  As any self-publisher will tell you, Google AdSense is the Ford Pinto of online ads.  They’re crappy, doesn’t work very well, and just about anyone can afford it.

In essence, they’re encouraging innovation [in the advertisement field] by sucking so badly [for the content producer].  The first person to make an ad network that works better than Google could take the world by storm.

Given that ever since President G.W. Bush took office and continuing strongly into the Obama administration we’ve been playing fast and loose with the constitution, terminology and finance, Google may be headed for a world of hurt.

There is most certainly innovation and money to be made in online advertising.  Aside from the other giants that dominate the field like IDG, Federated Media, Platform-A, TribalFusion, Burst, Glam and dozens others, we’re working on our own home-brewed solution in the SiliconANGLE Labs right now, to great interest and success.

More to the point, though, it’s vastly underestimated the alignment between Republicans and Democrats when it comes to views on antitrust.  Of course, elected officials are brought to office through the votes of the individual, but the ability to sway those votes generally comes through financing of big business. To suggest that votes are bought is tantamount to accusations of corruption, but it’s naïve to think that politicians of all stripe aren’t sensitive to the desires and will of big business.

Given the close relationship during the campaign of Google CEO Eric Schmidt and Barrack Obama, I think it’s fairly unlikely we’d see Ms. Varney’s dreams come to fruition here.

In Reback’s piece, he does very little to conclusively refute the questions raised in the other two Forbes editorials. Reback spent a several paragraphs refuting the piece entitled “A Giant Step Backward In Antitrust Law,” with what amounted to weakly propped up straw-men arguments:

The author also argued against enforcement of the law that forbids monopolization because, according to the column, enforcers lack a “coherent and comprehensive account” that differentiates between legal and illegal practices. Of course, as any physicist will tell you, we lack a “comprehensive account” of gravity, yet we are still able to fly airplanes. And we manage to treat many diseases effectively though we lack a “comprehensive account” of microbiology. We simply don’t need to address every remote hypothetical to the satisfaction of chronic naysayers in order to solve our most pressing problems.

Analogies and metaphors to gravity and microbiology are useful in a literary sense when trying to explain complex subjects like macro-economics. That doesn’t mean
that because we don’t understand the mechanics of gravity that it’s impossible understand what’s legal and illegal when it comes to a business.  In fact, I’d argue that when the government does not clearly define illegal behavior before choosing to prosecute it, that’s an action quite uncharacteristic of a free society.

Part of what makes a dictatorship an effective form of government is creating a climate of fear amongst the citizenry by creating absurd laws and then enforcing them arbitrarily or capriciously. To adopt that sort of policy as a means of policing corporate America strikes me as, if you’ll excuse the trope, un-American. I don’t imagine that it’s too much to ask that the government at least take the time to define undesirable behavior as illegal before they prosecute it.

His refutation of the second Forbes article, “U.S. Antitrust Becomes More European,” was similarly flawed, resting on selective recitation of antitrust history.

The ideologues attempt to deny history by claiming that antitrust enforcement impedes efficiency and innovation. In fact, vigorous antitrust enforcement against dominant firms has produced economic growth and prosperity. Most people are familiar with how the federal government broke up the Standard Oil monopoly. The state of Texas protected the economy even more effectively when its antitrust enforcers prevented Standard from engaging in tactics that would have killed the young companies that became Texaco, Gulf and Shell Oil.

The annals of antitrust contain many similar examples. The settlement of a Justice Department lawsuit against AT&T ( T –news – people ) in 1956 required the company to license a key invention, the transistor, to anyone willing to pay $25,000. William Shockley bought a license, formed his own company and spawned Silicon Valley’s semiconductor industry.

Aside from over-generalizing the birth of the Texas oil companies (their birth arguably had more to do with the discovery of the Spindletop oil reservoir than the breakup of Standard), he’s also assuming that because innovation unfolded under a
climate of trust-busting that it wouldn’t have formed any other way.  In the instance he mentions where AT&T’s settlement lead to the formation of Silicon Valley as a semiconductor powerhouse, that’s anecdotal evidence but it doesn’t preclude the possibility that more innovative technology could have been built to compete with the transistor by competitors, and eventually outmode it.

When it comes down to it, these ancient examples don’t have much bearing on today’s market, particularly when it comes to Web based companies like Google.

Certainly Google does have a uniquely powerful position when it comes to driving pageviews and ultimately views of advertisements, as was evidenced by their outage a few weeks ago, which correlated closely with a worldwide drop in Internet traffic by 5%.

Given the rapid pace of technological development and the rising power of the unending myriad of social tools in the hands of the general public, the recurring adage about “two kids in a garage” comes to mind. The ability for someone to put out of business any giant in the tech sector is truer now than it ever was, and while trust-busting may or may not have been an important release valve on innovation throughout history will continue to be debatable. That it’s necessary now, I believe, is not.