Google’s been running a gauntlet of regulators in Europe and the United States at least since 2007. It has managed legal challenges to any number of corporate practices ranging from the way it protects user privacy to how it chooses mergers partners to how it protects copyrights. And perhaps the FTC probe may prove to be just another minor bump on the road to riches.

But there are reasons to believe that it will prove to be a big distraction. The investigation will apparently focus on the search-advertising business, which is Google’s bread and butter. And the specific concern – that the company is using its pre-eminence in searches to direct consumers to Google-related enterprises – could be problematic because it potentially threatens Google’s ability to exploit economies of scope and scale.

This doesn’t necessarily mean, of course, that the rest of us should identify with Google’s worries. But the parallels with the global assault on Microsoft’s dominance in PC operating systems and Internet browsing, which in the end served hardly anybody’s interest, are troubling.

For starters, serial run-ins with regulators have a way of changing New Economy corporate cultures, and not for the better. An army of lawyers and consultants, who are paid not to think outside the box, gain influence over strategic planning. Why risk the wrath of government in the next acquisition, or the next challenge to other established enterprises? And along with the lawyers come the lobbyists, who in the process of speaking money to power further pollute American politics and policymaking.     

This might all be worth it (from the public’s perspective), if one could count on antitrust policy to put the interests of consumers first. But antitrust is built on models of slow-changing markets in which the name of the game is to prevent sellers from charging more than costs. By contrast, high technology in general and information technology in particular is all about charging more than costs – that is, earning amazing returns on amazing innovations. And market concentration says more about who’s king of the hill now than who has the power to stop others from becoming king of the hill tomorrow.

Microsoft, you may recall, was pilloried for its “impregnable” advantage in Internet browser software thanks to the dominance of its Windows operating system. But somebody forgot to tell hundreds of millions of PC users, who turned to Firefox, Safari and Chrome when Microsoft became complacent – or too distracted by regulation to defend its turf with improved versions of Internet Explorer. Today, IE is down to 55 percent of the market – and its share is still falling in spite positive reviews for the latest version.

Ah, but Google really does have a hammerlock on web searching, you say.  Look again. In the past year, Google has lost 10 percentage points of the market, ironically, almost all of it to Microsoft’s Bing. Moreover, the mojo that made Google seem invincible seems to be wearing off. Yes, the Android operating system has made a giant splash in mobile devices, but not at the expense of Apple’s iPhone. Yes, Google’s efforts to move computing and information storage to The Cloud may yet pay off. But any number of competitors in the cloud, including Amazon, Netflix and Apple, are doing just fine.

Antitrust isn’t an idea whose time has come and gone. But it has entered a phase in which the old ways apply awkwardly, at best, to new industries. And the consequences of missteps – especially for economies like ours, whose only shield against senescence is innovation – are growing. Does it make sense to take Google down a peg? We’ll probably only find out when it no longer matters.

Remember why the Antitrust Division brought an antitrust case against Microsoft in 1998? In a nutshell, the feds contended that Bill Gates’ monster so dominated the market for key information technology (the PC operating system) that rivals couldn’t compete without a little help from Uncle Sam.

Fast forward to June 2010. Microsoft has lost 40% of the market in Internet browser use — Google‘s Chrome browser and the “open source” Mozilla Firefox browser control one-third of the market along with 100% of the media buzz. And in spite of years of effort, Microsoft owns a mere 3% of the search market worldwide, compared with 84% for Google. Indeed, the notion that Microsoft can use its dominance in operating systems as leverage to push other software makers off their own turf is such a non-starter (to everyone but regulators) that the world barely noticed when the company started giving away terrific anti-malware software to Windows users.

Microsoft isn’t killing on other fronts, either. It barely qualifies as a major presence in smartphone platforms or in music players. (Remember the Zune: Someday, it will be a show stopper on trivia quizzes). And even Microsoft’s near-monopoly in office productivity software is finally being challenged, as Google and others offer free applications that live entirely on “the cloud.” The move has forced Microsoft to match their free Web offerings, accelerating the erosion of the traditional market for Office.

So now that the king is dead, should we be worrying about the anticompetitive behavior of the pretender to the throne? The Federal Trade Commission thinks so: It is investigating Apple for its efforts to leverage its market power in digital music and mobile devices to other services. But look more closely and Apple’s quasi-monopoly begins to resemble that of Microsoft’s a decade ago. Practically since the introduction of the iPhone, it’s been conventional wisdom that Apple had a hammerlock on high-end smartphones because it had created an incontestable lead in mobile apps. Yet, in a matter of months, Google’s Android managed to build an online store with 70,000 apps, and one forecaster thinks Android devices have a good shot at passing iPhone sales in the next few years. Arguably more ominous from Apple’s perspective, Android users are already clicking on more mobile ads than their iPhone counterparts.

So what does that mean? The markets for information technology products are, often as not, highly concentrated. But concentration doesn’t equal true market power the way it does in, say, steel or air travel because IT is changing so rapidly. Indeed, a competition policy that uses share of total sales as the cue for antitrust investigation in any technology-driven market may actually undermine competition. For without the prospect of huge profits associated with temporary market dominance, investment in expensive, long-shot technologies would surely diminish.

To be clear, there’s a place for antitrust regulation in protecting consumers from the abusive practices of companies that gain and keep market power by what the law calls “restraint of trade.” But where market power follows from innovation, the burden of proof ought to be on those who argue that dominance will endure.

(This blog post was published earlier on Forbes.)

The most significant changes in the market last year were (a) the disappearance of Alltel, the fifth largest carrier, through merger with Verizon and (b) the explosive growth of MetroPCS and Leap, the number six and seven carriers respectively, which both specialize in all-you-can-talk-text-surf plans. All told, the FCC notes that the market is a bit more concentrated than it was last year, and significantly more concentrated than in 2003.

No argument there: The Herfindahl-Hirschman Index has risen from 2141 to 2858 in five years. The dispute is over what that implies. Commissioner Michael Copps concluded that “competition has been dramatically eroded and is continually endangered.” We think concentration is just one factor is assessing the state of competition in this and other industries characterized by rapid technological change and service quality.

According to the report, prices are stable – evidence that the carriers either face direct competition or fear entry. Indeed, Leap and MetroPCS have had great success in using their image as discounters to compete for younger, less affluent customers. Note, too, that all the major carriers are running scared. All are promoting slews of new devices and investing heavily in the high speed, 4G networks needed to get the best out of bandwidth-hungry smartphones.

Then there’s the question of international comparisons. The average price of a minute of airtime in the United States is far, far lower than in other rich countries. In Japan, for example, the typical customer talks 139 minutes a month at a hefty 26 cents per minute, compared to the typical American’s 829 minutes at 5 cents a minute.

Don’t get us wrong. Somebody – preferably the Department of Justice or the Federal Trade Commission – needs to keep an eye peeled for signs of market power in the wireless industry. But the bigger risk at this point is that, in their enthusiasm to protect consumers, the FCC will attempt to manage market share – say by giving a helping hand to smaller carriers or by barring marketing practices that make it costly to switch carriers before the end of a handset contract. The industry has done very well on its own, thank you, in containing costs while fostering a technological revolution in wireless communications.

The proposal is timely because the Senate is apparently less than eager to create a brand new Consumer Financial Protection Agency (already part of the House’s financial reform bill passed last December). And giving the FTC more authority instead would represent a compromise of sorts.

Our own concerns are pragmatic, not political. We aren’t so naïve as to believe that competitive markets and the right to sue in court provide adequate protection to consumers in complex financial transactions. So, in theory, it makes sense to have a watchdog with teeth. But we’d like assurances that the FTC would use new authority to consider the costs of consumer protection rules as well as the benefits. Anything to add on that score, Chairman Leibowitz?