By: John Garrasi
Antitrust regulation has seemingly taken a back seat during the last twenty years. This apparent lull in government enforcement of antitrust behaviors has coincided with the rise of Big Tech. To the delight of tech executives across the country, the government has largely failed to enforce regulations on tech companies since the infamous Microsoft case of the 1990s. However, the federal courts will soon have their hands full with cases thanks to the recent push by the Biden Administration to set a new tone in the world of competition law.
One such case set for trial this month is the case of United States v. Google LLC, filed in 2020 in the District of Columbia. The U.S. Department of Justice alleges that Google has engaged in anticompetitive practices that harm consumers in order to maintain its position of market dominance. Most notably, the government alleges that Google has made deals with the likes of Apple in order to be placed as the default search engine option on their devices. The Justice Department is also challenging similar contracts that Google engaged in with other smartphone makers, arguing that by engaging in such contracts Google is effectively capturing the entire mobile phone industry in an effort to maintain their absolute hold on market share, constituting an 80% or higher market share in search queries.
Kent Walker, Google’s President of Global Affairs, argues that Google’s payments to Apple and other smartphone manufacturers constitute nothing more than a simple marketing expense, similar to an expense a company might pay to market their product inside a retail store to promote their products to customers walking by. Furthermore, Walker argues that Google itself promotes competition by devoting funds to the development of other browsers such as Mozilla and Firefox.
The ultimate argument, according to Walker, is that Google is simply too good for customers to pass up. Despite arguments to the contrary, most people go out of their way to change the default search engine on their devices to Google, regardless of the default browser. If customers don’t prefer the Google search engine, they can simply switch to another in as little as four clicks.
The stakes in this case could not be higher, as some say that a government win over Google could transform the company and signal significant changes for the broader tech industry. Executives at parent company Alphabet know this, which is why they spend nearly $18B per year maintaining their contract with Apple. While Google executives may argue that competition is alive and well in the search space, the reality is that such enormous payments create an insurmountable barrier to entry for smaller companies who find it impossible to compete in this space. Further, the argument that the solution lies in allowing customers to choose to change the default search engine on their own, falls flat in the face of emerging studies showing that search competitors fare better in markets with stronger antitrust enforcement in this space.
Consumers themselves have a stake in this case. As Google continues to dominate market share in the search space, they continue to be able to dominate the ways in which data and privacy are treated. With little meaningful competition to help keep their business practices in check, Google can collect and sell as much data as possible, which is cause for concern in the emergent era of Artificial Intelligence models such as Bard. Google itself has recognized just how powerful AI models can be, and their potential to create winners and losers in the online space have peaked Google’s interest. The company has already shifted their strategy to include these powerful tools, and have adjusted their company policy accordingly.
The government faces an uphill battle. While the Department of Justice has to prove that Google achieved its market dominance through illegal means, they have yet to make such claims explicitly. Further, few have grappled with the idea of what it might mean for Google if the government does win. The judge presiding over this case, Judge Amit P. Mehta, has already signaled that unless liability is found, there will be no discussion of remedies. Even with the historical specter of the Microsoft case from the late 90s looming large over this trial, Google seems to think it is in a much better position thanks to the legal theories advanced by that case, and certainly fears the possibility of being broken into smaller pieces even less. Despite accusations of the DOJ that Microsoft had abused the power generated from the overwhelming success of their operating systems, Microsoft ultimately emerged unscathed, and avoided a government-mandated breakup of its corporate structure. Google, similarly, faces accusations of abusing its position as the market leader in search, and points to strong evidence that they are a victim of their own success: a product that’s simply too good for their users to pass up.
Regardless of whether or not the government is able to prove its case, the implications of this action will have far-reaching consequences. A win for the government would most certainly signal the end of the big tech era free-for-all, where high-powered executives are permitted to corner the market at all costs to free market principles. A win for Google, on the other hand, would likely go further than the perpetuation of the status quo. Google’s victory in this case would serve as a public example of just what happens when you stand up to the almighty power of Big Tech.
Student Bio: John Garrasi is a second-year student at Suffolk University Law School. He is a staff writer on the Journal of High Technology Law, and received a Bachelor of Arts degree in Political Science from the University of Massachusetts in Boston, Massachusetts.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
