The ongoing antitrust trial against Google has prompted discussions regarding the strength of the government's case and its alignment with existing antitrust laws and precedents.
These discussions will likely shape the outcome of the case and future regulatory actions in the tech sector.
The U.S. Department of Justice (DOJ) and eleven state Attorneys General filed the antitrust lawsuit against Google on Oct. 20, 2020.
The lawsuit alleges that Google unlawfully maintained monopolies in search and search advertising through anticompetitive and exclusionary practices. The complaint cites exclusivity agreements, tying arrangements and preferential treatment as tactics used by Google to stifle competition and consumer choice.
The DOJ says their action seeks to halt Google's anti-competitive conduct and remedy the competitive disadvantages inflicted upon consumers, advertisers and internet-reliant companies.
Nicholas Johns, Senior Policy and Government Affairs Manager at the National Taxpayers Union, noted the government's case appears “relatively weak,” despite the sweeping allegations against Google.
“The crux of their case being presented is focusing on the business-to-business deals between Google and other parties within the mobile sphere,” Johns told Federal Newswire. “The government is arguing that these deals amount to monopolistic behavior. The government and opponents to Google even point to the Microsoft antitrust cases as a corollary.”
Johns said in the Microsoft case, the allegations centered around Microsoft's supposed restriction of access to essential code for competitors to build on their operating system and restrictive licensing agreements with manufacturers.
“However, it's important to note that that case had key differences to this Google case,” Johns said. “Consumers today are well-versed in technology and are able to easily navigate to an alternative search engine, or can easily switch their default search engine on their phones. In the Microsoft case, a key fact was that Microsoft was allegedly restricting access to the necessary code for competitors to build on their operating system.”
Johns added that Microsoft Windows was a paid product, which further differentiated it from the current Google case, and that while default settings may come preset, consumers maintain the ability to choose their preferred search engine on their mobile devices.
According to an opinion piece by Barbara Comstock published in USA Today, the DOJ alleges that Google has used its partnerships with manufacturers of mobile devices, computers, and browsers in an illegal manner to stifle competition within the online search market.
The DOJ alleges these collaborations have allowed Google to designate its search engine as the primary service on a significant number of consumer electronic devices, including smartphones. The government claims this practice has consequently deterred users from investigating alternative search engines like Bing, DuckDuckGo and others.
Johns pointed to a corollary example in an entirely different industry: the dominance of Nike in the basketball shoe market.
“Nike has an estimated market share of the basketball shoe market from 85% to as high as 96%,” Johns said. “It signs exclusive deals with influential figures in this market like basketball players and colleges even down to the high school level. Is this market share and are these deals inherently bad, or does Nike and its Jordan brand put forth a better product that consumers love? Consumers seeking basketball shoes are not forced to purchase Nike shoes, nor are these deals restrictive in any way for the broader consumer market. However, they do place a superior and desired product in the limelight.”
Drawing a parallel to the tech industry, Johns mentioned the past dominance of Yahoo in the search market and how Converse once led the basketball shoe market but failed to innovate, losing market share over time.
He stressed the rapid pace of innovation in the consumer web technology field and the emergence of competitors like ChatGPT, Bing with AI and DuckDuckGo.
“If Google were focused on purchasing these competitors, there would certainly be a strong antitrust argument against that move. However, we have a situation where a great product is currently the best out there in the marketplace and so is able to secure deals because of that,” Johns said.
For decades, the consumer welfare standard has served as the guiding principle for antitrust law, focusing on whether a company with substantial market power is raising prices beyond competitive levels or diminishing product quality through its market dominance.
Johns expressed concern that the DOJ and the Federal Trade Commission (FTC), under Chair Lina Khan, seem to be deviating from this successful standard.
“In this case, consumers have benefitted for decades from a free product from Google,” Johns said. “It's difficult to reconcile the norms of antitrust law with this particular case. Directly from the lawsuit, the government alleges that Google is ‘crippling the competitive process, reducing consumer choice, and stifling innovation. Consumers are clearly able to select competitors and there are several other options available for search queries.”
Johns highlighted that while past precedent could provide valuable insights, the most relevant cases to inform predictions are recent ones, such as the FTC's cases against Meta/Within acquisition and the Microsoft/Activision merger.
In the Meta/Within case, the FTC's arguments centered on a novel market definition of "virtual reality dedicated fitness application," which the court rejected, emphasizing the importance of a comprehensive market definition.
Similarly, in the Activision merger case, the FTC overlooked the Nintendo Switch in its market definition of "high-performance gaming consoles," illustrating the need for a broader perspective when assessing competition.
Johns expressed concerns about the current administration's approach to antitrust laws, suggesting that it appears to be bending these laws to fit political or ideological goals.
“The government's arguments within this case demonstrate a clear shift from past precedent which could be very damaging for American competitiveness,” he said. “At a time when global tech competition is stronger than ever before, this could damage and restrict a sector that has empowered America's prestige, economic growth, and global influence like few others.”
Johns emphasized that the current antitrust efforts present limited remedies while carrying substantial downsides and the potential to stifle domestic innovation.
“The success of this misguided endeavor could fuel further spurious lawsuits against our homegrown innovators which would further bog them down and reduce their abilities to invest in the technological development of the future,” he said. “These companies also represent the American dream in that they provide hundreds of thousands of individuals with great paying jobs.”
Johns raised concerns about the consequences of breaking up Google or imposing consent decrees on its ability to contract with phone manufacturers. The critical question posed is how these actions would impact consumers who might be accustomed to using Google as their preferred search engine.
“Would consumers be forced to switch their own phone defaults to a service they already want to use, Google?” Johns asked. “Or would Google's product be worsened by government intervention to the point that consumers might want to use alternative search engines? How is any of that to consumer benefit? This is why the consumer welfare standard is so key in informing antitrust enforcement.”
