Trust Issues

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Article from Issue 287/2024
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Are fortunes changing for Google? Many observers think so, but trillion dollar companies have ways of making problems go away. It does seem like they are on a bit of a losing streak when it comes to government tolerance of their anti-competitive behavior.

Dear Reader,

Are fortunes changing for Google? Many observers think so, but trillion dollar companies have ways of making problems go away. It does seem like they are on a bit of a losing streak when it comes to government tolerance of their anti-competitive behavior. The EU has been leveling fines against Google for years, and last year, the European Commission issued a formal antitrust complaint, suggesting that breaking up the company might be the only remedy [1]. Earlier this year, the EU began investigating Google under the new Digital Markets Act [2], which is designed to prevent gatekeeper companies from controlling their markets.

The EU deserves credit for their diligent pursuit, but because Google is a US company, the recent antitrust finding by the US District Court of DC could be far more eventful. In the first antitrust decision of the Internet era, judge Amit. P. Mehta ruled that Google is a monopoly company that uses anti-competitive practices to maintain its monopoly on search [3].

It is striking that the government seems to be open to all possible remedies, including breaking up the company. A hearing to discuss the next steps is scheduled for September 6, which means that by the time you read this, you might know more about the government's direction than I know now. It is interesting that even one of the milder remedies suggested for the situation could still have a massive impact. The simple step suggested by some observers is to stop letting Google pay huge sums to phone makers and browser vendors to make Google the default search engine.

Back around the turn of the millennium, the last big high tech antitrust case (against Microsoft) was all about "control of the desktop." It seems this new case could come down to "control of the home screen."

Imagine if, the first time you log on to your iPhone, a screen pops up giving you the choice of which search engine to use, rather than having that choice made for you by default. That small step alone could greatly increase the competitive positions of the alternatives. DuckDuckGo, for instance, which currently has around 3.5 percent of the search market, could easily see its market share double or triple (or more).

Apple, on the other hand, would face a $20 billion shortfall in revenue with the loss of the Google subsidy. Would they develop their own search engine? Would they take the loss and try to generate revenue elsewhere?

Whatever happens will probably take a few years to sort out. The important thing is, the US government is finally addressing some of the antitrust issues that people like me have been complaining about for years. And the feds have more on their minds than just Google search. Other current antitrust actions [4] against big tech include:

  • Amazon – online sellers have long complained about Amazon favoring its own products over those of third parties operating within the Amazon marketplace. The argument is that Amazon is both the platform and a seller competing on the platform, which puts the other sellers at a disadvantage.
  • Apple – the company's stranglehold over its own platform has long concerned regulators. Apple certainly doesn't have a monopoly level of control over the smartphone market in general, but the argument is that, within the sphere of the Apple universe, the company is behaving in a monopolistic manner, blocking competitor's access to Apple users. It all depends on how you define the market, but in any case, Apple is facing renewed scrutiny and might eventually face accountability.
  • Meta – Facebook's parent company is accused of making itself a monopoly by buying its competitors – in particular, Instagram and WhatsApp. The case was already dismissed once, with the judge commenting that the Federal Trade Commission (FTC) did not succeed in defining the market that Meta/Facebook is accused of monopolizing. (Think about it: What exactly is Facebook's "market?") The FTC is now taking another shot at refiling the case.
  • Another Google – The US Justice department has filed a wholly separate lawsuit against Google over advertising, accusing the search giant of reinforcing its monopoly position through anti-competitive mergers and practices and strong-arming online publishers and advertisers into using Google's ad infrastructure.

Antitrust cases take a long time to develop and an even longer time to resolve, but they can have a profound effect on the culture. If even one of these five cases results in a significant remedy, it could really shake up the Internet industry. But don't hold your breath: These tech giants have plenty of resources and are dug in for a long and protracted battle.

Joe Casad, Editor in Chief

Infos

  1. "EU Suggest Breaking Up Google's Ad Business in Preliminary Antitrust Ruling": https://www.theverge.com/2023/6/14/23759094/european-commission-google-antitrust-advertising-market-antitrust
  2. "Apple, Google, Meta Targeted in First Digital Market Act Probes": https://www.reuters.com/business/media-telecom/eu-investigate-apple-google-meta-potential-digital-markets-act-breaches-2024-03-25/
  3. "Google is a Monopolist, Judge Rules in Landmark Antitrust Case": https://www.nytimes.com/2024/08/05/technology/google-antitrust-ruling.html
  4. "After Google's Antitrust Ruling, Here's Where Other Big Tech Cases Stand": https://www.nytimes.com/2024/08/05/technology/antitrust-google-amazon-apple-meta.html@IE:

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