In mid-October, the US Department of Justice (DOJ) filed a long-expected antitrust lawsuit against Google, one of the worlds largest and most influential companies. Claiming that Google has used deals with phone makers to keep its web search engine as the default on Android and Apple smartphones, the DOJ is being joined by various US states (all with Republican attorney generals) in the suit. Many other states are also running their own investigations of the company.
Google, along with the rest of Big Tech, has become a political target due to its rising power and wealth (the company is now worth over a trillion dollars). With House Democrats calling for action against the tech platforms and Donald Trump also angry at them, the company appears to be in hot water.
But US antitrust law is notoriously weak sauce, only able to bring suit against companies in specific situations. Having a full-on monopoly is not one of them. Previous US cases, in particular against Microsoft in the 1990s, suggest that the government may struggle to beat its well-financed opponent in court. And even if it did, the search market would only see somewhat more market share going to giant rivals like Microsofts Bing or Verizons Yahoo. Theres no path that leads to the rich, free competition that capitalisms defenders insist it creates.
The DOJs case mainly concerns the deals Google has made placing its search engine as the default in various computing environments a crucial advantage since many users dont change their factory settings. As a Google design ethicist once commented, If you control the menu, you control the choices. Since 2005, Google has paid Apple enormous sums, estimated today at $10 billion a year, to keep Google Search pre-loaded in Apples Safari web browser.
The traffic acquisition cost yields as much as half of its search volume. The stakes are big for Apple too. Googles payments make up roughly a fifth of the companys entire yearly profit. On smartphones running Googles Android mobile operating system, Googles licensing arrangements require the phone makers (like Samsung and Huawei) to set its engine as the default and to keep its apps un-deletable.
The dramatically higher search traffic not only feeds Googles online ad business its main revenue source but also provides fresh inquiries for continued training of its search algorithm. The relationship with Apple in particular has been so important to Google that they internally referred to the possibility of losing iPhone search traffic as Code Red.
The fact that Google has a near-monopoly in search, including an 80 percent market share for desktop and about 88 percent for mobile, is not in itself illegal. Googles dominant position arises from the economics of online search, which is driven by a classic network effect more users of a search engine help strengthen the algorithm, making its search results more relevant to the user.
Under the USs very limited antitrust system, gaining a monopoly through such economic forces isnt against the law only using your monopoly to take over another industry (monopolization) is illegal under the Sherman Antitrust Act.
Googles various exclusivity deals likely do constitute monopolization, separate from other power-mongering practices like search bias, where Google has used its dominance to crush competing specialized or vertical search services like Yelp, Foundem, and Tripadvisor by down-ranking them in Googles search results or by scraping their content onto Googles own result pages.
The DOJ is still fighting an uphill battle due to the farcically limited nature of US antitrust law, which in its modern interpretation tends to also require likely consumer harm, usually in the form of higher prices. Since Google offers its services mostly for free (along with other likely imminent antitrust targets like Facebook), its unclear if Justice will be able to convince a judge that consumers are harmed by Googles traffic acquisition arrangements after all, consumer goods companies like cereal makers pay retailers for special product placement all the time.
If the DOJ does succeed and forces Alphabet to end its exclusivity/default setting deals with phone markers and service providers, it would likely only mean more traffic for the one serious rival to Google Search in the market, Microsofts Bing. Started in 2009 to try to wrest some market share from Google, Bing has just 2.83 percent of the market share for mobile search and a slightly higher 13.48 percent on desktop (due to it being the default on Windows, the desktop operating system that still runs three-quarters of the worlds computers).
The third-place Yahoo search uses Bing to produce its results and place its search ads. And while Bings wimpy market share looks inconsequential, Google takes its potential threat seriously the New York Times has reported that Google unfairly hinders the ability of search competitors and Microsofts Bing is almost the only one left from examining and indexing information that Google controls, like its big video service YouTube, with Bing unable to examine and index up to half the videos on YouTube.
So even in the best-case scenario, a monopolized industry would become more of a two-company or oligopoly industry, with few likely benefits to users as both siphon up user data and use whatever exclusive carve-outs they can retain as defaults, like on the Edge and Chromebook devices the companies produce. The companies are unlikely to make serious plays against one anothers search territory: the companies are already cooperating on several fronts, including Microsoft planning to use Googles Android on its new line of smartphones. The companies settled their long-running multiple patent-infringement suits and countersuits in 2016.
But will the DOJs case succeed? We can look to previous tech monopoly investigations for clues.
Microsofts own antitrust odyssey is the most instructive. Much like Google Search, Microsofts Windows had a near-total monopoly in a crucial tech market the operating systems that run desktop computers (the entire industry until the mobile era). The company had a history of taking ruthless actions to crush or copy competitors for its related products, including its Office suite of business applications like Word and Excel.
But it was only when Microsoft elected to use its existing OS monopoly to take over the new market for web browsing software that it got into trouble. The company bundled its own lousy browser, Internet Explorer, with versions of its Windows 95 and later updates, which were installed on most computers worldwide. Large payments followed to Apple, AOL, and other computing platforms to make Explorer their default browser rather than Netscape, with a senior VP alleged to have said Microsoft had cut off Netscapes air supply.
It was an open-and-shut instance of monopolization. The Federal Trade Commission and the DOJ got involved.
The case went to trial, and the company suffered deep public embarrassment as claims by the company and by Gates during his notorious video deposition were directly contradicted by the companys internal email trail. (It was during this period that Gates discovered the reputation-laundering powers of publicly posturing as a philanthropist.) After an arbitration attempt failed, the company was, in a rare development, formally declared a monopolist under the law and ordered broken up. Luckily for Microsoft, its appeal continued through the stolen 2000 election, and the George W. Bush administrations DOJ dropped its goal of splitting up the company.
Instead, the federal government told the company to make various behavioral reforms, including allowing computer manufacturers to hide from view the Windows-bundled Explorer logo and include a ballot screen, later called a choice screen, where users could select among various commercial internet browsers.
The shortcomings of these behavioral changes were seen in 2011, when Microsoft released a Windows 7 update without the browser choice screen software. Hilariously, no one noticed for almost seventeen months, when the company was reported to the European Commission (EC). The commission would go on to fine Microsoft $733 million, about one percent of its revenue that fiscal year.
Microsofts outcome is likely a harbinger of Googles eventual settlement indeed, its reminiscent of the European Commission judgment against Alphabet in 2018. That case was based on similar charges of requiring Android operating systemusing phone makers to pre-install the companys search engine and browser as defaults, without which Google would not allow them to include the Google Play store for mobile apps, the main way Android users get applications. The EC fined Google and forced it to end the practice, and EU regulators then pressured Google to include choice screens for users in every EU country.
However, for a browser to appear alongside Google on the ballot, they must bid in an auction for a slot (reflecting the companys love of using them in its advertising technology and elsewhere). Browsers like Bing and Yahoo, which collect user information to serve ads have far greater profits and resources to bid for ballot spaces, unlike smaller, privacy-centered browsers like DuckDuckGo. But this kind of wonkish policy outcome is quite possible for the US investigation of Alphabet.
Google was also investigated in the United States by the Federal Trade Commission (FTC) in 2013. That probe focused on search bias, meaning Googles abuse of its dominant search position by down-ranking competing vertical search engines for trips and shopping. Considered a close call by FTC staff, no charges were brought, perhaps due to the companys long-standing closeness to the Democratic party in general and the Obama administration in particular.
For all the rivers of digital ink being spilled over the Trump administrations suspect Justice Department going after Googles very real power-mongering, the limited scope of the suit, the constrained nature of US antitrust law, and Alphabets ocean of lobbying cash all suggest the chances of a dramatic outcome are vanishingly small. Alphabets stockholders have laughed off the suit so far. And its not hard to see why: it will likely take years, and the result will almost certainly be modest behavioral leashes.
Googles market power over the flow of information in our society, along with that of its Big Tech rivals/partners, isnt going anywhere not unless we start to entertain bolder steps beyond the weak tea of antitrust.
See the original post:
It's Going to Take More Than Antitrust Law to Rein in Big Tech - Jacobin magazine
- We're losing the war against surveillance capitalism because we let Big Tech frame the debate - Salon [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Barr: Changes To Big Tech Protections Are Meant To Protect Free Speech - The Federalist [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Antifa, Big Tech and abortion: Republicans bring culture war to police brutality debate - POLITICO [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Big Tech Wont Be the Same If Everyone Works From Home - Yahoo Finance [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Big Tech will annihilate Telcos (a weekend read!) | Gadget Guy Australia - GadgetGuy [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Tesla Is Overvalued: Investors Are Treating It Too Much Like A Tech Company, Says Morgan Stanley - Forbes [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Apple's app store is suddenly a flashpoint in the Big Tech debate - NBC News [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Fox News Host Tucker Carlson Blasts Alleged Big Tech Censorship: By Offensive, They Mean The Left Doesnt Like It - Deadline [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- The unholy alliance of big government and Big Tech - Washington Examiner [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Ben Domenech: Small Groups Have Power To Weaponize Big Tech Against People They Don't Like - The Federalist [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Big Tech Is Using the Pandemic to Push Dangerous New Forms of Surveillance - Truthout [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Big Tech Zeros In on the Virus-Testing Market - The New York Times [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- What the 1930s can teach us about dealing with Big Tech today - MIT Technology Review [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Foreign Interference Persists And Techniques Are Evolving, Big Tech Tells Hill - NPR [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Big Tech's Opposition to Section 101 Reform: Policy Rhetoric versus Economic Reality - IPWatchdog.com [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Former Facebook exec thinks big tech will get broken up over the next 10 years - TechCrunch [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Here's what happened to the stock market on Tuesday - CNBC [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- The Tech Billionaire Marshaling the Fight Against Big Tech - The Information [Last Updated On: June 24th, 2020] [Originally Added On: June 24th, 2020]
- Biased Big Tech algorithms limit our lives and choices. Stop the online discrimination. - USA TODAY [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Big Tech Earnings This Week: Facebook, Amazon, and Alphabet - Motley Fool [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Big Tech antitrust hearing could be colossal or mere theater - Roll Call [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- 'Advertising,' 'Data' And 'Targeting' Loom Large During Big Tech Hearings 07/30/2020 - MediaPost Communications [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Stop with the egg metaphor in discussing Big Tech break-ups | TheHill - The Hill [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Sen. Hawley introduces bill to remove Big Tech's Section 230 ad immunity - Fox Business [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- All Eyes on Big Tech Earnings: Here's What to Expect - Yahoo Finance [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- We like and value Big Tech, so why are we so determined to do it down? - Telegraph.co.uk [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- What to watch today: Dow to open higher ahead of Big Tech hearing and Fed policy decision - CNBC [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Big tech companies continue to expand in Seattle - KING5.com [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- When it comes to big tech, US government official incompetence is embarrassing and horrifying - AppleInsider [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Are the Big Tech companies breaking antitrust rules? Their CEOs testify before Congress. - Marketplace [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Lawmakers argue that big tech stands to benefit from the pandemic and must be regulated - TechCrunch [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Lawmakers keen to break up 'big tech' like Amazon and Google need to realize the world has changed a lot since Microsoft and Standard Oil - The... [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Busting Up Big Tech is Popular, But Here's what the US May Lose - Defense One [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Antitrust Showdown In Congress: Big Tech, Meet Big Government - Forbes [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Law Decoded: Big Tech, Central Banks and the Hunt for Monopolies, July 24-31 - Cointelegraph [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- For Big Tech, There's No Winning This Round - WIRED [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- As Tech Giants Face Congress, Heres What Americans Actually Think Of Big Tech - Forbes [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Is This the Beginning of the End of Big Tech As We Know It? - New York Magazine [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Big Tech and antitrust: Pay attention to the math behind the curtain - Brookings Institution [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Big Techs Backlash Is Just Starting - The New York Times [Last Updated On: July 31st, 2020] [Originally Added On: July 31st, 2020]
- Factbox: Where do Trump and Biden stand on tech policy issues? - Yahoo Finance [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Larry Berman: Should you buy the dip in big tech names? - BNN [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- The trailer for big tech documentary The Social Dilemma hooked viewers this week - YouGov US [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Big Banking Tech Rules that Solidify Trust in Transparency - AiThority [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- As Big Tech reinvented the game, we must rewrite the rules - London Business School Review [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- IAB Tech Lab's Project Rearc Chugs Along On Open Standards, But The Browser Makers Are Wildcards - AdExchanger [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- IPOs have gone red hot in 2020: Here are 7 big names to watch - Bankrate.com [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- When Tech Giants Want to Play Banker - The Regulatory Review [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Big Tech wants a bigger pie in India, but it just can't seem to bypass Mukesh Ambani - Economic Times [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- The six biggest tech stocks have lost more than $1 trillion in value in three days - CNBC [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Why big tech stocks can weather the storm - Financial Times [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Feds can't scapegoat Google and Big Tech as anti-trust targets forever - New York Post [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- A top Washington analyst weighs the risks of antitrust actions against Big Tech - CNBC [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Big Tech is turning on one another amid antitrust probes and litigation - MarketWatch [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Big Tech Still Loves The Oil Business - OilPrice.com [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Interview: Barry Lynn on the Fight Against Monopolies and Big Tech - RAIN Magazine [Last Updated On: September 15th, 2020] [Originally Added On: September 15th, 2020]
- Over 60% of Insurtech Firms are Now Interested in Working with BigTech Companies: Report - Crowdfund Insider [Last Updated On: September 18th, 2020] [Originally Added On: September 18th, 2020]
- Wray Touts Disinformation Strategy With Big Tech: Often-And-Early : Live Updates: House Hearing On Homeland Threats - NPR [Last Updated On: September 18th, 2020] [Originally Added On: September 18th, 2020]
- Australias News Media and Digital Platforms Bargaining Code is Great Politics But Questionable Economics - ProMarket [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- SUCCESS INSIDER: What people in the C-suites of Apple, Facebook, Disney, and 90 other big tech and media compa - Business Insider India [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Pandemic prompts more insurers to collaborate with Big Tech - International - Insurance News [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Goldman Sachs Partner Has a Warning on Big Tech Stocks - ThinkAdvisor [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Longhorns coach Tom Herman on the Big 12 opener against Texas Tech - KXAN.com [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Stock sell-off accelerates and is expected to get worse before it gets better - CNBC [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- How The Turmoil With TikTok Could Change The Course Of Big Tech - BusinessBecause [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Gen Z Says They're Eager to Use a Big Tech for Banking But Will They? - The Financial Brand [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- BARCLAYS: Tech stocks priced at dot-com bubble levels are at serious risk of bursting. Here's why the next meltdown will be far less severe than in... [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Big Comeback For Apple, Netflix, And Other Big Tech Names Softens Some Of The Pain - Benzinga [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Conservative group launches website to battle big tech companies over online censorship - Fox News [Last Updated On: September 21st, 2020] [Originally Added On: September 21st, 2020]
- Section 230 will be on the chopping block at the next big tech hearing - TechCrunch [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- Amazon and Big Tech cozy up to Biden camp with cash and connections - NBC News [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- Big Tech, Beware: New Bill Aims to Expand Antitrust Laws to Large Businesses Doing Business in New York - JD Supra [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- News Corp. changes its tune on Big Tech - Axios [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- Big Tech: Between a rock and a hard place - Yahoo News [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- Big Tech, Out-of-Control Capitalism and the End of Civilization - Scientific American [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- US House of Representatives to recommend break up of Big ... [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- Big Tech Was Their Enemy, Until Partisanship Fractured the ... [Last Updated On: October 7th, 2020] [Originally Added On: October 7th, 2020]
- Beware the Regulatory Crackdown on Big Tech - National Review [Last Updated On: October 25th, 2020] [Originally Added On: October 25th, 2020]
- Niall Ferguson: The Costs Big Tech Are Prepared To Incur Will Be Entirely Worth It For Them If The Outcome Is A Landslide Biden Victory - FOX News... [Last Updated On: October 25th, 2020] [Originally Added On: October 25th, 2020]
- More Than Two-Thirds of Big Tech Employees Feeling Burnout At Home - Nextgov [Last Updated On: October 25th, 2020] [Originally Added On: October 25th, 2020]