It’s Going to Take More Than Antitrust Law to Rein in Big Tech – Jacobin magazine

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.

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It's Going to Take More Than Antitrust Law to Rein in Big Tech - Jacobin magazine