The Levee Breaks Against Big Tech
The Department of Justice filed the most ambitious antitrust case in more than two decades on Tuesday, accusing digital search giant Google of manipulating the mobile phone market to shut out its competitor apps and products.
It is the most sweeping federal attack on an American monopoly since the DOJ filed suit against Microsoft in 1998, which was a landmark case widely credited with fostering digital innovation in the 21st century. In the years since, the federal government has shied away from confrontations with large corporations, approving blockbuster mergers and issuing only modest fines against rogue firms.
The case against Google, by contrast, is an attack on the company’s business model itself. According to the complaint, Google unlawfully ties its search engine to its popular Chrome web browser and pays billions of dollars a year to phone manufacturers and software developers to ensure that its products are given priority over competitors. In doing so, the government argues, Google illegally blocks out competitors and stifles innovation.
Anti-monopoly thinkers hailed the case as a breakthrough. “A right wing Republican administration is trying to break up a trillion-dollar corporation,” noted Matthew Stoller, director of research at the American Economic Liberties Project. “This is a total repudiation of the libertarian ideology that has been running America for 40 years.”
“This begins a new era of public accountability for dominant tech platforms,” said Charlotte Slaiman, competition policy director at the think tank Public Knowledge. “It is now a matter of when, not if, we develop meaningful oversight of harms to innovation, competition, and people.”
The suit could also impact big companies that rely on payments from Google as part of their revenue base. Apple, for instance, received $12 billion from Google last year in exchange for making it the default search engine on its Safari browser.
Google dismissed these concerns in a company blog post response, writing that “People don’t use Google because they have to, they use it because they choose to.”
The case mirrors the Microsoft case from two decades past. In that suit, the Justice Department alleged that Microsoft was abusing its dominant position in the operating system market in an attempt to create a new monopoly for its Internet Explorer web browser. Desktop and laptop manufacturers who wanted to sell computers with Microsoft Windows had to include Internet Explorer as part of the package. Many antitrust experts credit Google’s early success as a search engine to the Microsoft case ― without it, Microsoft would have been able to steer users to its own search engine, Bing, and block out competitors.
But in important respects, the Google case is a disappointment for reform advocates. State attorneys general in Texas, Colorado and Nebraska have been building broader cases against Google not only on the mobile device market, but for its core search and advertising activities.
The Justice Department has taken a narrower purview, focusing on the way Google distributes its search engine as a product, rather than the way the search engine itself functions. Critics and competitors have long complained that Google steers users to Google-owned properties instead of providing them with better information from across the web.
“This self-serving bias by Google happens literally billions of times per week in the United States,” said Luther Lowe, senior vice president of public policy at Yelp! ― a longtime Google critic. “By systematically reducing the quality of its search results in order to entrench and extend its search and search advertising monopolies, Google is directly harming consumers.”
Anti-monopoly leaders in Washington gave cautious approval to the DOJ case, while insisting that more needs to be done. Rep. David Cicilline (D-R.I.), who spearheaded the House investigation into Big Tech over the past two years, called the DOJ suit “long overdue,” but argued that the government must launch a more direct attack on Google’s “monopolization of search and search advertising.”
Conservative Sen. Josh Hawley (R-Mo.) concurred, calling the Google suit “the most important antitrust case in a generation” but also “just a first step.”
Though Silicon Valley has long been viewed as a corporate ally of the Democratic Party, bipartisan frustration with Google and other tech behemoths has been building over recent years. In 2016, Sen. Elizabeth Warren (D-Mass.) gave a major speech in which the progressive senator indicted Big Tech for a litany of abuses and called for a broad reconsideration of merger and competition policy.
At the time, Warren’s speech was a not-so-subtle rebuke of the Obama administration. To make her case, Warren cited a 2012 Federal Trade Commission investigation that had uncovered serious abuses at Google. Democratic appointees at the head of the FTC failed to act on that investigation, however, and reform watchdogs suspected the close ties between Google and the Obama administration were to blame. On election night 2012, for instance, then-Google Chairman Eric Schmidt personally oversaw the Obama campaign’s voter turnout software.
But over the ensuing years, Warren’s vision has come to dominate the conventional wisdom among liberals. During his 2020 presidential campaign, Sen. Bernie Sanders (I-Vt.) railed against Amazon and its CEO, Jeff Bezos. In her own presidential run, Warren presented a detailed reform agenda to break up Big Tech firms.
And earlier this month, Cicilline’s House Judiciary Antitrust Subcommittee released a devastating 450-page report detailing patterns of anti-competitive behavior across the digital economy, detailing titans like Google, Facebook, Apple and Amazon. The result of a 16-month investigation, the report called for a series of reforms including the break-up of large tech companies to prohibit them from serving as both a platform for digital products and a provider of those same products.
“Our investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation, and safeguards our democracy,” Cicilline said at the time.
House Republicans dissented from the remedies that Cicilline and other Democrats suggested, but issued a report of their own that agreed with the underlying monopoly problem in digital commerce. With a Republican administration now taking action against Google, anti-monopoly advocates believe the tide has at last turned against Big Tech in Washington.
“This is a truly important day,” said Barry Lynn, director of the Open Markets Institute. “You have to make this first step … we’re going to see a truly significant, top-to-bottom reorganization of the internet economy in the next few years.”
Zach Carter is the author of the New York Times bestseller “The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes,” available from Random House wherever books are sold.
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