Republicans and Democrats agree on something: big tech’s power threatens our economies and our flow of information
Last October the Department of Justice filed an antitrust case against Google. This is the most significant antitrust case filed since the government suit against Microsoft in 1998, and it also ranks with the most important antitrust suits of all time, including Standard Oil and AT&T. The move by a conservative Republican administration to take on one of the largest companies in the world is a repudiation of the libertarian ideology that has dominated American politics since the 1980s.
Search and advertising are not mere products like cars or refrigerators; search and advertising represent the flow of information in a free society. America, and the world, has never seen this kind of radical centralization of information flow and ad financing. As Senator Ted Cruz has put it, Google is “larger and more powerful than Standard Oil was when it was broken up by the antitrust laws”.
The complaint against Google looks a lot like the Microsoft case. In 1998, the government alleged that Microsoft ensured its browser Internet Explorer (IE) would become the dominant way to access the internet, instead of its rival, Netscape Navigator. Microsoft did this not by making a better product, but by cajoling or forcing computer manufacturers and internet service providers to distribute IE and not Netscape, as well as by tying its browser to its monopoly operating system, Windows.
The government is saying that Google is doing the same thing with search, putting its search engine in front of consumers so rivals – like Bing or DuckDuckGo – never get a chance to compete. The most important way to distribute search engines is to be the preset default general search engine on a device; most consumers simply never change their defaults. To take advantage of this dynamic, Google has agreements with mobile phone companies like Apple and Samsung, wireless carriers like AT&T and Verizon, and browser companies like Mozilla to gain default status for Google. These agreements include large payments – Apple reportedly gets over $12bn a year – so Google gets prime placement. Some of these agreements also include specific prohibitions to distribute the apps of its competitors. The case alleges that these agreements, which cover 60% of the general search market, are illegal.
In the way that Microsoft tied Windows and IE, Google has its own properties to which it ties Google search. This includes Android, a Google-owned mobile phone operating system, and Chrome, Google’s browser. Both Android and Chrome have a majority market share of their respective markets. Like Windows and IE, bundling search with these dominant distribution platforms gives Google an unfair advantage.
Software like Windows and search engines like Google demonstrate returns to scale, which is to say: the more users they have, the more useful the product. In the case of search, without enough users or scale, a search engine can never get enough data to learn how to be really good at returning results. By preventing rivals from getting enough scale, the government alleges, Google is maintaining its monopoly.
The government is asking for an end to anti-competitive contractual restrictions, as well as a break-up of those parts of Google’s business that present a conflict of interest. It’s a good case, and there’s a reason the Department of Justice is explicitly mirroring the Microsoft suit. The government won. (Though the remedy of a split-up was overturned on appeal, Microsoft’s guilty verdict was never undone.)
Google responded by saying that consumers can choose different browsers if they like. It has even released a set of videos showing how easy it is to switch. But everyone knows defaults are a key fulcrum for distribution – Google doesn’t pay Apple $12bn for fun. Moreover, Russian antitrust enforcers pursued something like this case in 2014, forcing Google to stop leveraging Android into mobile search dominance. It worked; Russia’s search market is competitive, the only place in the world where enforcers were able to take apart Google’s monopoly.
But there is a big difference between this case and that against Microsoft: the political environment. In many ways, the case against Microsoft was a political anomaly, an antitrust case in an era of prosperity when nearly all political elites thought that big corporations were good. Today, by contrast, corporate power is understood as a serious political issue, with Donald Trump tweeting about big tech monopoly power and Democrats including antitrust in their party platform. Earlier this year, the House antitrust subcommittee, long-dormant but now chaired by the vigorous Rhode Island Democrat David Cicilline, concluded a 16-month investigation of big tech companies and came out with scalding recommendations to break up not only Google, but Apple, Amazon, and Facebook as well. This case is part of an ideological break from the era of worship of free markets.
The Google case is a good start, but we haven’t really enforced anti-monopoly laws for 20 years, so search distribution isn’t the only problematic area. Google has market power elsewhere, including the software underpinning online publishing and advertising. It is starving newspapers and publishers and killing rivals like Yelp and TripAdvisor. Fortunately, state attorneys general are likely to bring cases against other aspects of the company’s business. More fundamentally, this case is bigger than just one market or one company; it’s about protecting democracy itself against concentrated private power.
As Cicilline put it a few months ago: “Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.”
(While a slightly dated article, if this is the first you have read it, treat it as news)
Sarah Miller is the executive director of the American Economic Liberties Project and a former Treasury official