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Antitrust Suit Against Google is a Watershed Moment


https://www.eff.org/deeplinks/2020/10/antitrust-suit-against-google-watershed-moment-0

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The antitrust lawsuit against Google filed by the Department of Justice (DOJ) and eleven state attorneys general has the potential to be the most important competition case against a technology company since the DOJ’s 1998 suit against Microsoft. The complaint is broad, covering Google’s power over search generally, along with search advertising. Instead of asking for money damages, the complaint asks for Google to be restructured and its illegal behavior restricted.

This suit flows from investigations by the DOJ Antitrust Division that have been going on since last year. Although a large, bipartisan group of state attorneys general were reportedly working together on the investigation, just eleven states, all with Republican attorneys general, joined the suit. A group of Democratic-led states are reportedly preparing a separate lawsuit.

Focus on Search


****The DOJ and states raised three claims in their suit, all under Section 2 of the Sherman Antitrust Act, which prohibits acquiring or maintaining monopoly power through improper means. The lawsuit alleges that Google illegally maintains monopoly power in three markets: “general search services, search advertising, and general search text advertising.” In these markets, says the complaint, “Google aggressively uses its monopoly positions, and the money that flows from them, to continuously foreclose rivals and protect its monopolies.”

Closely following the playbook of the US v. Microsoft antitrust suit filed in 1998, the suit against Google focuses on Google’s contracts with hardware vendors like Apple and Samsung, browser makers like Mozilla, Opera, and (again) Apple, and other technology companies whose products integrate with Google search or use Google’s Android operating system. These contracts, say the complaint, generally require technology companies to make Google the default search engine. In the case of devices that run Android, Google’s contracts also require vendors to include a bundle of Google apps (Gmail, Maps, YouTube). And vendors must agree not to modify Android in any significant way, even though the operating system is released under an open source license.

Implicit in the DOJ’s complaint is the notion that Google uses its control over multiple products and services (including search, email, video, and operating systems) to maintain its monopoly over search. Because of Google’s contracts, competitors in search like DuckDuckGo will struggle to offer an alternative to Google search unless it can also offer a mobile operating system, an email client, and so on.

Yes, Free Services Can Be Monopolized


****Over the past several years, as the public and policymakers began looking to antitrust to rein in the biggest tech companies, there’s been plenty of concern about the difficulty of applying competition law to products that are free to the consumer. Over the years, U.S. regulators applying antitrust law have taken on a narrow focus on consumer prices, often finding that monopolistic behavior is OK as long as prices don’t rise. The DOJ’s complaint does a good job of getting around this hurdle while still focusing on harm to consumers. It alleges that as a monopolist in the “general search” market, Google “would be able to maintain quality below the level that would prevail in a competitive market.” Yes, consumers can get search for free, but they could get an even better free service if not for Google’s market power.

The complaint also employs a strategy that EFF has long advocated: treating consumer privacy as an aspect of product quality, such that overcollection and misuse of customers’ personal information by a monopolist can be evidence of harm to consumer welfare, the touchstone of modern antitrust law. “Google’s conduct,” says the complaint, “has harmed consumers by reducing the quality of general search services (including dimensions such as privacy, data protection, and use of consumer data), lessening choice in general search services, and impeding innovation.”

On the innovation angle, the complaint alleges that Google’s contracts deny potential search competitors the benefits of scale, which “affects a general search engine’s ability to deliver a quality search experience.” In other words, we would see more innovation in search engines if other entrepreneurs were able to compete with Google at scale.

**We Don't Want Your Money, We Want Change******


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**EFF and many other watchdog organizations have long argued that money damages don't do enough to change Big Tech practices. Any award of damages large enough to affect the future behavior of a company the size of Google (and its parent, Alphabet) would have to be far larger than even the largest antitrust damages ever awarded by a court. Otherwise, Google and its Big Tech brethren treat fines and damages as a necessary cost of doing business.

The DOJ’s suit takes a different approach. Its complaint asks for “structural relief,” which means a breakup or restructuring of the company, and court orders to stop the anticompetitive practices described in the complaint, but no money damages. If the government can prove that Google violated the antitrust laws, choosing to forego money damages should help the court focus on crafting effective structural and conduct remedies.

**Banking on The Power of Defaults******


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Many of the claims in the suit are built on the power of default settings: users are likely to stick with whatever search engine their devices are preconfigured to use, even if they can choose a different search engine. Google’s public messaging has challenged this principle for many years, arguing that “competition is only a click away.”

In their first public response to the DOJ lawsuit, Google argues that “our competitors are readily available too, if you want to use them.” But according to the complaint, research shows that people stick with the defaults, especially on mobile devices.

We’ve been here before. Microsoft raised a similar defense 20 years ago, arguing that its efforts to drive Windows users to its Internet Explorer browser were not illegal because users could install another browser at any time. The Court of Appeals for the DC Circuit treated Microsoft’s argument with skepticism, and its decision implied that default settings can be anticompetitive and form part of an antitrust violation.

Still, most antitrust cases are decided on the “rule of reason,” meaning a balancing of pro-competitive and anti-competitive effects. We can expect to see heated arguments in this case about just how easy it is to use alternative search engines and what that means for the ability of competitors like DuckDuckGo to thrive.

**What’s Not In The Suit******


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Three things are glaringly absent from the complaint. First, despite the efforts of some politicians to paint the suit as Google's comeuppance for allegedly censoring conservative viewpoints, the complaint says nothing about ideological bias or censorship. That’s not surprising to antitrust attorneys, because the claims of bias simply don’t help to make an antitrust case. We hope those comments about the lawsuit don’t end up fueling a defense by Google that the suit is an attempt at partisan score-settling. This sort of accusation clouded the DOJ’s ultimately unsuccessful effort to stop the merger of AT&T and Time Warner.

Second, the complaint doesn’t include any claims of monopoly abuse in web advertising markets or mobile operating systems. And it doesn’t specifically mention Google’s history of acquiring companies that could become serious competitors, including companies whose technology now powers Google’s search advertising. The government can still argue that Google’s acquisitions were part of its illegal monopoly maintenance, but the complaint suggests it’s not a major part of the case so far.

Third, the government did not bring any claims under Section 1 of the Sherman Act, the well-known provision that bans any “contract, combination . . . or conspiracy in restraint of trade.” Since the suit focuses on Google’s contracts with hardware makers and others, we would expect the government to argue that those contracts were themselves illegal restraints, as well as contributing to a campaign of illegal monopoly maintenance. The absence of Section 1 claims in this suit is odd.

**The Rest of the Picture******


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Big Tech companies have been under scrutiny for years for being too big and too willing to wield market power in ways that are abusive or exacerbate existing problems. Unfair labor practices, outsized control over others' speech, and locking out new products by enforcing incompatibility on a technical level are a few that come to mind. If this lawsuit is the best opportunity in a generation to hold Big Tech accountable, it may seem disappointing that none of these issues are addressed. But it shouldn’t be. Today’s antitrust law focuses narrowly on consumer welfare, often permitting monopoly abuses as long as they don’t lead to higher consumer prices in the short term.

The DOJ’s suit is an attempt to show that Google’s practices have harmed consumer welfare. If lawsuits are going to address other harms, Congress needs to act to return antitrust laws to their historic focus on preventing and ending monopolies that harm workers, markets, competitors, and innovation. As the lawsuit continues, we’ll be pressing Congress to update our antitrust laws to address more of the harms of Big Tech monopolies.