On August 5, a federal judge ruled that Google is an illegal monopoly and that it used anti-competitive practices to dominate the search market and charge inflated prices for advertising. The case brought by the Justice Department targeted Google’s practice of paying enormous sums to companies like Apple and Samsung to set Google as the default search engine on their devices. In 2020, 90 percent of U.S. internet searches, including 95 percent of those on mobile devices, used Google. Google’s next closest competitor, Microsoft’s Bing, accounted for only six percent of searches. Google uses the extensive cache of data it has collected through searches to advertise to its users in a way that’s both highly effective and impossible to compete with. District Judge Amit Mehta wrote in his opinion that, in view of these anti-competitive practices, “Google is a monopolist, and it has acted as one to maintain its monopoly.”
The Google monopoly case is the biggest since the one decided against Microsoft in 2001, when the company was found to be using its power to destroy competitors in the web-browsing market. It’s also one of many recent antitrust cases brought by the federal government. For the last several decades, the 1890 Sherman Antitrust Act has sat mostly dormant; Chicago-school economists argued that antitrust law is violated only when a monopoly causes increased prices for consumers. Google insisted that, because its product is free to consumers, it couldn’t violate the consumer-price standard. But a new generation of antitrust crusaders has returned the focus of enforcement to where it belongs: preventing market concentration. The prosecution countered that Google’s own documents reveal that it could worsen its product quality without losing business because it was really the only game in town. In closing arguments, Google’s lawyer argued that “Google is winning because it’s better.” Judge Mehta conceded that Google is “the industry’s highest quality search engine,” but this, he concluded, is because Google pays for special access to user data it uses to make its product unbeatable.
It is unclear what this ruling will mean for the tech industry. Google has already appealed the decision. If it stands, the remedies phase of the case will begin, and Mehta will have to decide what penalty is appropriate. He could choose a comparatively light penalty, like invalidating the anti-competitive deals Google made with other companies or requiring “choice screens” on devices so that users can choose their own default search engine.
But as Tim Wu has argued in the New York Times, “A truly effective remedy need seek not only to punish Google for its past offenses but also open markets by meaningfully restraining the company from similar conduct in the future.” Along these lines, Mehta could choose a remedy that would directly restructure the industry, such as breaking Google up into separate companies or requiring it to share its data so it can be regulated like a public utility. Such a remedy would completely reshape the tech industry, particularly the emerging AI market. Some generative-AI companies are trying to use exclusivity agreements similar to the ones that just got Google into trouble.
Politics may affect the outcome of the remedies phase as well. The case will likely extend beyond the Biden administration, and there are some indications that a Harris administration would be less friendly to antitrust enforcement. And although the original case was brought by Trump’s Justice Department in 2020, it’s unclear if he would be as enthusiastic about it in a second term.
As Luke Goldstein writes at the American Prospect, the Google case is “an opportunity to write a new charter for the future of the internet.” It’s now up to Judge Mehta and the next presidential administration to make sure that opportunity isn’t squandered.
