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By Scout Burchill
November 16, 2020

Summary:

On Tuesday, October 20th the Department of Justice, along with 11 Republican state attorney generals, sued Google under Section 2 of the Sherman Antitrust Act. The lawsuit alleges that Google illegally maintains monopolies in “general search services, search advertising, and general search text advertising […] through anticompetitive and exclusionary practices.”

The scope of the suit focuses specifically on Google’s exclusive contracts with hardware makers like Apple and Samsung, browser developers like Mozilla and Opera and major wireless carriers like AT&T and Verizon. These exclusive agreements require Google to be the default search engine in the products and devices produced by these companies. Furthermore, some of these agreements require that smartphones and other devices that use Google’s Android operating system be preset with a bundle of Google applications (Gmail, Youtube, Maps, etc) and that these applications be featured in primary positions. To illustrate these practices, Google pays Apple up to $12 billion each year to appear as the default search engine on iPhones and other Apple products.

The Justice Department’s suit argues that Google’s monopoly over the search market is monetized and maintained through advertising revenues. This stranglehold on both the search market and search advertising denies competitors the benefits of scale, stifles innovation emerging from rival search engines like DuckDuckGo, lessens consumer choice and forces consumers to accept Google’s policies, personal data collection practices and privacy policies. The arguments presented by the Justice Department mirror those made in the antitrust suit against Microsoft in 1998, in which Microsoft was found guilty of a similar practice by making restrictive contracts and requiring computer makers to include Windows Explorer.

Analysis:

The Department of Justice’s lawsuit is the most significant challenge to a Big Tech company since at least the late 90s and signals what is to come as the political tides have decisively turned against Big Tech companies. The Trump administration’s partisan-backed suit, coming in the midst of a raging pandemic and a few weeks before the election, is politically motivated. However, Republicans are not alone in sharing the idea that the Tech Giants, which include Facebook, Amazon and Apple, have grown too powerful. According to Politico, another, broader antitrust lawsuit is expected to come from a bipartisan group of states, led by Democratic attorney generals in Colorado and Iowa and a Republican attorney general in Nebraska. Additionally, in a rare instance of bipartisan agreement, both Republicans and Democrats on the House Judiciary Committee agreed that Google, Facebook, Amazon and Apple are abusing their powers and need to be checked. Much disagreement remains about how to tackle this problem, and as is the case for most issues there is little hope for a truly honest and forward-looking bi-partisan effort, but still, there is a growing consensus that something needs to be done.

Merely a decade ago, in the early 2010s, the same Big Tech companies that are under increasing scrutiny today were championed as great American success stories and were associated with a myriad of positive outcomes, such as the strengthening of democracy worldwide, greater connectivity between people and booming businesses generating unprecedented amounts of wealth. One crucial turning point leading to the backlash we now see against these companies was the 2016 election and the victory of President Donald Trump. Online disinformation ran rampant during the election and ever since there has been a growing awareness of the amount of disinformation that spreads online, especially on Facebook. Facebook and Google’s business models, which are based on targeted advertising, profit off click-bait and virality rather than the quality and trustworthiness of information. Their dominance in the advertising market has also destroyed many local sources of news and journalism. Current issues over content moderation have pushed the topic of the power of Big Tech further into mainstream political discourse. Additionally, as the wealth and influence of Silicon Valley grew to staggering levels over the past two decades and the majority of Americans’ wages continued to stagnate, these companies came to symbolize a corrupt, elite class particularly in the rising usage of economic populist rhetoric on both the left and the right.

The Biden administration is likely to stand by the Trump administration’s suit and may even look to strengthen it. According to the House Judiciary Committee’s report, which was spearheaded by Democrats, Democrats in particular have called for much more sweeping changes to the laws and regulations governing these corporations. For now, it is unclear how the current suit will affect the internet landscape and furthermore, whether consumers would actually prefer to use other search engines. Google is largely expected to argue exactly this point: they are dominant because they are preferred. For now, the narrowness of this lawsuit, which mirrors the Windows suit of the late 90s in which the government won, is effective enough to gain some leverage over Google and can pave the way for potentially larger changes. Facebook, Amazon and Apple can see the writing on the wall and will be watching closely.

The Google case on its own represents a major step forward in challenging Big Tech companies and corporate power, however it remains unclear where this path leads. The Biden administration will play a key role in deciding the direction. Big Tech got so big because the government allowed them to. In fact, nearly all the business practices and behaviors outlined by the Google lawsuit have been known for a long time. The Federal Trade Commission and other regulators and oversight committees have done little to check Google and the other Tech Giants over the past decade. Even if this case and others are successful, they need to be accompanied by forceful and effective regulation of business practices.

Resistance Resources:

American Economic Liberties Project:

https://www.economicliberties.us/big-tech-monopolies/

https://www.economicliberties.us/

Department of Justice’s Antitrust Lawsuit Against Google:

https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws

House Committee’s Antitrust Report:

https://judiciary.house.gov/news/documentsingle.aspx?DocumentID=3429

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