Earlier this month, Google suffered a major blow that could paving the way for a wave of antitrust lawsuits against big tech companies. In the first of two lawsuits filed by the U.S. Department of Justice (DOJ) against the company, District Judge Amit Mehta ruled that Google violated antitrust laws by maintaining an illegal monopoly in the online search and advertising markets.
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This raises the question of what action Google will face, as the Justice Department is considering breaking up the company. But the bigger question is whether the case will catalyze the reforms needed to foster competition in the currently monopolized technology sector or whether it will ultimately be remembered as a missed opportunity.
As a former antitrust agent who spent years investigating and litigating against Google, I believe Mehta’s well-reasoned decision has an excellent chance of surviving on appeal. While simply holding a monopoly is not inherently illegal, Yes, it is exercising that power to stifle competition, as Google did. By leveraging exclusivity agreements to prevent rivals from defaulting to key access points, such as the Safari browser on iPhones, and by charging supra-competitive prices in the text ad market, Google was able to crush potential competitors.
The company announced its intention to challenge the decision before the Court of Appeal of District of Columbia, the same court that found Microsoft in violation of the Sherman Antitrust Act in 2001. This underscores the striking parallels between the two cases. Like the Microsoft ruling, the Google case did not rely on novel legal theories or fringe interpretations of antitrust law. On the contrary, Mehta closely followed the reasoning laid out in the Microsoft decision, taking a conservative approach that should increase the chances of his ruling withstanding Google’s challenge.
If the decision is confirmed, it could radically change the way large technology platforms and other dominant companies do business, making them more reluctant to sign exclusivity contracts aimed at excluding competitors. But the extent of this change will depend more on the severity of the remedies than on the ruling itself. To restore competition in the search and search advertising markets, the remedies must be multiple, structural and, most importantly, must address the root causes of the harm caused by Google’s anti-competitive practices. A slap on the wrist will not suffice; the sanction must be severe enough to serve as a warning to other monopolists.
“The Untouchables”
The implications of Google’s defeat go far beyond this case, as They show that Big Tech is not untouchable and that the Sherman Act of 1890 can still be applied to hold monopolists accountable. Since the US government has already taken legal action against Apple and Amazon, as well as another case against Google – this time in the advertising technology market (ad-tech)-, the Big Tech monopolies could soon face a painful reckoning.
In particular, Mehta’s decision could significantly affect Google’s judgment. ad-techwhich is scheduled to begin on September 9. Although the decision that Google is a monopoly in general search does not guarantee a similar outcome in the case ad-techthere are clear similarities between Google’s behavior in these markets.
In each of them, Google exploited its dominant position to suppress competition and make excessive profits by manipulating advertising auctions.
Given these similarities, District Judge Leonie Brinkema is likely to rely heavily on Mehta’s decision when deciding the case. ad-techWith the Apple and Amazon antitrust trials still years away, the ruling’s impact on Google search in those cases will largely depend on the outcome of the appeal.
Unfortunately, the Google search ruling was not a complete victory for antitrust authorities, as Other lawsuits filed by state attorneys general were dismissed. For example, the court rejected a claim that Google’s SA360 search engine management tool unfairly favored its own services. In his decision, Mehta argued that the company was not liable for this conduct because it had no obligation to deal with its competitors, despite having promised that SA360 would remain a neutral third party when it was acquired in 2008. Mehta ruled in favor of the government only on the most limited counts.
So will the Google search decision catalyze real competition in the tech sector? Probably not. While it represents a step in the right direction, US antitrust law remains burdened by bad precedents, and Courts are often reluctant to rule against large corporations.
Despite being relatively straightforward – essentially an updated version of the Microsoft antitrust case – the Google search trial dragged on for ten weeks, culminating in a 286-page decision that could still be overturned. It is becoming increasingly clear that Congress must step in and reform antitrust laws to ensure that small businesses have a fair chance to grow. and prosper. Google may have lost this battle, but the war for competitive markets will not be won in the courts.
TARA PINCOCK*
© Project Syndicate
Washington
* Policy advisor at the Open Markets Institute.
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