Google meets the Sherman Act
“Ambition is the subtlest Beast of the Intellectual and Moral Field,” wrote John Adams to his son, John Quincy Adams, in January 1794. “It is wonderfully adroit in concealing itself from its owner.” Father Adams was thinking of Thomas Jefferson in penning these words, that sly devil of a man who sought to gain power while falsely claiming to eschew ambition and vanity. It worked: Jefferson duly became the third president of the United States, succeeding Adams himself in 1801.
Such a biting description might well describe the digital giants of Silicon Valley, and one in particular. Google, a company so influential it has entrenched itself in the daily lives of billions of users across the globe, could also be accused of being adroit in concealing ambition. That singular ambition is not merely market dominance but total market domination. This has done the very idea of competition in the field of search engines to death; the Google beast flies, and flies high.
This month, the US Department of Justice summoned up the courage to use Section 2 of the Sherman Act in filing an antitrust lawsuit against the company. The action is intended to “restrain Goggle LLC (Google) from unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States through anticompetitive and exclusionary practices, and to remedy the effects of this conduct.”
In the words of Attorney General William Barr, “Competition in this industry is vitally important, which is why today’s challenge against Google – the gatekeeper of the Internet – for violating antitrust law is a monumental case both for the Department of Justice and for the American people.” One senses an election just around the corner, and the addition of 11 state attorneys general, all Republicans, did little to disprove the sense of political timing.
Google has faced an assortment of actions in terms of competition, consumer, and privacy laws in various legal theatres, the European Union foremost amongst them. Since 2010, the EU has done antitrust battle with Google, raking in $8 billion in fines. But no noticeable change in the competition environment has occurred; such fines are easily accommodated, permitting breaches to continue. The European Commissioner for Competition, Margrethe Vestager, along with other officials, have decided that more aggressive regulations are required. The latest comes in the form of the Digital Services Act. According to a draft of the regulation, giants such as Google “shall not use data collected on the platform…for [their] own commercial activities…unless they [make it] accessible to business users active in the same commercial activities.”
The DOJ has taken longer on this score. In 2012, interest was shown in hauling Google before the law courts by the Federal Trade Commission for anti-competitive practices. The effort did not get too far, largely because of fears that the case had no legs. Since then, Google’s parent company Alphabet has climbed the summit of value, reaching $1 trillion.
Deputy Attorney General Jeffrey A. Rosen was keen to stress the department’s profile in getting at monopolies, though it has little to go on, given the DOJ’s lack of appetite for pursuing antitrust filings since the 1970s. “As with its historic antitrust actions against AT&T in 1974 and Microsoft in 1998, the Department is again enforcing the Sherman Act to restore the role of competition and open the door to the next wave of innovation – this time in vital digital markets.” Not taking action to “enforce the antitrust laws to enable competition” would mean that “Americans may never get to see the ‘next Google.’”
Barr claims that the DOJ action “strikes at the heart of Google’s grip over the Internet for millions of American consumers, advertisers, small businesses, and entrepreneurs beholden to an unlawful monopolist.” The contention here is that Google has illegally monopolised the market in online search and search advertising. This has been secured through the use of “exclusionary agreements” that retard competition while preserving market share in what the DOJ describe as a “continuous and self-reinforcing cycle of monopolisation.”
At a more granular level, the DOJ highlights the company’s payment for agreements with, say, Apple, making Google the default search engine on Apple’s Safari browser; agreements excluding pre-installation of rival search engines by specified mobile device manufacturers and distributors; arrangements that, in turn, obligate specified mobile device manufacturers and distributors to pre-install undeletable Google search applications on mobile devices via its Android operating system; and using the profits derived from such dominance to purchase preferential treatment across a range of devices employing search functions.
Google was ready for a public rebuttal, and let Kent Walker, its Senior Vice President of Global Affairs and Chief Legal Officer, do the honours. In a post, Walker argued that the action against the company “would do nothing to help consumers.” That most conventional of monopolistic views are suggested: there are rivals, even if spotting them might be difficult; they do provide competition, though never sufficiently to challenge Google. Consumer choice is left unimpaired. “People use Google because they choose to, not because they are forced to, or because they can’t find alternatives.”
The reason? Google’s well-earned superiority. The lawsuit, argues Walker, would merely serve to “artificially prop up lower-quality research alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
Examples of competition are given. Apple devices feature Google Search in its Safari browser calling Google “the best.” But such an arrangement was not exclusive, as “our competitors Bing and Yahoo! pay to prominently feature and other rival services also appear.”
The DOJ effort is but one amongst several, with seven other states including New York and Colorado announcing that they will conclude parallel investigations into the company in the “coming weeks.” According to a statement from New York Attorney General Letitia James, “If we decide to file a complaint, we would file a motion to consolidate our case with the DOJ’s.”
The regulators are coming for Google, but as has been remarked upon by Kate Cox in Ars Technica, the DOJ suit is narrow, mainly focused on the search market. Google’s abuses of power in digital advertising, notably exposed in a report by the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law, is spared. Cox also notes that consumers are less the subject of interest of such actions than the competitors. “The complaint does not particularly address potential harms we, the end consumers, may experience as a result of this monopoly.” The nature of the relief being sought is also unclear, though “structural relief” might flag the possibility of breaking up the company.
Little wonder, then, that Gabriel Weinberg, chief executive of one of Google’s rival search companies, DuckDuckGo, was mildly celebratory at the announcement. “We’re pleased the DOJ has taken this key step in holding Google accountable for the ways it has blocked competition, locked people into using its products, and achieved a market position so dominant they refuse to even talk about it loud.” Adams might say they were being Jeffersonian about it.