A federal judge in the District of Columbia concluded on Monday that Google has violated the second section of the Sherman Antitrust Act, that prohibits using monopoly power to artificially maintain or increase the monopoly. Regrettably, this won’t spell the end of monopolistic practices in Big Tech.
“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” US District Judge Amit Mehta wrote in Monday’s opinion.
In the U.S., it is not illegal to be the only company on the market if it’s due to merit, but an illegal monopoly implies engaging in practices that alter the natural course of competition. The U.S. Department of Justice, first under the Trump Administration, and now under the Joe Biden’s, accused Google of manipulating search results to favor its own services and products to the detriment of its competitors and using data from one service to improve another.
Amongst the most severe accusations are, using data from the Chrome browser to improve search results, (confirmed by leaks and Google itself in May). It has also accused Google of imposing restrictions on advertisers to maintain its dominance in the online advertising market. What convinced the judge, however, was that Google has paid its main competitor Apple billions of dollars annually to be the default search engine on its devices and operating systems.
What happens now? First, the court will start the “remedies phase,” where both parties—the accused and the plaintiff—will propose measures to correct the violation and restore competition in the market. Google has already stated that it will appeal protracting an already lengthy process. The judge can impose sanctions and changes in Google’s business practices to correct the anti-competitive parts. For example, more transparency and data sharing with other players and fewer exclusive agreements for parking on operating systems that are not its own. The judge may also appoint an independent supervisor to ensure that the measures are implemented on time, with a schedule of penalties. Then there is there is the most drastic action. Dissolving the monopoly by breaking the company into many smaller ones (Such as Google Search, Google Ads, Google Maps, YouTube, Android, Google Cloud, etc.) is something that hasn’t been done many times throughout US history.
There have been 4 major monopoly breakups in US history (countless smaller ones). The most notorious was Standard Oil, which the U.S. Supreme Court divided into 34 independent companies in 1911 (Including ExxonMobil, Chevron, ConocoPhillips, or BP). In that same year, the American Tobacco Company was split into four competitors (Which later were found to be colluding with each other to enact a de facto monopoly). In 1982 telephone company AT&T was broken up into one long-distance company and seven regional offices dubbed “Baby Bells”, arguing that competition should replace monopoly for the benefit of consumers and the economy. About the fourth one, Microsoft in 1999 we will cover later.
Circling back to the aftermath of Mondays ruling, there are three paths ahead of us:
-If the judge finishes before the appeals court, there could be a chance Google would not have to pay fines or comply with measures while the ruling is reviewed, with the remedies being suspended whilst on review.
-If the appeals court finishes first and determines that the original ruling is unjust, then the remedies phase would be canceled, and Google would no longer be an illegal monopoly. If it considers the ruling excessive, then the measures would be renegotiated by the parties, with the judge mediating. If it considers the original ruling fair, then the corrective measures will be put into practice.
-If either party is dissatisfied, they can appeal to the Supreme Court.
Its anyone’s bet which one will happen, but it is nevertheless an consequential step. This ruling is important because it is the first major ruling by a US court in the matter of Big Tech in more than a decade. In recent years, the European Commission had imposed more than 8 billion euros in fines on Google for anti-competitive practices related to its search engine, Android operating system, and advertising business. However, this is the first time it faces significant correction in its own country and might set a precedent for the government to act against tech companies. Unfortunately for us consumers there are two big problems.
Time and Money.
Let’s start with Time. In 1999, Judge Thomas Penfield Jackson declared that Microsoft was an illegal monopoly for using its market dominance in operating systems to impose its Internet Explorer browser. The judge adopted all the remedies, including splitting Microsoft into two companies: one for the operating system and another for applications like Explorer. Microsoft appealed the ruling, and the appeals court modified the verdict in 2001, not because it was unfair but because it was excessive. By then, the lawsuit initiated by the Bill Clinton Administration had been inherited by George W. Bush’s, which resolved the case with an admonition. Microsoft “promised” not to buy or punish PC manufacturers for including competing software and to share its application programming interfaces with other companies to ensure interoperability. An administration later, especially concerned with other events such as the War on Terror, decided that it wasn’t worth it to devote more time to such an irrelevant matter. July 19ths massive worldwide outage of Microsoft-Crowdstrike systems proved the dangers of letting a monopoly off lightly, without changing its ways. Microsoft used time, or better, the governments lack of it, to get off the hook and continue maintaining the monopoly.
Additionally, we have Money, and this one is very simple. Google has the money and lawyers to stretch this process infinitely, while the government is stretched financially thin, and with other projects to bankroll. Specially now, the high inflation and rising costs of living are a much bigger priority to Americans than a never-ending lawsuit with a tech giant.
Washington has at least four other cases open against Amazon, Apple, Facebook, and Microsoft. Unfortunately, it seems that the government, whichever it is come January 20th, will run into the same problems as the previous Administrations. Too little money, too little time, and too little interest.
