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November 22, 2024 - 1:00pm
Lawyers for the United States government have formally requested that Google should be broken up. In the first and most advanced of two ongoing antitrust actions, Google was found guilty of acting illegally to protect its search business. While the second trial awaits a verdict, the first is now into its formal remedies phase.
This would be the biggest competition decision of the internet era, and the biggest in the US since the Bell telephone monopoly was broken up in 1982.
After being found guilty of abusing a monopoly position, a company may agree to conduct its business in a different way to restore a competitive market, an agreement known as a behavioural remedy. But if the court thinks it cannot comply with such measures, prosecutors may call for a breakup of the company, requiring it to divest itself of key assets too. Which is the argument made by Department of Justice lawyers here: Google is too big and complex to be trusted to behave.
So the US has requested that Google divest itself of the Chrome web browser, the most used browser on both mobile and web devices, with over three billion active users. Prosecution lawyers also want action on Android, Google’s smartphone platform, and also the largest by some margin. Google must also stop paying huge amounts, over $26 billion a year — largely to Apple — to be the default search engine in browsers it does not control. And the DoJ wants to prevent Google’s search monopoly being extended into Artificial Intelligence-powered search, by prohibiting it from investing in or buying AI search products. All of these deliver traffic to Google’s search business. Their dominance therefore deters investment in superior alternative search engines, the court concluded.
It’s a significant break with four decades of competition policy. Over these years, the Chicago school of antitrust became dominant, based on the belief that the market was self-correcting, and that government intervention would do more harm than good. From Reagan onwards, Republicans strongly upheld this laissez faire philosophy. Shortly after the Bush administration took office 2001, for example, the US vs Microsoft case was rapidly brought to a conclusion with the company agreeing to a lesser penalty, even though a judge had ordered a breakup of the company.
But loyalty to the Chicago school is no longer a given. The libertarian Koch wing of the Republican Party has not been the dominant voice in competition policy for some years. Populism recognises that global technology platforms who enjoy an income exceeding the GDP of nation states are a new and quite different beast. Voters see themselves as more than mere consumers, and even as consumers they see a small number of companies acting as they please. In fact, this case was one of the last acts of the first Trump administration, brought by Attorney General Bill Barr, who served on staff in the Reagan and George H.W. Bush administrations, in October 2020.
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SubscribeIt’s not that the Chicago school became dominant, it’s that competition enforcement authorities have to prove an abuse of dominance in order to pursue a case.
In a nascent market (which many of these markets were until, like, yesterday), this is legally impossible: how can you argue that they are abusing their position in a market which only yesterday did not even exist?
The fact is that for many years, Big Tech could credibly argue that they were creating value for consumers, despite their dominant market positions. After all, who buys a paper map these days when on a city break?
The development of tech ecosystems has changed that equation, in particular as Big Tech leverages its dominance in core markets like search to establish anti-consumer positions, for example in online shopping markets that are shouldering out retail competitors in an unfair way.
The EU has been well ahead of the US in tackling this problem, and the recent American cases are in fact largely reliant on the EU’s case law and experience.
The EU is also first to come up with new digital regulation, which is complementary to antitrust enforcement.
There is a fine line between the EU’s desire to introduce antitrust regulation, on the one hand, and political censorship and primitive envy, on the other.
In my opinion, the EU just demonstrates once again that the vast majority of government attempts to command and control the market do more harm than good. Command economies always underperform market economies. The market is a real thing, and market forces will always be stronger than government’s abstract ideas.
It’s like medicine. Doctors can help sometimes when people are sick. But on balance most of what they do does more harm than good. The US spends much more on health than other countries but gets worse results. The forces of nature win out over human efforts.
That’s not to say the government has no role in the economy or that doctors have no role in health. But it is to say that they should stop promising miracle cures when all they really have are nostrums that have no evidence to support them.
I agree.
But there are exceptions for defined market failures. Abusive dominance (monopoly) is one such area where targeted, minimal but effective government intervention is necessary.
China is currently monopolizing their state-supported business, driving producers in other countries out of business. I suggest we not forget this in the search for “cheap products”. A monopolist always charges cheaply, to drive competitors out of business; prices are then raised again, sometimes much higher than before. Those who yelp about “tariffs!” should remember that ….. steel production, equipment manufacturing, solar panels, clothing …. all has moved to China, putting good people in the US and UK out of jobs. But that’s okay, they can buy cheap goods, with their meager income! 😉
You’ve just given a brief explanation of why we should be decoupling with China entirely. Their economy deliberately exploits the vulnerabilities of a capitalist system in order to achieve geopolitical strategic objectives. They cannot be trusted to behave either.
Are you just talking about China or does your comment apply to Google too? How does Google charge cheaply, to drive its competitors out of business, only to then raise its prices to monopoly levels? That’s predatory pricing, and Google hasn’t done that or been charged with that.
I am not quite sure whether dismantling monopolies always benefit consumers.
For example in uk if you liked watching sport you needed bbc licence and sky subscription.
Now if you watch tennis, football, rugby and skiing you need 4 or 5 subscriptions.
So content providers benefitted but consumers pay more.
How can anyone seriously propose that Google can not invest in and develop AI?
It would mean certain technological obsolescence for the business.
What about shareholders?
People forget that there were many search engines before Google (remember Netscape?).
Google just won competitive battle.
There are many other browsers available, no one is forced to use Chrome.
I think focus should be on subscription model for apps like Microsoft Office365 and Windows OS trying to make difficult to use just local accounts.
The same goes for Android OS.
It expanded mobile market.
Let’s remember Nokia dominance and Microsoft futile attempt to compete in mobile arena.
Google should be compelled to sell YouTube to Elon.
Can’t happen soon enough.
As a technologist I’ll just say that far more important to break up than Google is Microsoft. Microsoft has much more of a monopoly and I promise you they are doing just as much if not more shady shenanigans in the back then Google is.
Fifteen years ago I would have agreed with you, but personal computer use is in decline overall. The personal computers that are popular these days such as tablets are not nearly as monolithic and monopolized as traditional and laptop PCs were. Microsoft faces stiff competition from Apple and, well, Google. I’m not unsympathetic to your position. Microsoft is a company that was built largely by theft, dirty tricks, and exploitation, but I’m afraid that ship has sailed. Microsoft has long since gotten away with its most profitable anti-competitive activities and Bill Gates is now using the untold billions of monopoly profits to advance his toxic political agenda. I’d go after him and leave the company be at this juncture.
I was hoping that Elon Musk might start a search engine in the spirit of X, showing all searches free of left wing biases. Any subject on Google’s search engine is politically tinted and you have to work yourself through pages to find alternative opinions. I now use DuckDuckGo, but it doesn’t seem to be so different.
During COVID all searches were tinted towards “Government approved” scientists, and the same happens, if you search for alternatives to main stream scientific opinions regarding the Green Religion and “Climate Crisis”…
Why doesn’t anybody dare to come up with an independent search engine? I also have to use Chrome, according to the tech guys at UnHerd, to be able to post comments under UnHerd articles as it seems to be impossible with my current web browser. Maybe some kind UnHerd reader could explain why?
I use Brave and can post comments OK, but then Brave is a Chrome based browser. Though more secure and private I believe.
I use Firefox and have had no difficulty posting here. Not sure what the issue is. I’m not sure DuckDuckGo is independent of Google or if it’s just running Google searches and blocking the invasive tracking and algorithm driven advertising.
Really no company should have a GDP comparable with a mid sized nation state. If they’re as big as a country, then they have as much power and influence as a country. They can be corrupted just like a country, and just like a country, they can have agendas that stand opposed to the interest of nations. None of this should be acceptable as such concentrations of power are antithetical to free and open competition. Governments themselves are, due to their size and influence, also anti-competitive. Governments aren’t generally good or positive, but it’s necessary to have one to impose some order on human activity. It’s also necessary to establish checks and balances on that power that are collectively expected and enforced through representation and elections so that power isn’t abused. It’s not necessary, and frankly rather stupid, to spawn a bunch more gigantic organizations with similar powers but none of the accountability. without a bunch of small nation states that are purely driven by profit to contend with. Particularly now when it’s so easy to transfer money and assets across borders, we just can’t have organizations that aren’t subject to any one nation’s laws or accountable to anybody and whose sole purpose is one of base greed. Reeling in the multinationals and putting a stop to the monopolization of industries, by both individual nations and individual companies, should be a main focusing point of the populist movement. I don’t have a lot of faith in Trump to have the attention span to take on Google or even make a serious attempt at limiting corporate power, but maybe he can at least set the ball rolling in the right direction so someone like Vance can pick it up down the road.
The now-failed attorney general nominee Matt Gaetz did talk about stripping the Justice Department of some of its power, but not antitrust. He is all for strict antitrust enforcement. In fact, he wanted the Democratic hipster antitruster Lina Khan kept on at the FTC. He’s just as much a Khanservative as vice president-elect JD Vance (quoted in this article) and senator Josh Hawley.
And here’s what Matt Gaetz had to say to Jonathan Kanter, Joe Biden’s antitrust chief in the Justice Department who led this Google case: “I think you’re doing a good job, and that is a painful admission for me to have to make about anyone who works at the Department of Justice.”
Antitrust is an unholy alliance between lawyers and economists. Both law and economics are very abstract disciplines that have little connection with the real world. No experiments are possible. Claims are made that cannot be tested. Careers are built by writing papers and arguing in court, not by getting results by people with skin in the game. Any verdicts in court feel more speculative than definitive.
So it concerns me when abstract, untested legal and economic theories are applied to shape policies and decisions with such big impact in the real world, by breaking up companies like Google that everyone has to deal with. The reliance on academic work and courtroom arguments, rather than tangible outcomes, creates a gap between theory and practice that is troubling.
Remedies like this remind me of a witch doctor diagnosing a case of monopolitis and prescribing a voodoo treatment involving blood from the neck of a newly beheaded chicken. Or a priest telling a penitent they have committed the sin of monopoly and demanding a penance of 10 Hail Mary’s.
I oppose the “break ’em up” remedies of the neo-Brandeisian, hipster antitrusters. My remedy would be to force interoperability between dominant companies and their competition, to break up markets instead of companies by adopting a modular product architecture with open interfaces.
That could foster competition without the need for drastic measures like breaking up companies. That could encourage innovation and consumer choice, ensuring that dominant players can’t monopolize the market by locking in users.
Interoperability standards would mean that startups could compete on a level playing field, making it easier for them to enter the market and offer their innovative products. This method could potentially disrupt the power dynamics in the tech industry and other sectors with an oligopoly, where a few dominant companies hold significant sway.
That’s what kept the computer industry so competitive without antitrust intervention. The modular IBM System/360 in 1964 obviated the need for the antitrust war against IBM that was (in Robert Bork’s words) the Justice Department’s Vietnam. The modular IBM PC architecture did the same when computers became personal. Similar market changes made it unnecessary to break up Microsoft.
Breaking up a company like Google is like doing major surgery for a problem can be controlled by diet and exercise. If competition needs help, do it in the least invasive way possible. Lawyers and economists should leave butchery to butchers.
In the 70’s Kodak had exclusive patent rights to it’s Ektachrome/E6 and Kodachrome/K14 films and the chemistry needed to process them. After a long anti-trust trial they were forced (1981) to relinquish their exclusive rights to Ektachrome. This led, as expected, to a huge explosion in the film and chemistry business. But also to an even bigger explosion in independent color labs, magazines (deadlines were no longer hostage to Kodak, the color labs could process film in a couple of hours), off-set printers and all aspects of the photography business; commercial and fine art. Tens of thousands of jobs were created.
I was shooting commercial still-lifes in the late 80s and 90s. It became apparent that Kodak had gotten lazy and hide-bound. Fugi, for one, made a much better product. I tried it on one job and I never looked back.
Chicago School free market ideologies look good on paper but not so good in real life. The Court should do the right thing, break up Google, and let the chips fall where they may.
That’s an interesting story about Kodak and its film that I hadn’t heard. But I think that case is irrelevant to the “break ’em up” remedy proposed for Google. It involved a patent monopoly. Google doesn’t.
Patents are themselves an artificial distortion of the free market, a government-created monopoly. Taking action regarding patents–like the patent pool in aviation to weaken the Wright brothers’ patent–makes sense.
Indeed, even though I have long been a registered patent attorney, and hold two patents of my own, I have always argued for the abolishment of the patent system. I don’t think it stimulates innovation, but stifles it. Big companies abuse patents, and that government-aided abuse should stop.
But that does not mean that we should adopt the “big is bad”, “curse of bigness” stance of the neo-Brandeisian, hipster antitrust people. They think we should punish success instead of bad acts. That all that matters is whether you have monopoly power, not how you got it.
All this talk about what the Chicago School and the Harvard School is academic. It’s like labeling someone a Republican or Democrat. What matters is not what you believe or what group you associate with, but what you can accomplish in the real world.
The court declaring Google to be a monopoly was the stuff of farce. Of course Google is a monopoly, a rich and powerful search company. Even the language we use is evidence, as “to search” is “to Google”–you can’t be more dominant than that.
But that doesn’t mean breaking up Google will make things better. There’s no evidence that it will. It’s like a doctor diagnosing depression and prescribing antidepressants as a cure. Anyone who looks at evidence and real-world experience will see that remedy as a cure that doesn’t cure.
It looks like the government is also asking that Google open up its interfaces, so-called APIs. That I support. That remedy breaks up markets rather than companies. It doesn’t punish Google for being big. It has proven to work.
I’m not a fan of Google, or Amazon, or Facebook, or Apple. These companies are big, huge even–heavyweights who throw their weight around. But that doesn’t mean we should be amputating their limbs.
These companies offer popular products at market, not monopoly, prices. Let’s not punish them for that. Let’s instead lower barriers to entry to let others compete, by opening up interfaces and promoting interoperability.
The reality is that regulators and politicians- like most of us – were slow to realise the implications of the emerging internet technology. The dot com bubble and following crash was evidence that even the biggest brains on the planet got it wrong.
Content controllers like Google and social media platforms have been getting away with murder, absolving themselves of responsibility while infecting discourse with a Silicon Valley liberal left bias. That’s not good for the USA as the populace has proved at the recent election, and not good for the rest of the world who can do without the bien pensant, malignant hand of tech bros trying and thankfully mostly failing to control our minds.