The Key Questions That Will Decide Whether Google Is a Monopoly
The U.S. Department of Justice filed a lawsuit this week alleging that Google is an illegal monopoly. Now comes the tricky part: proving it.
Once a humble search engine with no business model, Google has grown into such a vast conglomerate that the word “monopoly” seems almost inadequate to describe its scope. For that matter, even the word “Google” is inadequate — the search engine and its affiliated ad business are now just part of the broader, trillion-dollar Alphabet empire.
And yet the question of whether and how Google constitutes an illegal monopoly gets complicated in a hurry. Is its dominance of internet search a problem in itself? Does the problem stem from the breadth of its business, which spans search, online advertising, online video, mobile operating systems, cloud services, smart home devices, and much more? Does it arise from the interactions between these business lines, the way Google leverages its market power in one arena to boost its business in another? Or is there no real monopolization problem here at all, given that most users freely choose Google’s products over those of its rivals and reap the benefit of services that are offered to them at no monetary cost?
For all the potential complexity, the DOJ’s lawsuit seeks to answer that question as straightforwardly as possible. The problem, as alleged in its relatively svelte 64-page complaint, is Google’s dominance of internet search and search advertising, specifically, and the actions it has taken to entrench that dominance. And that’s a problem because it means less choice for both consumers and advertisers, and it stifles potential innovations that could lead to fresh approaches and business models in online search.
To better understand exactly what the DOJ is alleging, what it will have to prove, and what the case might hinge on, I talked with three leading antitrust experts, two of whom agreed to speak on the record. (The third spoke only on background because they are involved in a separate case against Google.)
At a time when many — including the U.S. House antitrust subcommittee — are calling for a dramatic rethinking of antitrust law and policy, the DOJ’s case rests on existing law and hews largely (though not entirely) to established interpretations of it, these experts told me. In particular, the case is framed as a sort of U.S. v. Microsoft 2.0, focusing on the aspects of Google’s business and behavior that most closely resemble those that got Microsoft in trouble in 1998 for abusing its dominance of PC operating systems.
“It’s definitely an attempt by the DOJ to consciously reflect the Microsoft decision, which is the most recent favorable high-profile monopoly case,” said John Newman, a law professor at the University of Miami whose work focuses on regulation of digital platforms and who has practiced in the DOJ’s antitrust division. “And it just so happens to be a case where the underlying facts are pretty similar to the Google case, at least as the DOJ alleges.”
“This will be a big fight, and Google has some decent arguments.”
The complaint alleges that Google has built and solidified its search dominance partly through contracts such as a deal with Apple that makes Google the default search engine on its Safari browser and elsewhere. (Apple switched Siri’s default search engine from Bing to Google in 2017, for example.) While the companies are secretive about the arrangement, the lawsuit cites reports that Google is paying Apple on the order of $10 billion a year for that privilege, an amount that works out to 15% to 20% of Apple’s annual profits. In turn, Google gets as much as half its search traffic from Apple devices, the lawsuit claims.
Google’s software also enjoys top billing on devices that run Google’s own Android operating system. Android phones generally come preinstalled with the Google Chrome browser, for example. On Galaxy devices, which run a custom interface over the Android operating system, the Samsung web browser defaults to Google, although users can switch to alternatives like DuckDuckGo and Bing. All of this is reminiscent of how Microsoft famously made its own Internet Explorer browser the default on its Windows operating system, kneecapping rivals such as Netscape.
There are much more theoretically interesting antitrust arguments that could be made about Google’s multifarious business lines, how the data it gleans from each feeds into the others, and the sheer concentration of information, influence, and artificial intelligence capability that now resides in a single firm. Some of those are already being made elsewhere, including in the House antitrust subcommittee’s Democratic staff report (and even in a Republican response). But the DOJ’s suit largely steers clear of them.
That makes sense from the DOJ’s perspective, said Rebecca Allensworth, a professor of antitrust law at Vanderbilt University. “It is very narrow and strategic, and I think it’s smart,” she told me. “This is not a wish list of everything that someone who’s concerned about Google might put into a case. This is the case that’s strongest. It’s the case that’s closest to Microsoft. They’re really trying to put this into the Microsoft box, because that was seen as a big success for the government.”
There is a caveat to that success, however. While the courts ruled that Microsoft had indeed acted as an illegal monopoly, the lower court’s decision to break up the company was reversed on appeal, and the DOJ ultimately settled for much more modest concessions, such as a requirement that Windows be made interoperable with non-Microsoft software. In its lawsuit against Google, the DOJ may argue that stronger “structural remedies” — potentially including a partial breakup — will be needed to check Google’s market power.
That will likely require convincing the courts that Google is not only acting anticompetitively, but also that its behavior is causing ongoing, demonstrable harm, ideally not only to competitors but to consumers as well. A controversial 2018 Supreme Court decision, Ohio v. American Express, found that the credit card company’s practices were harmful to merchants yet did not violate antitrust law because they benefited consumers. The decision was seen as an ominous sign for antitrust cases against tech platforms, which also operate in “two-sided” markets, with advertisers on one side and consumers on the other. It’s an open question whether that ruling will apply in this case.
Google, no doubt, will point out that its products are free to consumers and indeed are widely preferred to those of rivals. The company telegraphed that line of defense in its public response to the lawsuit on Tuesday. “This lawsuit would do nothing to help consumers,” the company wrote. “To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
Allensworth, the Vanderbilt law professor, said those arguments will likely resonate with the layperson — and perhaps also with a judge, who might well be a layperson when it comes to technology, despite their legal expertise. But whether Google has a superior product to existing rivals such as Bing and DuckDuckGo, she said, is not the key question. The question is, “Is Google using its market power to prevent a better product from being developed?”
Here, too, the Google case will be relying on precedent from Microsoft, said Newman, the Miami law professor. Whereas the prototypical modern antitrust case requires the plaintiffs to show direct harm to consumers, usually in the form of higher prices or lower outputs, the Microsoft case revolved around harms to innovation, which can be more difficult to quantify. One difference is that Microsoft’s tying of Internet Explorer to Windows demonstrably undercut an arguably superior rival in web browsing, an emerging market in which Microsoft was not yet dominant, whereas search has always been Google’s core business.
A twist in the Google case could be that the DOJ might try to argue that consumers really do “pay” for Google search, not in dollars, but in the form of their attention and data. That’s an argument that has gained some traction among antitrust scholars but remains largely untested in the courts, Newman said.
Allensworth and Newman agreed that the DOJ stands a decent chance of establishing that Google has monopoly power. Showing the harm to competition and consumers will likely be the greater sticking point. The last time Google faced a U.S. antitrust inquiry, focused on how it allegedly skewed search results toward its own products and services, the Federal Trade Commission bought Google’s argument that the arrangement was aimed at helping users, not just hurting competitors. (This despite a recommendation from its own staff to bring a case.)
The key question for the court, Allensworth said, will be this: “Are there good business justifications for the exclusive contracts and other practices that the government alleges as ‘bad acts’? In other words, are those practices just about making a better search engine that’s more useful to users (and advertisers?) or are they also about blocking rivals and potential rivals?”
For her part, Allensworth said she believes Google’s actions, like Microsoft’s, “go beyond improving the consumer experience and are designed, at least in part, to forestall competition.” In other words, she believes, Google is violating the Sherman Antitrust Act. But, she added, “this will be a big fight, and Google has some decent arguments.”
Newman agreed the DOJ has a strong chance of winning the case but said that convincing the courts to impose tougher remedies than they did against Microsoft will be a hurdle. To him, “the lesson from Microsoft is that if you really want to change the structure of a market, it’s hard to do that without a structural remedy,” such as a breakup. Whether a judge will see it the same way, he said, is a “bit of a crapshoot.”