US Court Calls Google Monopolist, Says It Violates Competition Law

On August 5, 2024, the US Court for the District of Columbia (DC) decided that Google was a monopolist, meaning it has durable market power as the dominant player in its field of "general search services". This is a violation of competition law.

As a remedy, the DC Court may seek Google search neutrality, requiring it to make its search results transparent. But this decision seems unlikely to be the harbinger of a strongly regulated Federal Search Commission, or even a better search experience.

Fines will have no effect on Google, or its peers Apple or Amazon - each of whom is facing major cases of their own.

When a company is as rich as Croesus and can employ every competition law firm in the world to appeal decisions, that will not worry the boardrooms.

What will worry them is being forced to interoperate their systems with those of smaller, more innovative and cybersecure rivals.

When consumers can send a message from their iPhone to any platform, not just iMessage, just as you can with email or text messages, that will scare Apple into compliance.

The US Department of Justice is seeking interoperability as the remedy in the case against Google, and hopefully also for Apple and Amazon. It's not a magic bullet, but it is the most pro-competitive position short of breaking up these vertically integrated platforms.

In the 1990s, American legal scholar and activist Lawrence Lessig called to break up Microsoft, which is still the most profitable of all the tech giants. Instead, the regulators in the US and the European Union imposed some interoperability, though they botched the details so benefits to consumers were restricted, despite record fines imposed.

In 2024, there is less appetite to break up the behemoths, but some to impose interoperability, which regulators now understand much better than in the 1990s.

In the EU, the Digital Markets Act 2022 has imposed interoperability on those platforms since 2023, though it is imperfectly implemented as yet, with teething troubles in the EU unit responsible for enforcement.

How we got here

In 2008, law professors Oren Bracha and Frank Pasquale critiqued the fast emerging monopoly on internet search by the "do no evil" Stanford start-up turned billion-dollar company, Google.

That year, Barack Obama - the "Blackberry candidate" addicted to his smartphone - was elected the 44th President of the United States in what was known as the "Facebook Election" for his team's revolutionary online campaigning.

Obama's technology policy was dominated by a commitment to network neutrality, declared in a Googleplex Talk in Silicon Valley in late 2007, when he was mentored by his old University of Chicago Law School colleague - Lawrence Lessig.

Lessig had been Special Master in the Justice Department prosecution of the Microsoft software-into-Internet browser competition case. He praised Obama for finally ensuring net neutrality in 2014, against the wishes of the Republican-controlled Congress.

Google supported the Obama network neutrality policy and he failed to adopt the congruent Pasquale policy of search neutrality.

Why did the Democrats take so long to tackle Google? They tackled the Global Financial Crisis immediately after taking office and repaired the global economy at the cost of creating a moral hazard by telling Wall Street banks they were too big to fail (proved by letting Bear Stearns fail and watching global markets meltdown).

By 2015, these banks underwrote Donald Trump's revolutionary bid for the White House, a campaign which benefited from free coverage from cable news and some Facebook advertising fuelled by Cambridge Analytica, itself funded by billionaire hedge fund manager Robert Mercer and his daughter Rebecca.

Meanwhile, Google, Facebook, Apple and the other big tech firms including Amazon, were moving from billion-dollar companies into trillion-dollar companies, raised by their voracious appetite for swallowing smaller rivals such as LinkedIn and Skype (Microsoft), AdSense and Motorola (Google), WhatsApp and Instagram (Facebook).

Obama's Department of Justice and Federal Trade Commission (FTC) waved through all of these mergers, with economists claiming that the price of free service was vertically integrated advertising-funded platforms.

They also blocked moves towards a new federal privacy law, despite a valiant attempt by US academic Danny Weitzner to achieve a basic legislative standard.

This period of laissez-faire unregulated growth created the unregulated Silicon Valley monstrously dominant platform environment of the Trump presidency.

Economists even hailed such monocultures as a healthy wealthy outcome, despite the huge cybersecurity liability they created.

COVID lockdowns in 2020-21 forced white-collar workers home, to work on these social media and e-commerce platforms even more intensively.

Even universities became huge users and funders of those dominant platforms.

They are now multi-trillion-dollar behemoths, the most highly valued commercial enterprises in history, even more prized by investors than Shell or BHP in the 20th century or the British East India Company in the 19th century.

Finally, the dominance of Google, Apple, Amazon and Facebook forced even the Department of Justice to act.

Joe Biden's COVID-19-sheltered campaign against an increasingly deranged and insurrectionist Trump led to the appointment of Lina Khan as Chair of the FTC in June 2021.

Khan was academically renowned for her work on a student paper she wrote called Amazon's Antitrust Paradox, explaining the dangers of vertical dominance in digital markets, and she had quit the Google-funded Open Markets Institute thinktank when Google tried to stop her investigating and advocating for healthier competitive digital markets.

FTC got to work prosecuting the biggest monopolies the world has ever seen. Now we have results.

We have a court judgment which is a statement of the obvious - Google is dominant in digital markets. Its behaviour has been abusive. Soon we will have a further finding against Apple and then Amazon.

We will also have an election in which the CEO of LinkedIn, lifelong Democrat Reid Hoffman, has called on the Democrats to replace Lina Khan, and Trump is funded by the Silicon Valley oligarchs and crypto fraudsters who also would gut the FTC.

If the Department of Justice pressed for the judge in the Google case to impose a remedy that equalised the rules globally, that would be a real result for consumers and competition.

Chris Marsden is a Professor of Artificial Intelligence, Technology and Law at Monash University and an expert on Internet and digital technology law, having researched and taught in the field since 1995.

(Originally published under Creative Commons by 360info)

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