When the Justice Department filed an antitrust suit against Google, it created what will likely be an inflection point in the history of the rise of Big Tech. For a preview of how this all could turn out, take a look at Europe, which has managed to take on both the search giant and Microsoft in the last decade and — for the most part — win.
At the core of the Justice Department’s federal case is the claim that Google is boxing out other companies to maintain its monopoly as the world’s top search engine. It does so, the Justice Department brief argues, by spending billions of dollars to ensure that its search engine is the default on other companies’ hardware and browsers. Google is alleged to flip that positioning into a perch to reap tens of billions from its ad sales and then pay out a cut of those profits to maintain its superiority.
At the core of the Justice Department’s federal case is the claim that Google is boxing out other companies to maintain its monopoly as the world’s top search engine.
If you happen to be entrenched in the high-stakes world of antitrust law, that may sound familiar. It’s remarkably close to one of the three cases the European Union has brought against Google, which have resulted in $9 billion in fines.
Each of those cases examined more aspects of Google’s alleged monopoly than the U.S. suit did. But Justice Department lawyers have a very big reason to be wary of overreach: United States. v. Microsoft Corp. Back in 2001, the government’s argument was that in bundling its Internet Explorer web browser with its operating system, Microsoft was leaving other browsers at a disadvantage. The government won that case initially; for a minute there, Microsoft was under court order to split into two companies, one focused on software and the other on its operating system. But Microsoft appealed and got the case remanded back to a lower court.
Eventually, the parties agreed to a settlement that several states’ attorneys general and tech writers believed was just a slap on the wrist. Still, the affair showed how deeply even having to go to court could affect giant tech companies. Microsoft’s explosive growth was temporarily stymied as it had to devote resources to fighting the case. The antitrust battles with the U.S. government also filled executives with an abundance of caution, Michael Cusumano, a professor at the MIT Sloan School of Management, told The Seattle Times in 2011. “They’re afraid, it seems,” he said. “Whether it’s antitrust in U.S. or in Europe, they seem to be slowly reacting to the world around them, rather than trying to get in there fast,” halting potential moves that might have more fully solidified its market share.
A Justice Department hoping to come away with a bigger win against Google can look to Europe’s battles with Microsoft for inspiration. The European Union ended up slapping a $611 million fine on the company in 2004 for using its “near-monopoly” to crush its competitors building media players to rival Windows’ native player, the creatively named Windows Media Player. In 2009, the settlement in an EU case against its Internet Explorer bundle left room for Microsoft to avoid paying a fine if it allowed more access for other web browsers on its software. But in 2013, European regulators determined that Microsoft was violating the terms of the settlement, issuing the company a $732 million fine.
If cases on both sides of the Atlantic have taught us anything, though, it’s that United States v. Google will likely take years to reach a conclusion.
Joaquín Almunia, then the EU competition commissioner, admitted that his predecessor had been “naive” to put its faith in Microsoft. It’s a mistake that the EU seems determined not to repeat against Google, as it has continued to hold the company’s feet to the fire, so to speak. The EU is developing new rules to help curb tech companies’ grasp on digital markets. It’s investigating whether Google’s proposed acquisition of Fitbit could “further entrench Google’s market position in the online advertising markets by increasing the already vast amount of data that Google could use for personalization of the ads it serves and displays.”
The case had the potential to seem politically motivated: It was filed two weeks before the presidential election, and Attorney General William Barr was reported to have overruled dozens of federal lawyers to speed up the timeline.
Beyond the massive fines levied against Google, the EU cases’ other outcomes have also proved to be of interest to Americans. In Europe, setting up Android phones — most of which run on Google’s in-house operating system — now triggers a menu allowing users to pick a default browser. The menu exists only because of the antitrust cases, prompting questions from Justice Department lawyers about whether that could be enough to level the playing field in the U.S.
The case had the potential to seem politically motivated: It was filed two weeks before the presidential election, and Attorney General William Barr was reported to have overruled dozens of federal lawyers to speed up the timeline. Instead, it seems a likely political winner, one of the few areas in which the Trump administration and Sen. Elizabeth Warren’s views align.
If cases on both sides of the Atlantic have taught us anything, though, it’s that United States v. Google will likely take years to reach a conclusion. In the nearer term, it deals the next Congress a stronger hand when debating how to tackle Big Tech legislatively. A House committee report released Oct. 6 determined that the Big Four tech giants — Apple, Google, Amazon and Facebook — “enjoy monopoly power.” (Note Microsoft’s absence from that list.)
All four companies have said competition among them prevents any of them from being a true monopoly. But it’s hard to make that claim stick when you’re all at the same table, divvying up the world into spheres of influence like colonialists. Apple, for example, plays a major role in the Justice Department’s case against Google, its ostensible rival: Cooperation between two of them in their respective spheres allows Google to cement its place atop the heap of search engines, and the money Google pays out for that provides a sizable chunk of revenue to Apple’s extremely profitable services division each year, in effect helping Apple to continue having the cash on hand to corner the hardware market.
Now, how about some links to read on your fine Apple or Google or Microsoft product?
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- GQ: Julia Ioffe goes in deep on a story that’s been floating around for a while without any real sense of closure. It involves scientists, spies, energy weapons and a potential cover-up. You’ll have to read it yourself.