The New Big Tech Robber Barons
Polling has indicated that a significant portion of the American public is concerned about the power and influence of big tech companies and that a majority of respondents support increased regulation and antitrust enforcement, a sentiment driven by concerns over privacy, data security and the monopolistic control these companies have.
A Northeastern University analysis makes it clear that there’s a growing public appetite for more proactive enforcement against big tech companies, a shift in public opinion that aligns with the increased scrutiny and legal challenges that Google and other tech giants have been facing from regulatory bodies like the FTC and the Department of Justice. The broad public support for these actions reflects a desire for a more competitive and fair marketplace.
This finding highlights the importance of Monday’s blockbuster antitrust ruling against Google, resonating with public concerns about monopolistic practices and the need for regulatory intervention to ensure a level playing field in the tech industry. The case against Google is seen not only as a legal battle but also as a critical step in addressing the broader issue of corporate power and its impact on consumers and the economy. It touches all of our lives. And for Judge Amit Mehta to have ruled that Google is an illegal monopoly, abusing its market power to quash competition, is a BFD
Writing for the NY Times, David McCabe reported that Google was found guilty of violating the Sherman Antitrust Act of 1890 in “a landmark decision that strikes at the power of tech giants in the modern internet era and that may fundamentally alter the way they do business… The Justice Department and states had sued Google, accusing it of illegally cementing its dominance, in part, by paying other companies, like Apple and Samsung, billions of dollars a year to have Google automatically handle search queries on their smartphones and web browsers. ‘Google is a monopolist, and it has acted as one to maintain its monopoly,’ Judge Mehta said in his ruling.”
The ruling is the most significant victory to date for American regulators who are trying to rein in the power of tech giants in the internet era. It is likely to influence other government antitrust lawsuits against Google, Apple, Amazon and Meta, the owner of Facebook, Instagram and WhatsApp.
The ruling did not include remedies for Google’s behavior. Judge Mehta will now decide that, potentially forcing the company to change the way it runs or to sell off part of its business.
The ruling capped a yearslong case— U.S. et al. v. Google— that resulted in a 10-week trial last year. The Justice Department and states sued in 2020 over Google’s dominance in online search, which generates billions in profits annually. The Justice Department said Google’s search engine conducted nearly 90 percent of web searches, a number the company disputed.
The company spends billions of dollars annually to be the automatic search engine on browsers like Apple’s Safari and Mozilla’s Firefox. Google paid Apple about $18 billion for being the default in 2021, the NY Times reported.
… The government argued that by paying billions of dollars to be the automatic search engine on consumer devices, Google had denied its competitors the opportunity to build the scale required to compete with its search engine. Instead, Google collected more data about consumers that it used to make its search engine better and more dominant.
The government also accused Google of protecting a monopoly over the ads that run inside search results. Government lawyers said Google had raised the price of ads beyond the rates that should exist in a free market, which they argued was a sign of the company’s power. Search ads provide billions of dollars in annual revenue for Google.
udge Mehta ruled that Google’s monopoly allowed it to inflate the prices for some search ads. That, in turn, gave the company more money to pay for its search engine to get prime placement, he said.
“Unconstrained price increases have fueled Google’s dramatic revenue growth and allowed it to maintain high and remarkably stable operating profits,” he said in the ruling.
Legal scholars expect this decision to help set precedent for government antitrust lawsuits against the other tech giants. All of those investigations, conducted by the Federal Trade Commission and the Justice Department, began during the Trump administration and have ramped up under President Biden.
The Justice Department has sued Apple, arguing that the company made it difficult for consumers to ditch the iPhone, and brought another case against Google— focused on its advertising technology— that is set to go to trial in September. The F.T.C. has separately sued Meta, claiming the company stamped out nascent competitors, and Amazon, accusing it of squeezing sellers on its online marketplace.
“It’s a very prominent test of the Biden administration’s new antitrust enforcement agenda,” said Rebecca Haw Allensworth, a professor at Vanderbilt University’s law school.
With those cases, the government is testing hundred-year-old laws originally used to rein in utility and other monopolistic companies like Standard Oil.
A victory for the government provides credibility for its broader attempt to use antitrust laws to take aim at corporate America, said William Kovacic, a former chairman of the F.T.C.
“It creates momentum that supports their other cases,” he said in an interview in June.
The last major court ruling on a tech antitrust case— in the Justice Department’s 1990s lawsuit against Microsoft— cast its own shadow over the Google arguments. Judge Mehta repeatedly pressed lawyers to explain how the specifics of the case against Google could fit into the legal precedents.
The Microsoft antitrust case alleged that the tech giant combined practices like bullying industry partners and leveraging the popularity of its digital platform, from which users typically didn’t switch, to stifle competition.
A District Court judge initially ruled against Microsoft on most counts of possible antitrust violations, but an appeals court reversed some of those decisions. President George W. Bush’s administration settled with the company in 2001.
Judge Mehta’s Google decision is likely to be appealed. “Regardless of who wins or loses, this case probably has a date with the Supreme Court,” Mr. Kovacic said.
These tech giants like Google have amassed massive power and influence over the digital landscape, which could be curbed by Monday’s ruling. By taking on Google, the government is signaling a commitment to challenging corporate giants and protecting consumers and smaller businesses. Remember, monopolistic practices always lead to higher prices, reduced innovation and, obviously, fewer choices for consumers. Who isn’t annoyed with Google collecting vast amounts of data on us? With limited competition, we have little choice but to accept Google's terms. Hopefully this ruling will lead to more stringent regulations on data collection and privacy, enhancing consumer rights and protecting individuals from exploitative data practices.
The ruling reflects the Biden administration's commitment to challenging corporate monopolies, a stance that aligns with progressive values and a surprising willingness to confront powerful corporations, which is essential for addressing broader issues of inequality and ensuring that economic policies benefit the many, not just the few. The Republicans have a very different perspective and I would expect plenty of Big Tech money will be flowing right into GOP coffers now.
Let’s hope this ruling influences public opinion further against monopolistic practices and increasing support for regulatory actions. As public sentiment grows in favor of stricter regulations, politicians may feel greater pressure to back antitrust initiatives. However, given the high stakes, Google is certain to appeal the ruling, and the case will eventually reach the very right-wing, pro-business, anti-regulatory Supreme Court.
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