The most important thing happening during these next few weeks might *not* be the presidential election. I think one can make an argument that today’s antitrust case filed against Google might ultimately be a bigger deal. Our daily lives, our stock market, our mental health, our communities, and our jobs are all tightly intertwined with just a few enormous tech companies. Finally, the only entity in the world with enough power to challenge Big Tech has stepped into the ring and promised to take on what I think is the fight of our time.
What will be the outcome of Uncle Sam vs Google? Who knows. My lens for seeing this case is colored by my time covering Uncle Sam vs. Microsoft, which ended up as quite a mixed bag. The government won its case, a judge ordered that Microsoft be broken up into pieces, but by the time all that worked its way through the courts….Google had essentially surpassed Microsoft and the case seemed moot. Tech moves much, much faster than federal courts do, so it’s easy to think something similar might happen here. The case could drag on for years, Google might pay some eye-popping fine, but by then another company will have installed an operating system into our brains. So, why bother?
Why should be obvious: One could argue that Google wouldn’t be Google if Uncle Sam hadn’t scared Microsoft into less anti-competitive behavior. As I read today’s lawsuit, — much of it critical of Google’s search as a forced default choice — I had flashbacks to criticism Microsoft faced about Internet Explorer being the default browser on Windows.
DOJ lawyers had flashbacks, too, and no wonder: Deputy A.G. Jeffrey Rosen, who leads the DOJ case, was lead counsel for Netscape back when it filed a complaint against Microsoft. And this sentiment bled into today’s complaint:
“Google did learn one thing from Microsoft …To chose its words carefully to avoid antitrust scrutiny,” it says. The suit claims Google told employees to avoid certain phrases, such as “cutting off air supply,” or “bundle” or “crush.”
Why the case matters should also be obvious: It’s time American regulators stopped letting a few companies dominate every aspect of our lives. Think about the products you buy — from cable TV to Internet service to online maps — whenever you have only 1 or 2 choices, service suffers and prices rise. If you believe in capitalism, if you believe in market economics, if you believe in America, you believe in competition. Google controls 90% of Internet search in America. That’s clearly not a competition.
Google is hardly the only problem. Big Tech in general has a lot to answer for, and this case is —hopefully — just a beachhead. The real “news” of this month was release of a giant Congressional investigation into Big Tech in all its forms. Matt Stoller’s Big newsletter has the best breakdown of what that report means. Mainly, it signals a dramatic shift in sentiment about monopoly power in Silicon Valley.
“Big Tech’s free pass if over,” said Sen. Josh Hawley (R-Mo.)
The Google case has flaws, not the least of which is its timing. It’ll be easy to dismiss as a political stunt. One wonders what might happen to the case if there’s a new administration in January (Stoller has some ideas.) The case reads very narrow to me, though it can be expanded when additional state attorneys general join in. I’ll have a lot more to say about it in coming weeks.
But let me put this marker in the ground for you now. Antitrust law has been dominated for decades by a 20th-century notion that only identifiable consumer harm matters. The so-called Chicago school of economics has long preached that being big isn’t a problem — in essence, only higher prices are a problem. So if a merger of giants occurs, and someone can prove that consumers don’t pay more for a product, antitrust law doesn’t apply. This was shaky logic in the past century, but it’s bankrupt today. The tech economy has designed elaborate cost-shifting and cost-obscuring mechanisms which makes price unintelligible. In Gotcha Capitalism, I write a lot about the Death of the Price Tag, but suffice to say: Consumers *most certainly do* pay to use companies like Google and Facebook, they just don’t know what the cost is. Is the cost annoying ads? Or job loss in the future due to profiling? Or higher credit rates? Or an uneasy sense that you’ve lost your freedom?
Or maybe, it’s crappy search results. (After all, when you Google for tech news, my stories often don’t show up among top results.) We don’t know what the real cost is because we don’t have an alternate universe where we could see what kind of great innovations have been snuffed out by anticompetitive contracts Google forces companies to sign.
In other words, “It’s free, so there’s no illegal antitrust activity here,” is flat-out wrong. Don’t fall for it.
Congress and federal agencies have been woefully underprepared to analyze and regulate big tech firms with their clever economists and distracting animated gifs. That’s why the Justice Department and other federal regulators haven’t filed a meaningful tech antitrust case in decades. Today *could* mark a new beginning. Congress’ Big Tech report lays the groundwork; today’s Google lawsuit is the first shot fired at Lexington and Concord. There’s a battle ahead, but one that’s very much worth fighting. I dare say, independence is at stake.
For further reading:
Here’s a PDF of the DOJ lawsuit
Here’s Google’s response: (“This lawsuit would do nothing to help consumers…”)
Here’s a NYT report on the Big Tech report.
And here’s the Big Tech report (Warning: It’s big)
And if you’re really curious, here’s something on the Chicago school and monopoly power.