Google’s Antitrust Lawsuit: The Shift to Restrain Big Tech

As Google loses its halo in the eyes of US authorities, its dominion over the Internet—whose popularity made its search engine a verb—seems to be at stake. In a complaint against Google, the US Department of Justice and 11 state attorney generals filed antitrust charges, accusing the company of illegally abusing its dominance as a search engine to preserve its monopoly over the internet. The lawsuit marks the most significant attempt the American government has taken against major tech firms in nearly two decades, pinpointing the beginning of a new era that challenges the power and influence of Big Tech.

As with the infamous antitrust suits filed against AT&T in 1974 and Microsoft in 1988, the DOJ and state attorney generals bring their allegations against Google under Section 2 of the Sherman Antitrust Act, which forbids maintaining monopolistic power through improper conduct. The case aims to “restrain Google LLC from unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States through anticompetitive and exclusionary practices, and to remedy the effect of this conduct.” As alleged in the suit, Google’s exclusionary contracts with device manufacturers like Apple and Samsung, as well as with browser makers like Mozilla and Opera, make the company the default search engine in millions of desktop and mobile devices. Given Google’s control over distribution channels that account for 80% of online searches, competitors often struggle to position themselves in the marketplace, as major manufacturers do not support products that might endanger their lucrative contracts with the firm. The government cites Google’s anti-competitive policies as the catalyst for Amazon’s Fire Phone failure, which used Bing as the default engine.

According to United States Attorney General William Barr, “Competition in this industry is vitally important, which is why today’s challenges against Google—the gatekeeper of the Internet—for violating antitrust laws is a monumental case. The lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, and small businesses and entrepreneurs beholden to an unlawful monopolist.” The government argues that the firm’s actions hurt consumers by limiting consumer choice and by stifling innovation, given that as a monopoly Google can maintain quality—including consumer privacy, data protection, and use of consumer data—at a level below that of a perfectly competitive market. 

Google’s dominance over advertisement and general search text advertising also impacts advertisers, who receive lower service quality and higher associated fees as a result of the company’s monopoly in the digital economy. Mark Asselstine, owner of Uncorked Ventures, voices the concerns of many small businessowners, declaring that he can’t afford to spend $30,000 each year on Google advertisements to promote his company. As a result of Google’s monopolistic business model, many small businesses remain uncompetitive. Moreover, the firm’s dominance over the marketplace harms booking sites like TripAdvisor, Expedia, and Booking Holdings, which spend massively on advertisement to compete against Google’s booking services. Unfortunately, while the ‘Internet’s monopoly gatekeeper’ earned $134 billion on ad revenue in 2019, many industries faced losses, with the travel industry spending as much as $16 billion on Google Ads.

For its part, Google claims that the lawsuit is fundamentally flawed. Kent Walker, Google’s chief legal officer, vehemently asserted in a blog post that consumers chose to use their services, since they have the option to easily switch from one search engine to another. Moreover, the tech behemoth claims that it was not using exclusivity agreements to shut out competitors as Microsoft did in 1988; just as cereal brands pay for grocery store shelf space, Google claims it can do the same to promote its services through agreements with Apple and Android. Given that the complaint could raise mobile device prices and create lower quality alternatives, Google also adds that consumer rights may be endangered by the lawsuit itself.

Although the lawsuit will likely drag on for years, this case marks the clearest sign of “Techlash,” a movement of growing animosity against Big Tech’s abuses in the marketplace. The government has traditionally adopted a broadly laissez-faire attitude towards Big Tech, just as it has historically protected other new and prominent industries. Margaret O’Mara, a historian at the University of Washington, recounts that, “We have seen this before in American history with other newish industries—railroads, oil, steel—that grew very fast and grew in a nearly unregulated fashion until there was a popular and political backlash against them that resulted in the regulation of these industries, and in some cases, the breakup of particular companies.” This lawsuit marks the first time that Washington has acted against tech’s anti-competitive practices in many years, indicating a shift towards the end of legal inaction against tech giants. 

The beginning of a “Techlash” era arises in an unusual period of bipartisan endorsement, whereby Republicans like President Trump and liberals like Senator Elizabeth Warren voice desires to limit the power of large technology companies. Last month, Democrats issued a report that aims to regulate and restrict the powers of Apple, Amazon, Facebook and Google through the reformation of American antitrust law or separations. They also advocated for clearer legislation to prevent tech behemoths from buying other companies. Although some members of the Republican party agree with the Democrats’ proposal on increasing funding for antitrust agencies, many vehemently oppose the restructuring of these companies. Instead, the conservative party seems eager to discuss how platforms (such as Twitter and Facebook) must be held accountable for political biases. To do so, Republicans are pushing to overhaul Section 230 in the Communications Decency Act, which states that platforms cannot be sued over content created by users. President-elect Joe Biden’s support to amend Section 230 lends further credibility to bipartisan efforts to rein in Silicon Valley giants, claiming that social media companies spread extremist views. If Democrats win both of Georgia’s Senate seats in the run-off elections on January 5th, 2021, they will gain control of the Senate, advancing Biden’s agenda. Coupled with a Democrat President and Democrat-controlled House of Representatives, the Democrats winning the Senate would mean a ‘blue wave’ and spell trouble for Big Tech, leading to a higher chance of reforming Section 230 and intensifying antitrust actions on Facebook, Google, and Amazon.

The DOJ’s antitrust lawsuit, along with passionate bipartisan opposition against tech incumbents, indicates the start of a new era whereby these monopolies face criticism for stifling innovation and for harming American consumers. As the lawsuit against Google continues, tech giants must brace themselves for a wave of legal action that will challenge their power over the Internet economy. While the prospective president has not outlined a detailed path to curb Big Tech’s power, Silicon Valley should not be anticipating a looser regulatory framework, particularly if the Democrats take back the Senate and pave the way for new antitrust legislation.