On Tuesday, the Department of Justice (DOJ) filed an antitrust complaint against Google — the highest-profile antitrust lawsuit since the 1998-2002 Microsoft case. The 64-page complaint argues that Google is “unlawfully maintaining monopolies” in search and advertising markets. But politics, not the law, is what is really driving this case.
Many Republicans are upset about perceived anti-conservative bias in the tech industry. That explains the Google suit’s timing — and the likelihood of a similar suit against Facebook before the end of 2020.
While the DOJ and most state attorneys general have been investigating Google for some time, many DOJ lawyers did not believe they had yet built up a solid case, and opposed Barr’s rushed pre-election timing. The New York Times reported in September that some staffers refused to sign onto the complaint. Some even left the case over their objections.
From the contents of the complaint, it is clear why. One of its listed grievances is that Google has become a verb. By this logic, as lawyer Cathy Gellis notes, Kleenexes, Band-Aids, and Popsicles have a potentially unlawful edge in their markets. The complaint’s more serious arguments fall equally short. Here are two reasons why.
The Dozen Keystrokes Argument
Google provides default search engine and web browser for most smartphones. As the complaint notes, “Google pays billions of dollars each year to distributors — including popular-device manufacturers such as Apple, LG, Motorola, and Samsung,” as well as to wireless carriers and browser companies. The exact payments aren’t known, but Apple alone likely receives between $8 billion to $12 billion from Google annually.
This default status is a powerful — and, DOJ argues, illegal — way for Google to exclude competitors.
The trouble with the Justice Department’s case is what I call the dozen keystrokes argument. It is not difficult to type DuckDuckGo.com or Bing.com into your browser. Just as Microsoft found out with Internet Explorer and then Edge, being the default is no guarantee of dominance. You still need consumers to prefer your product for them to use it.
Just as Microsoft never actually controlled the browser market despite its once-dominant market share, Google doesn’t actually control the search market. Consumers do. If they like something else better, they can make that known in seconds.
The Relevant Market Fallacy
Language matters. According to the complaint, Google doesn’t monopolize search, but rather “general search.” This phrasing allows the government to elide major portions of Google’s relevant market.
This is the relevant market fallacy. To strengthen their case, regulators often accuse a company of monopolizing a market far narrower than its actual relevant market.
In this case, the complaint even gives its own examples, on pages 9-10. “Specialized searches” where Google is not dominant include product searches on Amazon and eBay and travel-booking sites such as Expedia and Priceline. Other everyday non-Google searches include search-recommendation algorithms on Netflix and other streaming services, many internal website searches, Word and PDF in-document searches, and even Internet dating sites, which use their in-house algorithms as selling points. Nothing is stopping Google from competing in those other areas, yet other companies routinely outperform Google in them.
The classic legal test of monopoly power is whether a company can raise prices while restricting output. Online ad prices went down by more than half from 2009–19, and Google was a major reason why. Meanwhile, prices for print advertisements — which compete with Google for advertising dollars — rose, and in some cases doubled.
Monopolists do not cut prices. They raise prices while slashing output, because they have the market power to get away with it. The Justice Department would not have to use fancy phrasing if it had a better case.
There is a lot more to the Google case, and it will almost certainly drag on for years, regardless of this year’s election results. If the initial complaint is any guide, the Justice Department’s case is weak. But in antitrust law, the merits of a case are not as important as the politics behind it.
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