When the US Department of Justice filed a complaint against Google last week it triggered the most significant antitrust case since the federal authorities sued Microsoft in the 1990s. Today’s trustbusters argue that Google’s search and advertising dominance goes well beyond consumer preference and into consumer abuse by forcing people to use its services and bending them to its data collection practices.
This is a new era for big tech, one inaugurated by the US Congress report earlier this month that looked at Amazon, Apple, Facebook and Google. The 16-month investigation said it had found in Silicon Valley “the kinds of monopolies [last seen] in the era of oil barons and railroad tycoons”. This language deliberately recalls two American presidents, and cousins, Theodore Roosevelt and Franklin D Roosevelt, who are remembered, perhaps too generously, for standing up to big business and saving America from plutocracy. At the heart of Congress’s analysis is that tech giants are not playing according to economic rules set by the market, but by rules they largely set themselves. This allows corporations to appropriate excess profits through privileged access to user data.
Google went public in 2004. By 2020 it controlled about 90% of global web searches. On the face of it, Google looks like the biggest unregulated monopoly in the history of American business. The DOJ seems to be thinking along these lines. It accuses Google of using its clout to block would-be rivals. The case centres on Google’s exclusive deals that make its search engine so ubiquitous it is a verb. Business does not get much bigger than this: Google pays up to $12bn a year to be the default search engine on iPhones and iPads, about a fifth of Apple’s income. Non-Apple phone makers have little choice but to opt for Google’s Android operating system which installs its search engine for a cut of advertising revenue.
With rivals unable to gather as much browsing data and therefore compete with Google’s search results, the DOJ claims the company has an iron grip on web ad revenue. Alphabet, the parent company of Google, made $34bn in profit last year, almost all of it from online advertising. Consumer harm is conventionally measured by prices. A standard defence is that Google’s users are the product and advertisers are its customers, so who is being hurt? The company says people don’t have to use its search engine but they choose to.
Even if Democrats win the White House, the public anger at big tech means the Google case is unlikely to be withdrawn. It could rumble on for years. The company might be broken up eventually. The European commission has found Google guilty of antitrust violations three times from 2017-19, resulting in fines of €8.25bn. But lawmakers and watchdogs are too often dazzled by Silicon Valley. Mathew Lawrence of the Common Wealth thinktank points out, in a forthcoming report, that UK regulators are more bark than bite. He says there was tough talking when Amazon proposed taking a stake in the UK’s Deliveroo platform. But the deal was cleared with barely a squeak. The US is signalling, for now, a tougher approach. Change is needed because technology has become power. That power must ultimately work for the public rather than just the shareholders of platform monopolies.