American antitrust case against Google could change everything

The US Justice Department’s antitrust trial against Google is halfway through its 10-week run. Whatever the outcome, the case will influence the future of technology, and thus society, in ways we cannot yet imagine.

The case is significant: It’s the first big antitrust prosecution taken in the US in a quarter of a century, following the case against Microsoft in the late 1990s, with which it shares many similarities.

The Microsoft trial centred on whether the company engaged in anticompetitive practices by making it difficult for computer manufacturers and consumers to uninstall and replace Microsoft’s Internet Explorer browser. Microsoft lost, but avoided being broken up.

[ Microsoft’s Nadella to testify at Google antitrust trial ]

Google is also accused of anticompetitive practices – using market dominance in internet search to suppress rivals by making deals with device manufacturers to offer Google as the search default.

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Google argues that consumers remain free to install competitors’ search offerings, noting consumers still prefer Google search by huge margins. This echoes Microsoft’s insistence that its browser market dominance, once about 95 per cent, was due to consumer choice. But, anyone with a smartphone, tablet or PC knows default offerings remain default because fussing with settings and downloads is unwanted hassle.

That this is the first big antitrust case since United States of America v Microsoft Corporation is astonishing. For a quarter of a century, the US shelved its ample powers to rein in monolithic companies. And yet, since that trial we’ve witnessed the rise of the richest and most powerful companies in history, mostly US technology multinationals.

Both EU and US regulators have waved through damaging, market-constricting acquisitions, further swelling already-huge companies, handing them control of adjacent markets. Think Facebook adding WhatsApp and Instagram, or Google consuming online ad giant Doubleclick. Now regulators on either side of the Atlantic must grapple with daunting business and societal problems created by such acquisitions and ponder whether to break apart the mammoths they helped create.

All as if the Microsoft case never happened. As if none of this growth or behaviour ever raised serious antitrust concerns. As if nothing was ever learned. The very similarities between the Microsoft and Google cases only add to the exasperation. Why has nothing else in the intervening quarter century merited the application of antitrust law?

[ US says Google pays $10bn a year to maintain search dominance ]

Arguments can be made that US antitrust law is too piecemeal, or difficult to use effectively, or currently focused too much on whether consumers are harmed, measured in the short term. At the time of the Microsoft trial, a big tech sector complaint was that antitrust law was outdated, slow and ultimately ineffectual for such a fast-changing sector.

Many continue to argue the Microsoft case had little real effect. However, a browser market once overwhelmingly controlled by Internet Explorer is now diverse, and the dominant browser these days holds 65, not 95 per cent of the market. (That would be Chrome. From Google.) Some added irony: Microsoft chief executive Satya Nadella has testified in the Google trial, accusing Google of using unfair means to control the search market. And some more: US and EU regulators have just allowed Microsoft to acquire gaming giant Activision, a move analysts had predicted would be refused ... on antitrust grounds.

One of Microsoft’s big arguments 25 years ago was that antitrust (and other) regulatory action “stifles innovation”, a claim vociferously adopted ever since across the tech sector. But there’s evidence antitrust action can do just the opposite, to broad benefit.

Writing about the Google trial in a New York Times opinion piece last month, Columbia University law professor Timothy Wu states: “The history of antitrust prosecutions shows this again and again: Loosening the grip of a controlling monopolist may not always solve the problem at hand (here, an online search monopoly). But it can open up closed markets, shake up the industry and spark innovation in unexpected areas.” The break-up of giant telecom AT&T, he says, thus laid future ground for the swift expansion of the internet in a more open, competitive phone market.

Google search isn’t about search, it’s about mega-scale data gathering, no longer a side effect but the intent, with documentable societal and competitive harms

These big antitrust actions of the past didn’t confine definitions of harm to short-term consumer impacts. To do so now is untenable. That’s where the Google case should force change, and consider big tech’s overall business practices and a broader understanding of “harm”.

For example, Google search isn’t about search, it’s about mega-scale data gathering, no longer a side effect but the intent, with documentable societal and competitive harms. As Nadella rightly argued, search gives Google constantly renewed streams of consumer data, the real gold, which could hand Google towering control of the emerging AI market, as AI training depends on a steady diet of real-world data.

Antitrust law and judicial perspectives need to shift, weigh longer-term implications, consider potentially dreadful outcomes and appropriate remedies, incorporating the retrospective learnings from the Microsoft case. The Google trial offers a critical opportunity for change. The trial should mark an inflection point, re-conceptualising “harm”, allowing society to better control the tech sector’s operations and impacts. Failure to do so will leave us aghast at our shortsightedness in another quarter century.