Analysis of DOJ’s Antitrust Case Against Google (Part III of III)
DOJ’s antitrust case against Google presents several interesting and difficult issues. Google dominates the search engine market. No one can question that. But the question will eventually boil down to whether Google’s conduct, as a monopolist, resulted in consumer harm.
Section 2 monopolization cases require more proof than whether a specific company has a monopoly. The question boils down to whether Google engaged in exclusionary conduct and whether such conduct resulted in anticompetitive harm. In conducting this analysis, courts have to weigh any procompetitive effects against any anticompetitive effects.
On the procompetitive side of the equation, Google will argue that its scale is unique and provides important benefits to consumers. By conducting broad searches using its algorithm, Google improves its search analysis to improve predictions of consumer search behavior. In the end, Google is continually improving its service offering as a result of its unique scale of operations.
On the other side of the ledger, DOJ has to establish that Google’s scale was acquired by exclusionary conduct not procompetitive conduct, and that Google’s monopoly has been leveraged to cause higher prices and/or reduced supply for internet search advertising. In the general search market, DOJ claims that Google’s monopoly prevents consumers from securing increased privacy protections against sale and use of personal data.
Fortunately, in the Microsoft case, DOJ relied on evidence of analogous agreements that Microsoft imposed on original equipment manufacturers to require them to pre-install Microsoft’s browser along with Microsoft’s Window operating program. The Microsoft court ultimately ruled that consumers rarely changed pre-installed browsers to a competing browser. In the Google case, DOJ argues that consumers rarely change default browser settings on their cellphones, tablets or computers.
Press reports suggested that DOJ’s staff was unable to compete its investigation and ordered to prepare the case quickly for filing. DOJ faces a significant challenge – to assemble evidence to back up all of the claims and assertions included in its complaint. Given the difficult burden and the expected aggressive defense, DOJ’s case will require herculean efforts.
The case included eleven (11) state attorneys general, all from Republican states. Apparently, democrat states wanted to file a broader case against Google to include Google’s activities in non-search businesses, its harvesting of personal data and its prior acquisition of Fitbit.
DOJ’s case suffers from one significant theoretical challenge – Google searches are free to consumers. Google does not charged for its browser. Consumers are a little more sophisticated than tech consumers in the 1990s dealing with Microsoft. Consumers may use Google and decline to use alternatives because they like the service. By definition, consumer searches improve with larger databases – Google has the largest database of internet web addresses, and its ability to cull through such information reflects its self-improving operational loop. As a result, consumers’ decision to stick with Google may not reflect the power of a default setting but a conscious choice by consumers in favor of a more popular search product.
Assuming that DOJ carries its burden and wins the case against Google, there is a big question – what remedy will DOJ seek? DOJ is not inclined to impose behavioral restrictions on a monopolist. To the contrary, DOJ prefers a structural solution.
If DOJ decides to pursue a structural remedy, would DOJ consider requiring Google to sell off its free browser service while retaining its advertising operations? I am not sure policymakers and politicians would favor such a remedy but it is hard to posit a good alternative. If DOJ decides to seek behavioral remedies, DOJ could be injected into reviewing and enforcing prohibitions on distribution contracts and find itself back in the regulatory business.