Monopoly

by Missy

 

[1]

On October 20, the Department of Justice (DOJ), along with 11 other states, submitted a complaint against Google for alleged violation of antitrust laws.  The complaint[2] is 64 pages long. To summarize the complaint, according to the DOJ,

the Complaint alleges that Google has unlawfully maintained monopolies in search and search advertising by:

·          Entering into exclusivity agreements that forbid preinstallation of any competing search service.

·          Entering into tying and other arrangements that force preinstallation of its search applications in prime locations on mobile devices and make them undeletable, regardless of consumer preference.

·          Entering into long-term agreements with Apple that require Google to be the default – and de facto exclusive – general search engine on Apple’s popular Safari browser and other Apple search tools.

·        Generally using monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization.

These and other anticompetitive practices harm competition and consumers, reducing the ability of innovative new companies to develop, compete, and discipline Google’s behavior. ^[3]

Google has not officially responded at the time of this writing. However, on a Google blog post, Kent Walker, Google’s SVP of Global Affairs, published that the complaint was flawed and would not help consumers in any way. He further stated that what Google is doing with their products is like having a product at the store placed at eye level on a shelf. The blog contained images and instructions that show consumers how to change Google as the default search on many devices. In addition, Kent asserts that “This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”[4] He argues that the DOJ completely missed the mark. “The bigger point is that people don’t use Google because they have to, they use it because they choose to.”[5] On that last point, I personally agree that I do choose to use Google search.

Over the past several years, the last four devices I have been using on at least a weekly basis, all came with a search engine other than Google as the default. Admittedly, inertia did have an affect, and I did start using the default search engines. However, I changed all four default search setting to Google within less than a week, after I found the other search engines to be far inferior to Google. 

Regardless of my personal actions, the plaintiffs assert that consumers will not change the default on a device, and this further contributes to Google's monopoly.  The plaintiffs establish the antitrust case under Section II of the Sherman Act, which reads:  “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony. . .”[6]

Monopoly is further defined as requiring:

“(1) monopoly power and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” ^[7]

Google was not always a giant. Survival of the fittest is alive and well in the free market. If you are old enough, you may remember there were other competitors in the general search industry: MetaCrawler, WebCrawler, HotBot, Excite, AltaVista, Ask Jeeves, Ask.com, Lycos, MSN Search,  AOL Search, Infoseek, Go.com, Netscape, Dogpile, and All The Web.[8]  Today, the main competition remaining is Google, Bing (owned by Microsoft), Yahoo (the complaint states they pay Bing for the use of Bing search results),[9] and DuckDuckGo. (DuckDuckGo is distinguished from the other search engines because they offer more privacy settings such as not collecting personal information or participating in web tracking.)[10] 

Interestingly, the complaint uses two Google competitors, Bing and Amazon, to demonstrate Google’s monopolistic power over the two. However, Amazon and Bing are not doing anything much different from Google; Amazon has its own exclusive apps and has Bing preinstalled on its devices.[11] The complaint also refers to the Microsoft antitrust case from a few decades ago. Stephen Houck, formerly the Chief of the Antitrust Bureau in New York’s Attorney General’s Office, who served as lead trial counsel in the case against Microsoft,^[12] points out the Google complaint neglects some main differences between the Microsoft case when it tries to align the two for comparison. Houck’s states that Google’s products are free, and Microsoft was charging high monopoly prices for Windows. He further uses the example of Apple in the Microsoft case and stated that Microsoft coerced Apple to use their browser instead of a competitor, when Apple wanted to use the competitor. He goes on to state that the court said it was an interim threat.[13] As stated in the complaint, Google incentivizes distributors, but there was no indication of any type of threat.

Regardless of how you view the Google case, in looking at antitrust in general, how should it be determined if distributors, advertisers, and consumers are choosing a product because of its superior quality, business acumen, and advantage in innovation rather than illegally dominating the market? What rights does a company have to protect its intellectual capital without running afoul of antitrust? If other competitors are doing the same thing, then is it just a question of size?

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[1] http://www.fubiz.net/2013/08/01/google-monopoly/

[2] https://www.justice.gov/opa/press-release/file/1328941/download

[3] https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws

[4] https://blog.google/outreach-initiatives/public-policy/response-doj

[5] EBID

[6] 15 U.S.C. § 2 (2000).

[7] https://www.justice.gov/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-1#:~:text=I.&text=Section%202%20of%20the%20Sherman%20Act%20makes%20it%20unlawful%20for,foreign%20nations%20.%20.%20.%20.%22 (Emphasis added.) United States v. Grinnell Corp., 384 U.S. 563, 570­71 (1966)

[8] https://searchengineland.com/a-look-back-at-the-old-search-engines-25766

[9] https://www.justice.gov/opa/press-release/file/1328941/download at paragraph 23

[10] https://duckduckgo.com/

[11] https://www.justice.gov/opa/press-release/file/1328941/download at paragraph 130

[12] https://www.competitionpolicyinternational.com/a-modest-proposal-for-antitrust-enforcement/

[13] https://www.youtube.com/watch?v=ibcII48xDE4