Antitrust Law: One Solution to Big Tech

As wealth disparity continues to skyrocket, inequality now sits at levels comparable to the Gilded Age.1 No wonder the public appetite to bring back Rockefeller-era antitrust laws has risen to match; technological giants like Google, Apple, Meta, and Microsoft are omnipresent in the average American’s daily life. From ‘Googling’ the news, scrolling on TikTok, or connecting with friends and family over Instagram or Facebook, these free platforms have seamlessly integrated into our lives. The question of these services’ costs, or the lack thereof, and their dominance over U.S. markets has been the subject of recent anti-monopoly cases. The Federal Trade Commission has sued Amazon and Meta, Facebook’s parent company; at the same time, the Department of Justice (DOJ) has sued Alphabet’s Google for illegally restricting competition.2 3 The case against Google, according to the New York Times, is the biggest monopoly trial of the modern internet era; the DOJ’s lawsuit against Microsoft in 1988 was the last time an antitrust case of this magnitude was prosecuted.4 After all, Google is most emblematic of Big Tech dominance; its name is a verb. 

Google was not always such a giant in the industry; it began as an upstart to engines like Yahoo and AltaVista. Before the modern internet age, search engines had no system of indexing information and were guided largely by advertising money. Google changed the paradigm through its algorithm by creating ‘crawlers’—programs that create databases and then index relevant data.5 This allowed it to account for page quality, number of links, and relevance to user search in addition to advertisement monetization. Those days of simplicity are long gone now. Alphabet, the parent company of Google, is valued at $1.04 trillion with a cash reserve of $120 billion and has faced similar antitrust lawsuits in Europe. In 2019 alone, Alphabet spent $12.7 million lobbying in the United States, one of the top spenders in Washington.6

Roosevelt addressed antitrust laws in his 1902 State of the Union: “Great fortunes have been accumulated, and yet in the aggregate, these fortunes are small indeed when compared to the wealth of the people as a whole.”  The question today is whether the wealth of the people can be leveraged against these technological juggernauts.7 Rather than a fully laissez-faire model of passivity hoping that the markets will simply do what is right or a fully socialist approach to convert corporations into public services, American antitrust laws function in the spirit of guided capitalism, limiting private monopoly power. By dividing corporations into smaller sections, the law ensures vulnerability to competition. The case, U.S. et al. v. Google, has been filed by 35 states, Guam, Puerto Rico, and D.C.8 It should be noted that the DOJ case does not only accuse Google of having a monopoly: it is not illegal in the United States to maintain a monopoly. The DOJ believes that Google’s dominance is not owed to product superiority, but rather its dominance has been leveraged to suppress competition unlawfully.  

Technological companies are becoming increasingly powerful; given recent concerns about artificial intelligence and the harm of social media (i.e., Cambridge Analytica and potential campaign interference), the backlash has been one of the few bipartisan issues as of late. Both former President Trump and current President Biden have announced their support for government intervention against the issue of ‘Big Tech.’9 10 The most prominent companies that fall under this ubiquitous term are Google, Apple, Amazon, and Meta. 

The case accuses Google of maintaining a market monopoly by paying Apple, Samsung, and other dominant tech companies to make Google the default search engine on smartphones and browsers. The case against Google is almost identical to the successful suit brought by the government in 1998: the DOJ effectively proved that Microsoft, by establishing its own web browser—Internet Explorer—as the default on Windows computers, crushed competition illegally. 

The federal government has estimated that almost 50 percent of Google’s search traffic originated on Apple devices in 2019. Reportedly, Google pays the company anywhere from $8 billion to $12 billion annually to maintain its status as the default on iPhones, iPads, and Macbooks. Google’s payments account for about 12-15 percent of Apple’s total profits. Losing the position on Apple products is considered a “Code Red” according to the lawsuit. These contracts were made when Bing and Yahoo posed significant competitive threats to Google search. The contract with Apple being reactionary shows a direct correlation with the market competition.  

Google’s chief legal officer Kent Walker wrote in a blog post, “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”11 The company’s argument pleads that these agreements are no different from cereal brands paying for prime placement on store shelves, essentially stating that its success comes down to the quality of its products. That may, in part, be true. Google has a tremendous dominance in the market—estimated at 90% of the search engine market in the United States and 91 percent globally.12 With that many users, the company is able to collect a higher volume of data than its competitors and improve its search results, resulting in more refined results and causing users to rely increasingly on Google. Proponents of Google argue that online search is a natural monopoly, a type of monopoly in an industry with high bars to entry that prevents competition, resulting in only one efficient company. 

That being said, Google has other competitors with different trade-offs. DuckDuckGo is a search engine, with its selling point being that it collects less data than Google. This could be a beneficial option for consumers; however, the company’s full potential is being blocked by the illegal contracts that Google produces and needs. This is due to the fact that consumers are most likely to use a website that is convenient and accessible; the Justice Department has argued that this is the best way to get searches. If customers exceedingly choose what is convenient, it stifles fair competition. And it works: Google’s biggest competitor, Bing, launched a new generative AI version of its search engine in February: and its market share in the U.S. is a staggeringly low 6.35 percent, even lower than before it launched.13 14 Google’s dominance has always been remarkable, but a decade of its monopoly has thoroughly debilitated any genuine competition. 

Judges have typically ruled against companies in antitrust cases only when demonstrable harm is done—often through raised prices— like the splitting of AT&T in 1982.15 As online platforms are costless to consumers, harm may be more difficult to define but definitely still exists. The guiding economic ethos of these companies is that profits are first and foremost; since 1970, corporations have followed the Friedman doctrine, where short-term profits are maximized for the benefit of shareholders.16 The way that technological companies create this profit is through advertising and selling data: products are given to consumers for free, but much of their personal data is recorded and sold. While users consent to this sharing of data, most are unaware and skip through the lengthy, jargon-filled terms and conditions.17 Without any genuine competition, Google is able to track shopping habits, video-watch history, and even the content of users’ email conversations freely.18 19 20 A randomized trial in 2020 found that Google-associated results (ads for Alphabet’s other products) made up more than 60 percent of the first page of search results on smartphones.21 This practice is clearly lucrative; Google’s search engine brought $162 billion in advertising revenue in 2022, 57% of its total revenue.22 23

Breaking up monopolies will not fix the issues of wealth disparity in America, but it can certainly allow for competitive innovation within industries. After the 1984 breakup of AT&T, though prosecutors were more concerned with lowering prices for long-distance calls and consumers’ ability to choose, it served as the catalyst for the internet explosion of the 90s, wherein companies increasingly conducted business through phones. IBM’s suits in the 60s and 70s allowed Apple and Microsoft to flourish. Google itself has Microsoft’s antitrust lawsuit to thank, as Google was able to surpass Microsoft’s Bing after the case. Google was once an upstart that benefited from space in the industry brought by antitrust law, but it has since stagnated. With the advent of AI, the question of breaking up Google is also whether it will make space in the AI world, like Microsoft’s ChatGPT. 

Google has argued that it competes not in the world of search engines but online advertising as a whole. While it may have market dominance of search engines, it does not have a monopoly on all platforms. It competes with services like TikTok and Facebook for consumers’ attention in terms of advertisement space. But search is its own category and a massive one at that. Google’s algorithm is so powerful that websites alter their content to be promoted so that there’s an entire enterprise of search engine optimization tools that are dependent on Google.24 25 If most people do not look past the first page of results (one study estimates that only 0.63% of users click on the link on the second page), companies are forced to contort themselves around Google's Search Engine Optimization (SEO) standards.26 Online cooking recipes rely on certain pieces of data like recipe yield, calories, and ingredients that are prioritized by the algorithm, even if the information is inaccurate.27 Food blogger David Lebowitz wrote that “Everyone is just trying to scramble to the top of the list… I write recipes for readers, not for search engines, and I am being penalized for it.” This means grave implications for consumer harm, especially given evidence that Google knowingly leverages its search algorithm to “exclude challengers,” according to a Yelp-funded study from American legal scholar Tim Wu.28 Google’s dominance over the field of search engines (which is a $225.3 billion market) is of critical importance.29

There are several solutions to Google’s overwhelming market control: the European Union has filed several successful antitrust suits against the tech giant. One solution has been to present smartphone users with a screen that allows them to select their search engine, negating the default built into many devices today. The European Union also requires every database to allow consumers to access their information at the user’s request. In the United States, Facebook and Google have these monopolies on our data, allowing them incredible power in our infrastructure. While Google’s search business is not something easily split up like AT&T or Standard Oil along regional divides, it is certainly possible to downsize and require transparency. The government should compel Alphabet to sell Chrome, its browser, and adopt an EU model for consumer choice. With time, competition will be able to thrive accordingly.