On the morning of Oct. 20, the U.S. Department of Justice (DOJ), along with the Attorneys General of 11 states, filed an antitrust lawsuit against Google.
The news was greeted with a sharp dip in the stock of Alphabet, Google’s parent company, which rebounded by the close of day. Policy wonks and reporters covering the tech beat seemed to regard the news as a predictable, even if unexpected, turn in the longstanding DOJ investigation into Google which began a year ago. Most surprising is the fact that the lawsuit is being advanced now, a mere two weeks before the election.
For some of us, however, a lot of this is white noise. Antitrust lawsuits and DOJ investigations into Google, what does it all mean?
Antitrust lawsuits are legal actions brought by state or federal attorneys general against companies accused of violating antitrust laws. The specific laws on the books vary from nation to nation, but in the U.S. our benchmark antitrust law is called the Sherman Antitrust Act of 1890, in its amended form after the passage of the Clayton Act in 1914.
Google is being charged with violating, specifically, the provisions of section 2 of the Sherman Act which states that conspiracy by one or several persons to monopolize interstate or import/export commerce is guilty of a felony. The DOJ defines monopolization as a business’s having monopoly control in a market and specifically seeking monopolistic control in a market as opposed to having attained it through normal growth and development.
In plain English, the DOJ is accusing Google of having a monopoly on general search engine results and advertising on those search engines which they enforce by deliberate action. Some examples of these practices cited in the DOJ brief include crowding competitor search engines out of the marketplace by preventing their access to data and advertisers and signing exclusionary agreements with manufacturers of cellphones to ensure that Google is the default (or exclusive) search engine on a device.
If the charges stick, Google would be the largest monopoly ever trust-busted, as its 86.86% market share according to Statista.com is comparable to the 64% monopoly that Standard Oil Co. had on the oil industry when it was forced to disband in 1911 (although it had, at one time, boasted a marketshare of around 90%).
What does this mean, however, for the millions of people, especially young people, that use Google’s services every day?
Well, it could mean a lot, or very little.
In the brief, the plaintiffs are seeking “structural relief as needed to cure any anticompetitive harm.” This is a very open-ended condition and, if the government wins its case, it could lead to everything from breaking up Google into dozens of smaller companies to merely setting up some minor divisions within the company that would last for a set amount of time, as was the case following U.S. v Microsoft (2001) which is the natural comparison case.
In the case of a settlement like that agreed to with Microsoft, little would change in terms of Google’s services and their availability. As a matter of fact, it might be a net benefit to consumers as cellphone manufacturers, for instance, could take greater advantage of the open source Android operating system without being restricted by binding contracts with Google. However, a Microsoft-style settlement might also not achieve its goal of reversing Google’s dominance in the search engine marketplace. After all, Microsoft’s Windows still only has one major competitor in Apple’s MacOS.
If Google were to go the route of Standard Oil Co. and be completely dissolved by the government, some Google services may go forever.
One notable and beloved Google property that could face disaster in this scenario would be YouTube. Google has famously been very secretive about YouTube’s exact profits and, while they released healthy revenue reports from the last quarter of 2019 earlier this year, it’s still unclear whether Google continues to operate YouTube at a loss, given that a substantial portion of ad revenue goes to content creators.
If true, that YouTube continues to operate at a net loss, then it would not stand on its own as a company and it would be an albatross around the neck of any other companies emerging from the breakup of Google.
This might lead to a vacuum in the streaming video market being filled by services that, for example, charge a mandatory membership fee for access as opposed to YouTube’s optional premium service. We might also see streaming video platforms with a heavier emphasis on ads or that incorporate more and more legacy media content (as the case has been with YouTube in recent years) to catch more eyeballs and drive more clicks.
Either way, the future for Google seems uncertain and William Barr’s DOJ, judging by the aggressive tone of the brief, doesn’t seem inclined to go easy on the tech giant. What effect that will have for the millions of Americans, especially tech-savvy younger Americans, remains to be seen.
