August 12, 2024
Edward Longe and Turner Loesel
For years, the U.S. government has been hunting for something elusive: an antitrust win in federal court against the country’s largest and most innovative tech companies. While the Federal Trade Commission has largely been unsuccessful against Meta and Microsoft, the Department of Justice’s Antitrust Division, led by Jonathan Kanter and 11 state Attorneys General, recently secured a victory against Google after convincing Judge Amit Mehta that “Google is a monopolist, and it has acted as one to maintain its monopoly.”
While we don’t yet know what remedies the court will demand, the decision will reshape America’s tech landscape and change how Americans access information. The decision could also reverberate here in Florida, where the tech giant has a significant economic footprint underpinned by the billions of dollars the company makes every year.
The government’s case against Google centered around the allegation that the search engine had paid device manufacturers “huge sums” to be the default search engine on their devices. These agreements allowed Google to receive “billions of queries every day,” providing the company with “extraordinary volumes of user data.” With vast amounts of data and queries, the company generated billions of dollars in advertising revenue to maintain its alleged monopoly and lock out other competitors through exclusivity deals.
Significant tension emerged between the government and Google over the definition of the market. Defining markets is particularly critical in antitrust cases because if the definition is too broad, the market will incorrectly seem less competitive than it is. Similarly, if the definition is too narrow, the market will look more concentrated than it is. The government argued that Google was engaged in general search services because, unlike social media sites or specialized search engines like Expedia, it was not a “walled garden.” On the other hand, Google sought to argue it should be classified as a query product, largely because “whenever a person seeks information online, they choose where to search, whether on a GSE, an SVP, a website, or a social media platform.”
While the court ultimately agreed with the government, market realities suggest that Google’s definition better-reflected consumer habits. While Google remains the dominant means of obtaining information online, habits are changing. Firstly, younger internet users are now using social media to get information online, eroding Google’s dominant position in the information market. Secondly, search engines could face major disruption from the emergence of AI chatbots. In fact, AI chatbots are forecast to cause traffic to search engines to drop by almost 25% by 2026. Changing consumer habits points to a more complex and competitive market than Judge Mehta may have considered.
The judgment also fails to recognize the ease with which consumers can select other search engines or browsers. While Google does have a large share of the search engine market, its exclusivity deals have never prevented consumers from using other search engines like Bing, Yahoo, DuckDuckGo, or AskJeeves. The reality is that consumers are using Google because it offers the best service.
Now, had these agreements actively kept consumers away from Google’s competitors, government action would almost certainly be warranted.
The effects of Judge Mehta’s ruling will be chilling for America’s tech industry. It will almost certainly disincentivize scrappy start-ups, as Google once was, from becoming the next tech giant, fearing that any actions designed to grow and cement their market position will attract unwanted attention from antitrust enforcers. Secondly, at a time when America is locked in a race for tech supremacy, this ruling may have kneecapped one of the West’s most potent weapons.
The ruling’s effects will be felt here in Florida, too. According to Google’s Impact report, the company has generated over $36 billion in economic activity and supported over 1.3 million businesses in Florida alone. Any changes to how Google operates could disrupt these investments and the support the company provides to Florida’s growing economy.
For an administration increasingly hostile to large technology companies and has failed to achieve any meaningful success over the past few years, the DOJ’s victory against Google was a reason to celebrate. Still, the tech giant has already laid out its intention to appeal the ruling. How that appeal plays out will ultimately determine whether the search engine, which has now become a verb, can continue to deliver the products and services that enabled it to become wildly popular. Or if the government will punish a true American success story.
