Last week’s antitrust lawsuit against Google may be the culmination of years of preparation, but it also marks the beginning of what’s likely to be a very tortuous process indeed.
It’s the first big challenge to a tech company’s dominance since 1998, when the US Department of Justice filed a similar suit against Microsoft, and is being compared with the breakup of AT&T in the 1970s.
The focus of the case is Google’s dominance in the search and advertising markets. The company is worth over $1 trillion and has revenues of $160 billion; it has around 90 per cent of the mobile search market.
And, reads the complaint, “For many years, Google has used anti-competitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising – the cornerstones of its empire.”
In response, Google has described the case as ‘deeply flawed’, adding, “People use Google because they choose to – not because they’re forced to or because they can’t find alternatives.”
At the heart of the case are the contracts Google has with phone manufacturers such as Apple, LG and Motorola, which make Google the default search engine.
While the DoJ laid out a large number of other complaints against the company in a report last month, limiting the lawsuit significantly increases the chance of success.
What could a successful lawsuit mean?
It’s worth emphasising that the case is likely to take at least twelve months – and appeals against the verdict many years more. More lawsuits – into the company’s digital advertising business, for example – are also likely to follow, dragging the process out even further.
Nothing’s going to change in the short term.
In the longer term, it’s possible that the company could be broken up, with its Android business, for example, spun off into a separate company. Another alternative would be to prohibit the company from signing the offending contracts. Either way, users could be presented with a clearer choice of search engines, in a similar manner to the one in the EU.
Microsoft’s Bing could benefit, as could smaller search engines, but the chances are that many if not most users will continue to use the one they’re used to.
More cases to come?
More significant, in theory, would be the knock-on effects on the other tech giants. In early October, a report from the House Judiciary Committee on Amazon, Apple, Facebook and Google concluded that the four companies were ‘the kinds of monopolies we last saw in the era of oil barons and railroad tycoons’.
The report recommended breaking up the firms and strengthening antitrust laws.
And antitrust investigations of Amazon, Apple and Facebook are also underway at the Justice Department, the Federal Trade Commission and, potentially, dozens of state attorneys general.
Right now, it’s clearly far too early to say whether these investigations will come to much – especially when we don’t know who will be in the White House in a few months’ time. However, the Democrats are at least as enthusiastic as the Republicans when it comes to curbing the power of the tech giants.
In the case of Google, either way some sort of settlement is likely.
Any significant breakup would be an extreme solution, and difficult to carry out. However, there’s no doubt that the lawsuit marks a stepping-up of efforts to curb Google’s dominance – and any resulting changes to the current antitrust regulations would provide a clear warning for the rest of Big Tech.