Two weeks ago, the US House of Representatives completed a 16-month investigation into Amazon, Apple, Google and Facebook, calling for major changes to limit the market power of these companies. Legislative verdict: Traditional antitrust laws are not up to the challenge, and the code is facing its biggest revision in more than 40 years.
After a lengthy investigation, the Justice Department filed a major lawsuit against Google on Tuesday based on the same antitrust laws. And, according to the agency, they are more than enough to call into question Google’s monopoly behavior.
This is because a company has broken the law under applicable antitrust laws when it uses restrictive contracts to protect its dominant position, undermines competition and thereby harms consumers. The Ministry of Justice strictly adhered to the requirements set out in the legislation when initiating its proceedings against Google.
The lawsuit, backed by eleven state governments, accuses Google, part of the Alphabet group, of having entered into a number of exclusive deals with Apple and other partners that stifled competition in the search and search advertising markets. This restraint of competition ultimately harms consumers by limiting people’s choices.
“The case looks specific but very strong,” said Herbert Hovenkamp, a professor at the University of Pennsylvania School of Law. “A dominant company’s focus on restrictive contracts is as old as the Sherman Act,” which has been the foundation of the US antitrust laws since the 1890s.
Google issued a statement describing the government’s actions as “a deeply flawed process that does nothing to help consumers.”
The decision whether or not antitrust laws need to be modernized and whether the Justice Department will be able to win the lawsuit against Google based on existing laws are not mutually exclusive.
The two matters must run in parallel. The amendments to the antitrust laws recommended by the House’s legislators are merely a fundamental proposal, the fruits of which can only bear fruit after years. The Justice Department’s actions against Google must also take some time. The company announced Tuesday that it is expected to take at least a year to bring the case to court.
According to court experts, the details of the Justice Department’s actions mirror the recent major antitrust case against a major technology company, Microsoft. The lawsuit, opened in 1998, alleged that Microsoft had abused its position as custodian of access as the controller of the dominant Windows operating system to block the potential threat from competing Internet browsers.
The Justice Department has accused Microsoft of entering into restrictive contracts with personal computer manufacturers and other companies to prevent the distribution of software by Netscape Communications, the commercial pioneer in the Internet browser market.
And the process worked. After a long process, the court ruled that Microsoft had repeatedly violated US antitrust laws.
“It was the last big victory for the government, so it makes sense to take a similar path,” said Sam Weinstein, former member of the Justice Department’s antitrust division and now professor at the Cardozo School of Law.
The case against Microsoft also helps the government develop an argument that consumers will be harmed in the lawsuit against Google. In antitrust cases, consumer welfare is often associated with a monopoly showing power by raising product prices to maximize profits.
Google’s search service is free to consumers, so the government cannot point to examples of price increases. But prices weren’t part of the lawsuit against Microsoft either. The software giant made its internet browser available for free as part of a package based on its dominant Windows operating system.
The government argued that this could lead to various types of harm to consumers. Less competition in the market means less innovation and less choice for consumers in the long run. This could theoretically close the market for competitors that collect less data for targeted advertising than Google. A gain in privacy can, for example, be seen as an advantage for consumers.
“The damage is caused by competition and the consumer suffers,” said Tim Wu, professor at Columbia University School of Law (and New York Times staffer).
The case against Microsoft also serves as a precautionary measure. The process took years and was only ended by mutual agreement in 2002. Its effects are being discussed today. Without the process and the resulting years of research, Microsoft could have stifled Google’s growth, according to Google.
Others insist that the technological shift to the Internet and to the detriment of the personal computer has caused Microsoft to lose the blocking power it once had. Technology, not antitrust law, paved the way for competition, according to this interpretation.
The Justice Department, in its first petition for the lawsuit and briefing journalists, was vague about the solutions the government would propose if it won. At this point, however, Google’s position in the search is so dominant that giving users the option of choosing a different search service can no longer make a big difference.
Google is seen not only as a search service that provides relevant results, but also as a verb – “googlar” has become synonymous with searching the Internet. Given a choice, there is a very good chance that people will choose Google, and the company can argue that it is because it offers a superior product that people prefer.
“It’s hard to argue that, regardless of the outcome, this case will change the competitive landscape in online research,” said A. Douglas Melamed, who was director of the Justice Department’s Antitrust Division and is now a professor in the university’s School of Law. Stanford.
The most common criticism of antitrust laws, which lead to lengthy litigation, is that they take time to take effect and take effect slowly, making them unsuitable for dealing with competitive problems in fast-paced, high-tech markets. And that’s a real problem, say experts.
But opening the case this week could make a difference, they agree.
“Such a process sends signals to the marketplace and to the company itself about what kind of competitive behavior is acceptable,” said Scott Hemphill, professor at New York University School of Law.
Translation by Paulo Migliacci