Sean Heather
Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce
Published
September 09, 2024
The recent ruling against Google in a case brought by the Department of Justice and state attorneys general is noteworthy. While the decision will be appealed, the remedy phase of the trial begins this week, and any remedy is likely to disappoint increasing demands from biased observers to break up the company.
The decision against Google, if upheld on appeal, holds that Google had obtained its monopoly position on the merits. The decision suggests Google earned its market dominance in mobile by being better than its competition. Consumers willingly chose Google and were not forced.
Decision Debrief: Understanding the Ruling
The decision further acknowledges that earning a monopoly position is not a violation of the law. However, antitrust law prohibits a company from engaging in anticompetitive conduct to maintain a monopoly.
This is where the judge found that Google crossed the legal line. According to the court, Google’s monopoly status was legally earned until it entered long-term exclusive contracts to secure its position as the default search engine on mobile devices. The judge deemed this practice to be conduct that no longer allowed Google to earn its monopoly status on merits, but instead made payments to maintain it.
A Controversial Call: Analyzing the Details of the Decision
There is debate about whether the judge should have readily agreed with the government’s definition of “general search” as the correct market definition. After all, defining a market too narrowly or in a manner that does not reflect consumer behavior, can make it easier to label a company a monopoly. Google disagrees with the market definition the judge has used, citing evidence that consumers have many ways to find information.
But perhaps the more interesting question is establishing what harm Google caused consumers when it paid to be the default search engine on mobile devices. Showing harm to consumers, not just competitors, is required to prove a violation of the antitrust laws.
Here, the decision is unclear. Although paying to be the default search engine might seem like a means to avoid competition, the opinion recognizes that Google has consistently made investments to improve its search engine and largely remains ahead of its competition regarding quality. While being the default search engine is beneficial, it’s also relatively easy for consumers to change their default settings.
The decision finds that Google’s exclusive contracts were “reasonably capable of” contributing to the maintenance of its monopoly power in the general search services market. The court suggested that, had Google not bolstered its monopoly position in this manner, other competitors would have invested more heavily and improved their search offerings, potentially resulting in even better search options offered by Google and its competitors all to the benefit of consumers.
Perhaps this is true, but trying to predict an alternative future can be unreliable. On appeal, it may not hold up that Google’s exclusive default search engine contracts resulted in a sufficient finding of consumer harm.
Neo-Brandeisians Rejoice Amidst Remediation Talks
The Google case has been divided into two parts. The trial to determine whether Google violated the antitrust laws—which has concluded—and a proceeding to determine the remedy—which is just beginning. Since the decision that an antitrust violation has occurred, Neo-Brandeisians have been eagerly opining in what appears to be an orchestrated effort to establish a fallacious view in the court of public opinion that the best remedy, or maybe even the only remedy, that should be considered is to break up Google.
Such calls ignore what was at issue in the case. "Break-up" advocates pretend that Google has committed a gross violation of the law. However, that view ignores the judge’s weighing of the facts against the law, as well as his acknowledgment that Google has created an excellent product and that it continues to invest in and to innovate.
Antitrust remedies should specifically address any unfair practices that limit competition, aiming to restore a competitive market. They also shouldn’t ban practices that encourage competition or impose penalties unrelated to the violation.
Too broad of a remedy could discourage competitive behavior (indeed, the court found that short-term exclusive contracts can promote competition) and stifle innovation, especially for a company that obtained its market-leading status on the merits. As in any legal proceeding, the court should only impose a targeted remedy, not an outlandish one.
About the authors
Sean Heather
Sean Heather is Senior Vice President for International Regulatory Affairs and Antitrust.
