The legacy of antitrust rulings that shaped modern capitalism has significantly influenced today's societal landscape.
Since the enactment of the Sherman Antitrust Act in the late 19th century, which led to the breakup of Standard Oil and the American Tobacco Company, to the scrutiny faced by AT&T and Microsoft in the 80s and 90s, each antitrust banner was waved with a surge of innovation and the rise of new industries.
With the widespread growth of the internet in the new millennium, some of the most powerful tech giants in history emerged. They're spending tens of millions of dollars annually on political lobbying and mastering public opinion through complex algorithms. For regulatory bodies, they've proven even more challenging adversaries than the Rockefellers and Carnegies of yore.
In a month, one of the fiercest judicial showdowns of the century will commence. The U.S. Department of Justice has set its sights on Google and has unusually proposed breaking it up. If things proceed as anticipated, this trial could overshadow the United States v. Microsoft case from over 20 years ago.
Google's Ad Business at Stake Amid Reduced Charges
The current antitrust lawsuit against Google began during the Trump administration.
In 2020, the Department of Justice, alongside 38 state attorneys, filed a lawsuit against Google, accusing it of using its monopoly power to hinder internet search competition and alleging its search engine designs harmed rivals like Expedia, TripAdvisor, and Yelp.
The case persisted into the Biden administration, and this January, the Department of Justice filed another suit against Google, urging the court to force the tech giant to divest some of its ad tech products and separate its digital advertising operations.
However, just last Friday, U.S. District Judge Amit Mehta rejected four of the government's requests due to insufficient evidence but maintained the three main complaints against the company. Mehta emphasized that the accusations against Google's vertical search rely not on concrete evidence, but largely on expert opinions and conjecture. He mentioned in his ruling that only when a monopolistic company's actions stifle competition is such behavior unlawful.
Mehta expressed the need for a trial to assess whether Google's payments to organizations like Apple and Mozilla to keep its search engine default status, along with pre-installing Google services on Android devices, might be deemed as illegally maintaining a monopoly.
The trial is set to begin on September 12 and is expected to last 70 days. Both Google and the government will debate whether Google's multi-billion dollar expenditure to maintain its default search engine status across various platforms is anticompetitive.
Furthermore, the court will not only scrutinize Google's operations but also its relationships with major corporations like Apple and Samsung - relationships that have largely remained confidential.
Market analysts predict that this lawsuit could significantly impact Google's digital advertising business, which accounts for half of its revenue. In 2020, rumors surfaced that Apple was secretly developing a search engine in case its exclusive agreement with Google shifted.
Tech Giants' Data Monopoly Could Break, Paving Way for New Innovations
The lawsuit against Google marks the first time since the 1982 breakup of AT&T's Bell Labs that the U.S. Department of Justice has aimed to forcibly dismantle a mega-corporation through legal proceedings. As such, the case holds monumental significance regardless of its outcome.
Google dominates the search industry with over 90% market share, annual revenues nearing $300 billion, and nine of its products boasting over a billion users, thereby understanding its 3 billion users better than their own families. In 2022, Google spent $10.9 million lobbying Washington for more lenient regulations. NYU Marketing Professor Scott Galloway once candidly remarked, "Google is God."
However, as Google's monopoly continues to grow, it might be time for this "deity" to face the music.
A report by Zheshang Securities highlighted that among the major global economies, the U.S. stands alone in launching spontaneous, systematic, and large-scale antitrust initiatives. Since the 1890s, the country has experienced three waves of antitrust movements. Analysts note that the first wave targeted industrial magnates like the Rockefellers monopolizing resources like oil and steel. The second wave post the information revolution was against tech giants like IBM, AT&T, and Microsoft, monopolizing tech components. The current, third wave, is directed at platform-based businesses like Google, Meta, Amazon, and Apple monopolizing data.
Every antitrust wave has come with a wave of innovation and the rise of new industries. The antitrust suit against AT&T led to patent openings, directly fostering the growth of IBM, Texas Instruments, and Sony. Without the 1998 antitrust suit that forced Microsoft to open Windows compatibility, Google might not have risen to prominence.
Analysts believe that the rise and monopolistic status of platform companies since the millennium have had adverse effects on the entire internet industry ecosystem. If the current antitrust movement proves effective, the liberation of data production spaces might foster the rise of a new generation of industry giants.
