Google is a monopolist, and has acted illegally to maintain a monopoly in online search, a US court said in a landmark antitrust ruling last week.
Users of Google may wonder what the big deal is since the search engine makes life easier and is free. Google, too, has long argued that it’s winning because it’s good, but the court said this isn’t so.
Google pays billions of dollars to companies such as Apple ($20 billion in 2022 alone) and Samsung to make its search engine the default on their smartphones, tablets and web browsers. By doing this, Judge Amit Mehta ruled, the company has acted illegally to maintain a monopoly over competitors. After all, it wouldn’t have to pay those companies if it was people’s automatic choice, would it?
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By locking more users into its ecosystem of services such as Gmail, Google Maps and YouTube, the company gains access to more user data, which in turn lets it develop newer services and better artificial intelligence technology.
The court noted that Google accounts for 90% of global web searches, which denies other companies the opportunity to grow and compete with it. Google has inflated ad prices above free-market levels, it said, giving it the power to pay billions for default status and maintain its monopoly.
Consumers lose when choice is limited in this way, even when the products in question are free to use. This is why competition-distorting behaviour is frowned upon.
Ripple effect
The ruling is seen as a landmark in the US Justice Department’s efforts to curb Big Tech’s enormous power and is expected to have repercussions for the government’s lawsuits against other US tech giants. In its lawsuit against Apple, the US government has alleged that the company’s ‘walled garden’ makes it difficult for customers to ditch the iPhone. It has also sued Amazon for allegedly squeezing small sellers on its marketplace.
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The remedies in the Google lawsuit will be pronounced separately. The company will, of course, appeal the ruling. But as the company is changing how it operates in Europe to comply with the EU’s new laws on digital markets, Google may have to do so in the US as well.
Brave new world wide web
The political consensus globally is that Big Tech’s power isn’t benign, and that these tech giants have far too much power over how people consume information, search the internet, and buy goods and services online. This poses risks not just to markets and economies, but politics, elections and democracy, too.
The US is testing if its more than 100-year-old antitrust laws – which were used in 1911 to curb the power of Standard Oil by breaking it up into 43 separate companies – are good enough to rein in Big Tech.
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An antitrust ruling in the 1990s had called for Microsoft to be broken up, and there’s speculation that something similar could be prescribed for Google. Microsoft appealed that ruling and settled with the administration of President George W Bush in 2001.
Incidentally, India was the first developing country that took action against Google and other tech giants for abusing their dominance. On 20 October 2022, the Competition Commission of India fined Google ₹1,337.76 crore for anti-competitive practices relating to Android mobile devices and ordered it to halt various unfair business practices. India is also in the process of creating new legislation to regulate digital competition.
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