Google’s Recent Challenges
In recent years, the dominance of major technology companies like Amazon, Google, Meta (formerly Facebook), and Apple has sparked debate about antitrust laws and their effectiveness in regulating Big Tech in today’s economy. As tech giants expand their influence, intensified scrutiny has followed, potentially triggering a significant shift in overall antitrust enforcement.
Increased Antitrust Scrutiny
Antitrust laws, generally enforced at the federal level by the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC), are designed to promote competition and prevent monopolistic practices. Several recent, high-profile antitrust cases have set significant legal precedents and indicated a shift in how Big Tech is regulated.
Google has become the focus of a few of these high-profile antitrust cases (amongst other recent lawsuits), having recently been scrutinized in two major antitrust cases, particularly concerning its search engine and advertising practices.
Court Declares Google’s Search Engine a Monopoly
The DOJ filed suit against Google in October 2020, with the support of eleven U.S. states including California, Texas, and Florida. The underlying complaint accused Google of maintaining a monopoly through its general search services (Google’s core product—the search engine that most people use to find information on the internet), and its general search text ads (the advertisements that appear on Google’s search results pages, usually at the top or bottom, marked as ads). The DOJ explained that competition from Google’s rivals has been stifled because of certain deals Google entered with other companies, in combination with Google’s dominance in online searches. DOJ lawyers elaborated that Google’s search engine monopoly enabled it to charge advertisers unreasonably high prices.
In August 2024, the judge presiding over the case sided with the DOJ’s arguments and explained that there was sufficient proof of Google possessing a dominant market share, enjoying an “89.2% share of the market for general search services, which increases to 94.9% on mobile devices”, thus representing a high barrier to entry for rivals along with a restriction on Google rivals’ ability to sell general search text ads. Accordingly, the judge ruled Google’s search engine an illegal monopoly. The judge agreed that Google’s search engine monopoly had been maintained in part by exclusive agreements Google enters into with companies like Android to ensure Google is the default search engine presented to consumers upon purchase of mobile devices and other similar devices, which the different companies agree to in exchange for Google paying them billions of dollars of the total advertising revenue generated from search queries made through these default search access points. Overall, the judge concludes that Google has been exploiting its dominance in the industry.
Another Challenge for Google: Alleged Digital Advertising Monopoly
Following the ruling in the Google search engine monopoly case, in another pivotal legal development, Google has become the subject of another high-stakes antitrust lawsuit filed by the DOJ in January 2023. This case, initiated due to concerns over Google’s dominant role in online advertising, could have severe implications for the broader Big Tech industry.
The DOJ is now accusing Google of dominating both sides of the digital advertising technology market. Attorneys for the DOJ claim that Google is engaging in “anticompetitive and exclusionary conduct” by using acquisitions and other practices to dominate the advertising technology platform, as well as to control the advertising exchange market, thus inflating costs for advertisers and stifling publishers’ ability to compete. The DOJ further explains that “Google isn’t [in court] because they are big,” but instead, because “they use that size to crush the competition”. Specifically, the lawsuit claims that Google unfairly leverages its size to control both the purchasing and selling processes of online ads, thus creating a monopoly, and enabling itself to keep about $36 of every $100 spent on advertising through its platform.
Should Google not successfully defend itself against the allegations in this suit, the results may threaten to break up Google by forcing it to divest major portions of its advertising business (including ad-serving and buying technologies). Additionally, if the DOJ prevails, the outcome will mark a significant shift in how the digital advertising system operates and may encourage further regulatory action against other tech giants like Amazon and Meta.
As of September 2024, this case is in its discovery phase, and the legal community will be closely watching to see how this battle plays out.
Breaking Up Big Tech
The intensified scrutiny of Google signals an overall increasing analysis of Big Tech, which will likely shape future antitrust enforcement. As the Google advertising monopoly trial continues, we will get a better idea of what this means for the future of antitrust law in the technology sector.
