Google Antitrust Ruling: Why the US Government Wants to Curb Big Tech

Google users may wonder what the big deal is, since the search engine makes life easier and is free. Google has also long claimed that it wins because it is good, but the court found that it does not.

Google pays billions of dollars to companies like Apple ($20 billion in 2022 alone) and Samsung to make its search engine the default search engine on their smartphones, tablets, and web browsers. Judge Amit Mehta ruled that in doing so, the company was acting illegally to maintain a monopoly over its competitors. After all, it wouldn’t have to pay those companies if it was an automated decision by humans, right?

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By connecting more users to its ecosystem of services like Gmail, Google Maps, and YouTube, the company gains access to more user data, which in turn allows it to develop newer services and better AI technologies.

The court noted that Google accounts for 90% of global web searches, which deprives other companies of the opportunity to grow and compete with it. Google has inflated advertising prices above free-market levels, it said, allowing it to pay billions for default status and maintain its monopoly.

Consumers lose out when choice is limited in this way, even when the products in question are free. Therefore, anti-competitive behavior is frowned upon.

Ripple effect

The ruling is seen as a milestone in the U.S. Justice Department’s efforts to curb Big Tech’s immense power and is expected to have repercussions for the government’s lawsuits against other U.S. tech giants. In its lawsuit against Apple, the U.S. government alleged that the company’s “walled garden” made it difficult for customers to abandon their iPhones. It also sued Amazon for allegedly squeezing out small sellers on its marketplace.

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The remedies in Google’s lawsuit will be announced separately. The company will of course appeal the ruling. But as the company changes how it operates in Europe to comply with new EU rules on digital markets, Google may have to do the same in the US.

A bold new global network

The global political consensus is that Big Tech’s power is not 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 only for markets and economies, but also for politics, elections, and democracy.

The United States is testing whether its more than 100-year-old antitrust laws — which were used in 1911 to curtail Standard Oil’s power by splitting it into 43 separate companies — are good enough to keep out big tech companies.

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An antitrust ruling in the 1990s called for a breakup of Microsoft, and there is speculation that something similar could be done to Google. Microsoft appealed the ruling and settled with President George W. Bush’s administration in 2001.

Incidentally, India was the first developing country to take action against Google and other tech giants for abusing their dominance. On October 20, 2022, the Competition Commission of India fined Google ₹1,337.76 crore for anti-competitive practices related to Android mobile devices and ordered to cease various unfair business practices. India is also in the process of creating new laws to regulate digital competition.