In Google antitrust case, more questions are raised than solved
In what was widely seen as a major victory for Google this month, U.S. District Judge Amit Mehta rejected the harshest remedies sought by the Justice Department in its antimonopoly case against the tech company. Google’s stock rose 9% on the news.
Mehta’s remedy, which seemingly contradicts his original finding that Google violated antitrust laws, is somewhat of a paradox. It might finally close one of the DOJ’s two yearslong cases against Google, but it raises more questions about antitrust standards for the future.
Mehta ruled last August that Google violated antitrust law by paying browser developers and Android manufacturers and carriers tens of billions of dollars to make Google the default search engine at search access points, which includes browsers and search widgets. This ruling hinged on the court’s conclusion that Google failed to establish “valid pro-competitive benefits” for the “exclusive distribution agreements” under which Google paid for default status.
Yet, in his remedy, Mehta didn’t force Google to divest from Chrome or Android. What is more remarkable is that the ruling allows Google to continue paying Apple and other companies to make Google the default search engine at search access points—even though these very payments led the court to conclude that Google violated antitrust law in the first place.
In the remedy, Mehta said “cutting off payments from Google almost certainly will impose substantial—in some cases, crippling—downstream harms to distribution partners, related markets, and consumers.”
This point creates confusion about antitrust standards. How can the payments for default status be both instruments of monopolization and at the same time so beneficial that prohibiting them would cause substantial harm to distributors and consumers? What should Google have done differently to avoid antitrust liability—refrain from paying for search default status to avoid becoming too successful, even if such payments generate significant benefits?
Hearings about how to remedy Google’s other antitrust case started today. The judge in that case ruled in April that the company’s online advertising technology was monopolistic. It isn’t yet clear how the court will rule on remedies in that case, which raises distinct issues.
Antitrust has long recognized that a firm can legitimately be monopolist through superior business acumen and by delivering more benefits to consumers than their competitors. As Judge Learned Hand explained in his Alcoa opinion in 1945, “the successful competitor, having been urged to compete, must not be turned upon when he wins.” Yet, 80 years later, the DOJ and the court appear to be doing exactly that.
The court wants it both ways: For the country to reap the benefits of Google’s large payments for default status and, at the same time, to punish Google for achieving success because of those very payments.
While the court’s ruling spares Google the harshest remedies, it does impose significant regulatory restrictions on Google’s business conduct and forces the company to share proprietary search data with competitors. But if the goal of the remedies is to “restore competition” to what it would have been but-for the illegal acts, there is nothing to restore, considering the judge decided antitrust law doesn’t prohibit Google from paying for default status.
The court’s ruling essentially gives the DOJ the power to regulate search—albeit not at the level that the department originally sought—without a clear showing of harm to competition.
The court’s intellectual journey from doubting the benefits of paying for default status to concluding that prohibiting such payments will cause crippling harm underscores the need for more clarity in antitrust standards. The lack of clarity can cause real harm.
Successful companies may take their foot off the gas because they fear becoming too successful and having an antitrust target on their back. The winner (or winners) of the AI race might need to contend with antitrust enforcers combing through all their documents and chats for some evidence of anticompetitive conduct based on some vague notion of what it means for conduct to be anticompetitive.
Why are courts and antitrust enforcement agencies continually concocting novel “theories” of how companies run afoul of antitrust law while the companies themselves have no idea what is illegal under those theories?
With vague antitrust standards, market participants are at the mercy of antitrust enforcement agencies with political agendas and courts’ arbitrary findings. We deserve more clarity on antitrust. We aren’t getting this clarity from the courts.
If the courts cannot provide it, Congress should.
About the author: Jay Ezrielev was an economic advisor to the chair of the Federal Trade Commission from 2018-20. He is the founder of the economic consulting firm Elevecon and an adjunct professor at George Mason University Antonin Scalia Law School.
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