Google Is Big. Does That Make It a Monopoly?

“This victory against Google is an historic win for the American people.” So declared U.S. Attorney General Merrick Garland in response to District Judge Amit Mehta’s August 5, 2024, ruling in United States v. Google, which found the tech giant guilty of amassing and wielding illegal monopoly power over the online search market.

What Garland left unsaid was that the ruling was also a win for his boss, President Joe Biden, and for his boss’s predecessor, former President Donald Trump. That’s because the federal case against Google did not originate with the Biden Justice Department; it originated with the Trump Justice Department. “Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet,” the Trump administration argued in its original 2020 lawsuit. “That Google is long gone. The Google of today is a monopoly gatekeeper for the internet.” In an increasingly polarized political climate, the Google ruling was hailed as a rare triumph for bipartisanship. At last, the thinking went, the two parties can finally agree on something.

Yet the ruling was not uniformly celebrated among legal and policy experts. Mehta’s judgment “may not hold up on appeal,” argued Alden Abbott, former general counsel at the Federal Trade Commission. Instead of harming consumers, Abbott wrote, Google’s search engine “likely raised consumer welfare, which the Supreme Court has deemed the overarching goal of antitrust enforcement.”

Nor did the ruling give much weight to consumer choice, effectively ignoring the actions of the many consumers who have opted to use Google search precisely because they view it as the best product around.

So forget the rosy paeans to bipartisanship. When you dig into this case, you find a raging debate not only about Google’s actions, but also about the federal government’s response to those actions—a debate about whether both the Justice Department and Mehta have taken a big wrong turn on antitrust.

In a way, it’s tempting to think of U.S. v. Google as a futuristic sort of case. It does involve cutting-edge innovations and fast-moving technologies, after all. Yet the underlying legal dispute is anything but new. Indeed, in the world of law and economics, the basic nature of the dispute is fairly old. It’s a fight that keeps coming up again and again.

The reason why the conflict keeps recurring is because for well over a century, two competing views about monopoly have jostled for dominance in American law. It is these competing views—each one with its own unique history and tradition—that are still driving much of the debate today.

To understand what’s happening in the Google Search case, in other words, you need to first understand this longrunning clash of visions over monopoly and government power.

Two Concepts of Monopoly

One of the most influential figures in the history of American antitrust law is actually more famous for something else. Louis Brandeis was appointed to the U.S. Supreme Court in 1916 by President Woodrow Wilson and served until his retirement in 1939. Judges and lawyers today still cite his opinions on issues ranging from freedom of speech to the right to be free from unreasonable search and seizure. As a jurist, he made his mark on the law.

He also made his mark as a legal and political activist. Before joining the high court, Brandeis was a successful litigator who frequently filed suits against powerful corporate entities. He was one of the guiding intellectual lights of the Progressive movement, a coalition of social reformers, labor activists, and various other critics of industrial capitalism. The Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, and the Federal Trade Commission Act of 1914 all largely resulted thanks to the efforts of Progressives like Brandeis.

Dubbed “the people’s attorney” by his admirers, Brandeis was particularly fixated on curing what he called “the curse of bigness.” Testifying before Congress in 1916, for example, Brandeis argued that big business in America had simply become too big to be allowed to survive. “The main objection, as I see it, to the large corporation,” he said, “is that it makes possible—and in many cases makes inevitable—the exercise of industrial absolutism.” As a solution, Brandeis urged the government to step in and impose “a limit on the size of corporate units.” Put differently, he wanted to see all forms of big business broken up.

That hostility to “bigness” remains a very influential concept among many antitrust advocates and practitioners today. The popular business writer and strategist Ben Thompson, for example, has described his own views in highly Brandeisian terms. “I share the societal sense of discomfort in dominant entities that made the Sherman Antitrust Act law in the first place,” Thompson wrote. Judge Mehta’s ruling against Google, he argued, is “pushing in a direction that’s worth leaning into.”

Or take the case of Tim Wu, a Columbia University law professor and former adviser to the Biden administration on technology and competition policy. When Wu went looking for a title for his 2018 book about “extreme economic concentration,” he reached straight back to Brandeis, titling it The Curse of Bigness: Antitrust in the New Gilded Age. That none-too-subtle homage is emblematic of Brandeis’ lasting influence on the monopoly debate.

Of course, Brandeis represents just one side of that debate. On the other side, we find the intellectual legacy of another long-dead Supreme Court justice.

That dead justice is Stephen Field. Appointed to the Supreme Court by President Abraham Lincoln in 1863, Field served on the bench until his retirement in 1897. Field’s name is mostly forgotten today, except among legal scholars. But the ideas that he championed are alive and kicking. That is particularly true about Field’s jurisprudence on monopoly and government power.

Consider the 1876 case of Munn v. Illinois. At issue was a state law setting the maximum storage rates that could be charged by 14 massive grain elevators located at the port of Chicago. Those grain elevators “stand…in the very ‘gateway of commerce’ and take toll from all who pass,” the Supreme Court declared in Munn. That made them tantamount to “a ‘virtual’ monopoly” and thus opened them to extensive government controls.

Writing in dissent, Field took the opposite view. “There is nothing in the character of the business of the defendants as warehousemen which called for the interference complained of in this case,” he wrote. “Their buildings are not nuisances; their occupation of receiving and storing grain infringes upon no rights of others, disturbs no neighborhood, infects not the air, and in no respect prevents others from using and enjoying their property as to them may seem best.”

Unlike “public ferries, bridges, and turnpikes,” whose financial success rested upon “some special privilege granted by the State or municipality,” Field wrote, the grain elevator operators had succeeded in the marketplace on the merits. So why penalize them for that legitimately won success? “No reason can be assigned to justify legislation interfering with the legitimate profits of that [grain elevator] business,” Field wrote, “that would not equally justify an intermeddling with the business of every man in the community, so soon, at least, as his business became generally useful.”

In other words, according to Field, the mere “bigness” of the enterprise (to borrow Brandeis’ term) should not matter in the legal analysis; what should matter is whether or not the enterprise is directly harmful to the public, such as by “infect[ing] the air” or “prevent[ing] others from using and enjoying their property.” And if it was not harmful—as Field argued that the grain elevators were not—then the enterprise should not be subjected to anti-monopoly legislation, even if the enterprise happened to have grown economically big and powerful.

Think about it like this: For Brandeis, the thing to worry about was unchecked business power. For Field, the thing to worry about was unchecked government power. Brandeis thought “bigness” in the economic realm was a threat to society in and of itself. Field, by contrast, thought the real threat to society came when the government throttled successful private enterprises in the name of battling “bigness.”

These competing concepts of monopoly have been shaping the legal debate ever since.

‘True Market Competition’

Which brings us back to U.S. v. Google. According to Mehta’s August 2024 ruling, “Google is a monopolist, and it has acted as one to maintain its monopoly.” Google has done this, Mehta argued, by signing “exclusive” contracts with “browser developers, mobile device manufacturers, and wireless carriers” who “agree to install Google as the search engine that is delivered to the user right out of the box at key search access points.” Put differently, Google has signed expensive deals to make its product the default search engine on various browsers and mobile devices. “These exclusive deals protect Google’s dominant position,” Mehta maintained, “and shield it from meaningful competition.”

But just because Google is the default search engine does not necessarily mean that consumers are prevented from using the products offered by its competitors. Yes, Google Search does come “right out of the box.” But consumers are still free to switch their default settings to a different search engine, such as Microsoft Bing. If consumers don’t want to use Google when they search the web, they’re not forced to do so. (It would be more accurate to say that consumers are nudged to use Google.) As Google and its allies are quick to point out, Google’s competition is just “one click away.”

On the other hand, according to the Justice Department, Google has dominated the internet search market to such an extent that it effectively has no meaningful competition left. During the trial phase of the case, for example, Apple executive Eddy Cue said that “there’s no price that Microsoft could ever offer” that would persuade Apple to switch to using Bing instead of using Google as the default search engine on its iPhones.

There are two ways of looking at Cue’s statement. We might call them the Brandeis way and the Field way.

The Brandeis way was expressed by Mehta, who saw Cue’s statement as clear evidence that “Google does not face true market competition in search” and thus counts as an illegal monopolist. In effect, Google’s very “bigness” was an indicating factor of its guilt.

Here’s the other way of looking at it. In United States v. Grinnell Corporation (1966), the Supreme Court distinguished between “the willful acquisition or maintenance” of monopoly power (which is illegal), and monopoly power that results “from growth or development as a consequence of a superior product [or] business acumen” (which is not illegal). Under this view, Google has dominated the search market as “the consequence of a superior product.” Its search engine is simply so much better than Bing that “there’s no price that Microsoft could ever offer” to replace it as an iPhone default.

“The fact that Google search has an 80% market share even on Windows devices, where Edge is the default browser and Bing is the default search engine, demonstrates that consumers go out of their way to use Google because they believe it is the best option,” argues​​ Geoffrey Manne, an antitrust expert and president of the International Center for Law & Economics. That’s the Field view.

There’s also the related question of just how dominant Google Search is likely to remain given the new competition it may increasingly face from developments in artificial intelligence. What does it mean for the monopoly case against Google if consumers steadily embrace AI as their go-to search option, leaving both Google and Bing in the dust?

In his ruling, Mehta gave little weight to such questions. “AI may someday fundamentally alter search,” Mehta wrote, “but not anytime soon.”

Neil Chilson, former chief technologist at the Federal Trade Commission and current head of AI policy at the Abundance Institute, told me “there’s one very good reason that Judge Mehta didn’t make more of competition from AI: discovery in the Google Search case ended June 30, 2022—five months before ChatGPT-3.5′s public launch. So I think there just wasn’t much hard evidence in the record about how rapidly and significantly the industry was shifting strategy due to the seismic impact of ChatGPT.” In Chilson’s view, “this is more evidence that antitrust enforcers sometimes have 20/20 hindsight yet are legally blind about the future.”

What’s Next?

A case of this magnitude is unlikely to be resolved by the single decision of a single federal district court judge. Google has already vowed to appeal its loss to the higher legal authorities at the U.S. Court of Appeals for the District of Columbia Circuit, a process that could potentially drag on for years. Meanwhile, Mehta is holding another round of hearings to determine what sort of penalties Google should face.

The Biden Justice Department asked the court to break Google up—a very Brandeisian punishment. But Mehta may stop short of that drastic penalty and opt instead to invalidate and prohibit the company’s default search deals. Of course, Google might still someday prevail on appeal, with the D.C. Circuit (or even the Supreme Court) ultimately finding that Google’s success is “the consequence of a superior product.” Place your bets now.

Whatever happens in the near future, the larger legal debate is not going away. If anything, the fact that both the Trump and Biden administrations have chosen to vigorously pursue this case suggests that other such lawsuits against Big Tech should be expected in the years ahead, regardless of which political party happens to occupy the White House.

What that means is that Google (and others) will be slugging it out in court with the federal government for the foreseeable future. The latest battle over monopoly and government power is just starting to heat up.

The post Google Is Big. Does That Make It a Monopoly? appeared first on Reason.com.

Source: https://reason.com/2025/02/16/google-is-big-is-that-bad/