Moves against the monopoly
Ray Snoddy details the U.S Justice Department’s lawsuit against ‘the unchallenged gateway of the Internet’, whilst using Google to fact-check of course
To the casual observer, the timing of the U.S Justice Department’s move against Google must look highly suspicious. It’s less than two weeks before the Presidential election, or as the Americans like to call it, the general election.
It’s highly reminiscent of the FBI’s decision four years ago to investigate more Hilary Clinton emails just before election day, inevitably leaving a cloud of suspicion hanging over her with no time to resolve the issue either way.
The suspicion is unlikely to be justified. Large bureaucracies, either in the U.S or the UK, move at glacial speed and a decision finally pops out when it’s ready to go.
In a way, it’s to the institution’s credit, or lack of political sensitivity, that it just gets on with it, thereby exposing itself to allegations of political bias.
In a long overdue move to tackle one of the most intense monopolies the world has ever seen, the Justice Department is unlikely to be doing the bidding of President Donald J. Trump.
He approves of great American monopolies and indeed, denounced the EU for imposing $9 billion in fines on “a great American company.”
The Trump beef against the tech giants of California is to do with what he sees as their institutional liberal bias and opposition to his idiosyncratic approach to politics.
Whatever the reason behind the timing, it’s an historic moment and the Justice Department does not mince its words.
The lawsuit says that Google is “the unchallenged gateway to the Internet” for billions of people around the world and that it has used “pernicious” anti-competitive strategies to intensify its monopoly.
One of the most serious detailed allegations against anti-competitive practices are the exclusive deals the company signs with fellow tech giants such as Apple.
Google pays Apple billions of dollars a year to ensure that it is the default search engine on iPhones.
The issue is actually more simple than that – the sheer scale and interlocking power of the technology billionaires and the ruthless way they have not just maintained their monopolies but expanded them through a continual stream of acquisitions.
The numbers remain awesome even though by now they are very well known.
Google, which is worth more than $1 trillion controls 90% of the global market for online searches and an estimated one third of online advertising sales, which gave it revenues last year of $136 billion dollars.
It puts historic U.S monopolies such as oil, steel and telecoms, broken up through the 1890 Sherman Antitrust Act, into the shade.
There has been nothing like it since the action taken against Microsoft in 1998. Ironically a fledgling Google then supported the anti-trust case against the computer giant.
Google has known for some time it was likely to face a Sherman Act showdown and apart from the EU, regulators as far apart as India and South Korea have either taken action against the company or are seriously considering doing so.
Google deploys the obvious reflex action of opposing every lawsuit and appealing every conviction and has shown little signs of modifying its behaviour in any way.
Apart from alleged anti-competitive business practices, it has ploughed ahead using its more than $100 billion pile of cash to buy-up interesting companies or potential competitors before they can pose any threat, however small.
The company has bought up no less than 212 companies and despite the gathering storm clouds, it is now entangled with competition regulators over its $2.1 billion planned acquisition of Fitbit.
If there is a flaw in the Department of Justice lawsuit it is that it doesn’t go far enough, or to be more precise, it is not comprehensive enough.
It doesn’t appear to even begin to deal with the effects of its dominance, or as the Justice Depart sees it, monopoly, on the news business.
The chief executive of the News Media Alliance in the U.S, David Chavern, says Google’s distribution is just a small subset of the issues posed by Google’s dominance.
“News publishers are particularly harmed by Google’s control of ad tech- and that doesn’t appear to be covered at all by the DOJ’s action,” Chavern argues.
It is a sentiment that will surely be shared by media operators in the UK. Despite the huge symbolic moment, there is also another enormous flaw in the DOJ initiative, particularly for the media.
It will inevitably take years and if the verdict is to break-up Google, there will follow inevitably years of appeals from Google.
It would be a Pyrrhic victory if a long way down the track – after perhaps two more American Presidents have come and gone – Google was finally broken up but there are hardly any newspapers left to report the outcome.
What of the outline Google defence that people use Google services because they like them and find them useful and a break-up, which is indeed one of the options on the table, would simply add to consumer costs?
They do and perhaps it would, but it would be a small price to pay for doing something to at least limit the dystopian online world that has been created.
It has contracted the public space for rational debate and replaced it with streams of fake news, conspiracy theories and outright hate that are stoking the fires of populism and undermining democracies around the world.
With all the limitations of a single U.S lawsuit, however powerful, 20 October 2020 should be marked as the day that a serious pushback began against what has become a dangerous monopoly. And there could be more to come.
American competition regulators are also having a hard look at the impact of Amazon, Apple and Facebook on competition although they may not all face the Google treatment.
Maybe, and it would be a minimalist sort of gain, legal action just might persuade the tech giants that endless expansion is not a great idea and might bring even greater retribution on their heads.
And finally, the irony is obvious. In writing this article Google search was enormously useful in checking facts and figures. Any remaining mistakes are my responsibility.