No images? Click here In this week’s Corner, Open Markets policy counsel Tara Pincock — who helped write the original lawsuit against Google — discusses a potential breakup.
Anita Jain & Tara Pincock This week the Department of Justice announced it will likely follow its recent court victory over Google with a call to break off key parts of the corporation. After a 10-week trial that focused on how Google protected its dominance of online search, Judge Amit Mehta of the federal district court in Washington in August ruled that the corporation is an “illegalmonopoly.” Anita Jain, OMI’s editorial director, spoke with OMI policy counsel Tara Pincock, who in her previous role at the Utah attorney general’s office helped write the original complaint against Google’s search monopoly. That complaint grew out of an investigation by 50 U.S. states and territories. Anita Jain: Can you tell us why the DOJ and state AGs filed the case against Google in 2020? Tara Pincock: The government alleged that Google used its dominance in Android and Chrome to ensure that it was the default search engine on every search access point. It also paid Samsung, Apple, and others for exclusivity — Google Search was the default search engine on devices out of the box. Anita: How did you feel about the judgment that Google is an illegal monopoly? Tara: Judge Mehta wrote an excellent opinion. Instead of being fooled by Google's arguments that it competes with the entire internet and has high market share because it's the best search engine Judge Mehta understood that Google's market share is bolstered by its access to data and benefited greatly from network effects. This was a giant step forward for those of us who want to see antitrust enforcement restored to its former glory. Anita: This week, the DOJ said it is looking to break up the tech giant. Did this come as a surprise? Tara: I was expecting this. Structural remedies were always on the table. The question is and has always been, what would be spun off? Anita: What does this proposal say about antitrust enforcers' vision to dismantle monopolies in general? Tara: The government is taking a broad, out-of-the-box approach to remedies. They are considering options that have the best chance of breaking Google's dominance and restoring competition to the market. This includes banning exclusive contracts, allowing competitors to Google's web content, and even licensing or syndicating Google's ad feed. Anita: In your opinion, what should a breakup look like and why? Tara: My number one choice would be Android. If Google can't use Android as a lever to force manufacturers (likeSamsung) to install Search, it could open the door for other search engines. To get access to Google’s proprietary software, manufacturers must agree to a ton of requirements that favor Google search. You can't get Google's apps like maps, Gmail, play store, etc., without agreeing. What choice do manufacturers have? Anita: Google has said it can't share data associated with its Search Index with the rest of the market out of privacy concerns. What do you think of the DOJ’s response, which is that Google should therefore also be banned from using such data for its own business? Tara: I loved that proposal when I read it. If it's too sensitive to share with others, it's too sensitive for Google to use for itself. Anita: Google spent the first two decades of the century amassing enormous power. What do you say to criticism that antitrust enforcers took their eyes off the ball? Tara: First, I think it's clear that enforcers took their eyes off the ball. They allowed Google (and others) to acquire companies that led to dominance. Google, for example, bought Android. It didn't develop that company. Anita: The DOJ has also brought a second case against Google, arguing that the corporation’s control of the core technologies of the online advertising system is also illegal. If the DOJ also wins that case, what might breakup there look like? Tara: Ad tech is a great example of Google buying its way to dominance. It bought the companies in the ad tech stack(like Doubleclick) and then used its massive number of advertisers as leverage to convince publishers to use Google's tools. Anita: Google is such a powerful corporation. What does a diminished Google look like? After all, Google is a verb. Tara: Google will continue to be the dominant search engine for the foreseeable future. The case doesn’t hinge on search itself but on the advertising revenue generated by search. The remedies need to make it so other search providers have a better chance of getting more advertising. Anita: When was the last time we saw such a broad restructuring of a corporation? Tara: We haven't seen a company brought to its knees this century. Maybe not even in our lifetimes. Anita: What do these remedies signal to Amazon, Facebook, Microsoft? Tara: I think the DOJ has signaled that they're looking at every possible solution to the problem. It's not just structural remedies or blocking contracts. It shows that they're interested in doing what needs to be done to restore a competitive market. Open Markets Files Amicus Brief on Algorithmic Price-Fixing Case Gibson v Cendyn Open Markets Institute filed an amicus brief in Gibson v. Cendyn Group, a case on appeal before the Ninth Circuit. The case is based on allegations that hotels on the Las Vegas Strip used an algorithm designed by Cendyn Group to conspire to fix prices on their rooms. “With the growth of extraordinary computing power and data processing capabilities, the ability of firms to work together to fix prices and take other coordinated actions for their collective benefit — at the expense of consumers, suppliers, and workers — is rapidly becoming more sophisticated and more difficult to detect,” the brief reads. Supporting the plaintiffs, the Open Markets brief urges the courts to apply longstanding law against collusion between competing firms, regardless of whether they do so directly or through a third party. The district court made critical errors of law in dismissing the case, including placing improper emphasis on the method of price-fixing and its efficacy. The amicus brief received coverage in Law360. Read the full brief here. 📝 WHAT WE'VE BEEN UP TO:
🔊 ANTI-MONOPOLY RISING:
We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter. 📈 VITAL STAT:$3.8 trillionThe total amount of U.S. debit transactions processed by Visa in the year ending in June, equivalent to 60% of the market, which netted the financial services giant $7 billion in annual processing fees. The Department of Justice has filed an antitrust lawsuit against the company for monopolizing the market in debit cards. (New York Times) 📚 WHAT WE'RE READING:How TV Watches Us: Commercial Surveillance in the Streaming Era — The Center for Digital Democracy’s Jeff Chester and Kathryn Montgomery provide an eye-opening look at the streaming TV ecosystem’s increasing use of deceptive and invasive data and advertising practices. After pulling back the curtain on the way connected television has become the next frontier in the erosion of Americans’ privacy rights, Chester and Montgomery outline policies that could reorient the industry to better serve consumers and democracy. Order Sandeep Vaheesan’s forthcoming book: Sandeep Vaheesan, the legal director at the Open Markets Institute, will publish his first book Democracy in Power: A History of Electrification in the United States on December 3. Vaheesan examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives. 🔎 TIPS? COMMENTS? SUGGESTIONS? We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue. |