Search Party

“Google is a monopolist, and it has acted as one to maintain its monopoly,” wrote federal judge Amit Mehta of the US district court for DC in his decision earlier in August. Google has known for years this moment might come and has done everything possible to avoid or delay it, including a policy of automatically deleting chat messages between executives after twenty-four hours. But at long last a legal ruling of monopoly has arrived, with all its potential ramifications.

The ruling focuses on Google’s long-running practice of paying giant sums to other tech firms to make its search engine the default setting on web browsers. This practice reached enormous scale, with Google paying Apple $18 billion in 2021 to appear as the standard search option on Apple’s Safari browser. Phone maker Samsung and browser Firefox also received billions annually to privilege Google Search in similar ways. Phone users can always change their search engine preference, but in practice very few do so.

The US Department of Justice (DOJ) and a group of US states sued in 2020 to end these arrangements, which have helped Google establish monopoly status in search — a 90 percent market share according to DOJ estimates, rising to 95 percent in mobile search. Usually economists don’t require a company to have a full 100 percent market share to be a monopolist, just a strongly dominant position.

But Google didn’t buy its way to being a monopoly. As I’ve discussed previously in Jacobin, the stupendous stature of trillion-dollar platforms like Google and Facebook are owed mainly to the well-known economic phenomenon of network effects. As more users create Instagram accounts, say, or upload videos to YouTube, those hubs become more attractive to audiences, in turn attracting more creators, which then brings in an even bigger audience. This positive-feedback effect means the value of goods like phone service or an Instagram account gets bigger as more users join the network, unlike other goods such as food or clothes. So Google’s paradoxical-seeming claim that its market control actually helps users is actually true to a point, since its dominance means top-tier search results for free.

Indeed, the lawsuit and court ruling recognize this, claiming reasonably that Google used its giant payoffs to other tech platforms to “reinforce” or “strengthen” its already existing dominance. And crucially, the corporation in fact does this: Google’s specific network effect in search comes from its access to user data.

As users conduct searches on the platform, Google collects data on user behavior, such as what links they click on or don’t, what responses best answer different questions, and so on. That data was used for years to improve the quality of Google’s search product, making it by far the best option. (This was prior to Google’s gradually stuffing the results with profit-driving ads in recent years, driving down the quality of the search product in the eyes of many users.)

So Google’s default deals with Apple and Samsung did help Google entrench its monopoly, since they steered large amounts of search queries to its platform and starved of data its rivals like Yahoo or Microsoft’s Bing search tool. Thus Mehta ruled that the deals “have given Google access to scale that its rivals cannot match.”

Fair enough. Google has announced it will appeal, likely pushing a final resolution of the case several years out. But in the meantime, we can make an educated guess about what lies ahead, using the one other example of a convicted platform monopolist.

United States v. Microsoft Corp. versus United States v. Google LLC

In many ways, the ruling is Google’s Microsoft moment.

Readers of these pages may know I have a certain obsession with the Microsoft antitrust case from the 1990s and early 2000s, since (until this week) it’s the only example of a major tech platform being adjudicated as a monopolist. While Microsoft then and Google today are different beasts, they were both indicted and convicted for abusing monopolies based on network effects and platform dominance, so there’s a good deal to be learned from the case.

Indeed, Mehta’s own ruling refers to Microsoft on 104 of its 277 pages. That case was brought after Bill Gates belatedly recognized the importance of the newfangled “internet” and decided to crush the then-dominant web browser, Netscape. It did so by bundling its own Internet Explorer browser into the hyperdominant Windows operating system. This “monopolization” meant its competitors were eventually able to get the government interested, leading to a suit brought by the DOJ and several US states. That ultimately resulted in a federal court ruling that Microsoft was an operating-system monopolist that had abused its power to take over adjacent markets, including web browsing.

An appeals court upheld this finding but pared back its conduct requirements, including allowing Microsoft to bundle its browser and OS — which suggests Google may well trim its liabilities on its future appeal. Crucially, the federal court ruling found Microsoft must be broken up into an OS company and an apps company, but appeals reopened the remediation process, which lasted through the controversial 2000 US presidential election. The George W. Bush administration’s DOJ publicly abandoned the effort for structural remedies — in other words, it gave up on breaking up the company.

While Microsoft’s OS monopoly was itself never legally challenged and lasted for many more profitable years until the advent of mobile and the broad adoption of Chromebooks, the requirements on its conduct that survived appeal were weak. The company endlessly foot-dragged on compliance with the rulings, quickly falling behind deadlines on sharing protocols with competitors. It was so egregious the original consent decree was extended twice, ultimately lasting over nine years from the original decision. A “technical committee” was appointed over the company’s loud objection, in part to help determine which problems were technical and which were driven by the company’s recalcitrance.

The European Commission (EC), which conducted its own investigation at the same time, ordered the company to include a “choice screen,” where users could choose their browser — a likely remedy in the Google case, but for search engines rather than web browsers. But a year after this requirement was imposed on Microsoft, the company issued a Windows update without the software for displaying the browser-choice screen. In a suggestion of what Google’s “compliance” may look like, the failure somehow went unnoticed by the authorities for seventeen months, until the EC received reports and ordered a fix.

The judgment cites Google’s internal estimates that it could lose 60 to 80 percent of queries on iOS devices, coming to a loss of over $32 billion (counting the money saved from not paying Apple), if Mehta were to recommend these remedies and they survive appeal. Notably, Microsoft tried repeatedly to get its unpopular Bing search engine into the dominant spot on the iPhone, even at one point offering to give Apple 100 percent of its search ad income on iPhones, or even selling it to Apple outright. But Apple preferred the higher-quality option from Google, especially since it came with gigantic payoffs.

Imposing a search-engine-choice screen on phone makers would be a natural choice. However, when the European Union forced Android mobile devices to carry such a screen in 2020, the giant majority of users stayed with Google, keeping its European market share north of 95 percent since. The United States may encounter a similarly enduring monopoly, since Google has by far the greatest data hoard to optimize search, plus near-universal name recognition.

Much as in Google’s case, the court ruled in 2001 that Microsoft’s contracts illegally blocked rivals — Microsoft did it through deals with PC makers to keep out Netscape, and Google has done it through deals with phone manufacturers to keep out Bing. Crucially, the companies’ original, network-based monopolies weren’t illegal, but their use of that monopoly power to buttress or expand those monopolies was illegal.

In other words: monopoly is legal, monopolization isn’t. The press quotes a former antitrust official explaining that “while you can be dominant, you can’t abuse that dominance.” Google’s deals were more based on the carrot of billion-dollar checks while Microsoft’s were based on threats of withholding the Windows OS, but the underlying rationale is the same — monopolies arising from market forces are OK, but using them to take over more sectors isn’t.

Antitrust Skepticism

Liberals and some conservatives are enthusiastic supporters of antitrust law, seeing it as an adequate means of policing monopolies and excessive market power. But leftists have long been critical of US antitrust regulation, from its nineteenth-century origins as a tool mainly used against labor organizing through its New Deal–era glory days and its recent, wimpier neoliberal period.

Antitrust in the United States has a number of major weaknesses, even when compared to other developed, capitalist countries’ anti-monopoly rules. For example, the EU’s competition authority can outright declare a company to be a monopolist without taking a case to trial, whereas in the United States, the DOJ or the Federal Trade Commission (FTC) must win a federal court case.

Further, over the past forty years, antitrust enforcement has shifted to a “harm-based” approach, which only recognizes consumers to be “harmed” by monopolization if it leads to price increases. From Standard Oil’s petroleum price cuts to Google’s nominally free services, this newer, business-friendly standard allows a galaxy of corporate consolidation and control to continue well within the law, as long as price spikes don’t occur too nakedly. Google’s defenders are quick to insist that the company can’t possibly harm consumers since its products are free to use.

But even setting aside this Robert Bork–inspired change, the enterprise of policing monopolies comes up against fundamental limits due to the numerous inherent monopolizing forces in markets, from network effects to economies of scale. At best, antitrust typically breaks up a monopoly and creates an oligopoly, as with the breakups of Standard and AT&T, which became gigantic, still-powerful firms that remain with us today, like Exxon, Chevron, and Verizon.

And some markets are meant to be monopolies — so-called natural monopolies — and Google is certainly one of them. The most common natural monopolies are regional utilities — power and water companies, commonly observed to be the only providers in an area. The infrastructure required for these industries, like power grids and water mains, come with giant costs, but then also have highly reliable demand, resulting in giant up-front expenses divided by enormous volumes of output. This creates falling costs, known as economies of scale, making competition unlikely (and redundant if accompanied with duplicate power lines or water pipes).

Strengthened by search-data network effects, with an obligation to the public to limit outright disinformation in a disinterested way and in a position to control the flow of online information, Google Search is in fact too important to be left to Google — or a handful of hypothetical post-breakup Google offspring, for that matter.

If there’s any company that should clearly be nationalized, it’s this one. Even compared to other gigantically important firms, including Microsoft and the Wall Street megabanks, Google has a uniquely key role as the online master switch of knowledge. No other corporation has this particular power, and so many tools to undermine behavioral rulings, and so much cash to spend to convince politicians to let it do what it wants. Its parent company, Alphabet, currently has a stupendous net cash balance of $87.5 billion.

Nationalization could allow the search engine to exist as public property, without constantly warping the engine to allow more ads and purchased results at the top, as has become the case with today’s commercial model. Like the other public agencies, it could make information available to all parties. We might recall that billionaire Google cofounders Larry Page and Sergey Brin wrote in a grad school paper about the program that became Google: “Furthermore, advertising income often provides an incentive to provide poor quality search results. . . . We believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm.”

Recidivism Revisited

Observers and antitrust experts expect that, rather than a drastic breakup, Mehta will likely rule merely for injunctions against Google’s default-search deals and require that the company add a choice screen for users to pick their browser search engines. The ultimate outcome of the case will have major influence on the other ongoing DOJ and FTC antitrust lawsuits, including against Amazon, Apple, and Meta.

While we wait several years for Google’s various appeals to play out and hold our breaths in the meantime to see what remedies are prescribed, we can be confident that relatively little will change in the near term. Google’s giant deals for default-search status can continue under appeal, although the company is now exposed to class-action lawsuits from users during that time. But Google’s “long game” is unlikely to conclude with a serious breakup of the company, although it’s not out of the question. More likely, like Microsoft, it will get away with wimpy “behavioral” requirements that only partially address the issues and that it will be able to water down over time.

But even in a best-case scenario, antitrust remedies are limited to moderately policing market structure, turning a monopoly into an oligopoly with two or three firms instead of one. This isn’t valueless and can put some constraints on the liberty of the giant platforms to utterly control our online experience and the flow of information. But as in many other cases, attempting to rein in capital’s power here with regulatory guardrails, or limiting market share with court cases, fails to address the fundamental problems with private ownership, and antitrust remedies don’t generally call for nationalization. For that, taking Google into public, collective ownership would be the real solution.