Slap on the Tentacle

The penalties ruling is underwhelming, and don’t take my word for it — “Google Dodges Worst Penalties in U.S. Antitrust Case” was the Wall Street Journal’s headline, and Google’s and Apple’s stocks jumped on the news. The business press widely hailed the ruling as more or less the best-case outcome for the companies.

Impressively, even the most egregious of Google’s monopolistic practices was left in place by Mehta’s verdict: namely the annual payment of $20 billion to Apple in order to be the default search engine on the Safari mobile browser. I expected Chrome to be left attached, but I figured the Safari default practice was such a naked barrier to entry it couldn’t be allowed. But the ruling only requires that the arrangement cannot be exclusive, meaning that theoretically any other firms willing to burn eleven-digit amounts yearly could make a better offer to Apple. Google is likely to remain the default, given the stratospheric amount required to pay for the privilege (to illustrate, $20 billion is enough to build about a hundred hospitals a year).

The advent of large-scale consumer AI adoption may be an economic threat to Google but was a major boon for its legal troubles, with the presiding judge openly stating it “changed the course of this case.” Indeed, many people have adopted chatbots like ChatGPT as a substitute for traditional web searches, dealing a blow to Google’s classic core application. But with consumer use of AI so far mostly limited to free apps, and corporate adoption mainly limited to low-cost AI tools like CoPilot, it’s unclear how much the growth of this technology will actually limit the power of the pre-AI tech behemoths. Indeed, these firms are leading the race to pour insane amounts of resources into the new industry, such as it is.

The judge didn’t even accede to the DOJ’s request for a “choice screen,” which would prompt users to consider if they wished to change their web search default. A remedy tool used in other Big Tech proceedings, including the great Microsoft prosecution of the 1990s, the technique is especially relevant for mobile search — where users tend to be less interested in exploring the browser settings that govern things like search defaults. Mehta claimed a ballot screen would intrude on product design, a surprisingly thin rationale.

2 and 0

Notably, this is actually Google’s second time skating in court — it got off with nearly no penalty on the little-remembered 2011 privacy Federal Trade Commission (FTC) case. The Obama-era prosecution dealt with whether users of Gmail had been misled when creating accounts on an early Google social media venture, finding that the company enrolled users in some features of the network even when they declined to join and failed to disclose that, when joining, their most-emailed contacts would be made public. The resulting consent decree required Google to create a full privacy program.

The following year, Google was found to have violated the consent decree when its notification to users that they would be tracked across apps by Google’s aggressive new cookies claimed that Safari users needed to take no action. But Google actually altered the browser’s default, no-tracking cookie option. The FTC settled, with the company paying a mere $22.5 million fine, a microscopic amount for the platform.

Importantly, Obama-era Democrats saw the “smart” new tech industries as potential economic patrons, to help offset the reliably Republican tilt of other major industries like energy and Wall Street. The company’s then CEO, Eric Schmidt, was an adviser for the Hillary Clinton campaign and contributed to a company running its campaign technology. But though Clinton’s 2016 opponent is now in the White House (again), Google is still enjoying the protection of a presidential administration.

Alphabetical Order

The toothless US antitrust penalty contrasts with the recent decision by the European Commission, which found that Google is a market manipulator in display ads (the US ad-tech monopoly case penalty hasn’t yet been handed down). The Europeans fined Google’s parent company, Alphabet, a hearty $3.5 billion, still quite modest for such a behemoth corporation but at least enough to sting a bit. Alphabet is appealing.

Compare that fine to what Google paid in 2012, when the company was found to have violated that 2011 privacy-related consent decree. The $22 million fine was the largest ever collected by the FTC at the time, and yet it amounts to just 0.6 percent of the European Union’s this month. (The FTC is firing greater ammunition these days, having just won a $2.5 billion settlement from Amazon for its numerous dark patterns used to keep Prime subscribers from ending their memberships.)

Notably, Trump reacted angrily to this European ruling, threatening new tariffs on the trade bloc in retaliation. Like Google during the Obama administration, the firm is still seen as a national champion that should be defended internationally even if constantly scolded domestically. Despite the president’s constant sniping at tech for allowing criticism of his reign, the desire to keep it close and free from real legal peril has remained.

Alphabet is reviewing the ruling in the US case but is considered likely to appeal, if only to fight the one real penalty: the requirement to share some search data with its rivals. With a remedies verdict on the company’s advertising marketplace monopoly not expected for weeks, and an appeal on that verdict likely as well, the company’s litigation horizon extends out for years.

The other Big Tech behemoths confront similar prospects, but the toothless ruling against Google must be heartening to executives across Silicon Valley. Even as the stakes of tech’s dominance continue to rise, antitrust action against the sector is reaching new lows.