- Google's abuse of dominance trial opened last week in Washington and is expected to last ten weeks.
- Google is accused of illegally nipping competition in the bud via exclusivity contracts to impose its search engine.
- For the American expert Andrew Chin, there is no miracle solution, especially because of the passivity of the competition authorities in recent years.
This is the biggest tug-of-war between the American justice system and a tech giant in more than twenty years. The historic US trial against Google opened last week in Washington and is expected to last ten weeks. "This case is about the future of the Internet, and whether Google will ever face significant competition in search," said a representative of the public prosecutor's office. The Mountain View giant is accused of abusing its dominant position by signing exclusive contracts with Apple, Samsung or Mozilla, to make Google the default search engine on their smartphones or browsers.
In the United States, the tide seems to have turned. Once revered by political and public powers, "Big Tech" is under attack from all sides, with a Biden administration hoping to convince judges to reshuffle the competition cards. "Entrenched monopoly power on (internet) platforms is endemic," said Andrew Chin, an antitrust law professor at UNC-Chapel Hill University. Two decades ago, this expert had acted as a consultant for Judge Jackson during the trial that almost led to the dismantling of Microsoft. Maintenance.
What are the main issues at stake in this trial?
The verdict is likely to redefine competition rules in search and advertising markets, and potentially in mobile operating systems and app stores. In an ideal world, competition should be independent in these markets, with an alignment between innovation and consumer interest. From an economic and technological point of view, they are separate markets that work best when they are not bound by contractual agreements.
How will the judge determine whether or not paying partners to make Google the default search engine violated antitrust laws?
The court will have to determine whether these exclusion agreements have significantly harmed competition. The challenge will be to establish a causal link between the challenged contracts and Google's current and future monopoly power, given that much of this monopoly is the result of its innovation and other legitimate practices. It will be necessary to distinguish between barriers to competition that come from a superiority (of Google) and those that are the result of exclusivity contracts.
What are the similarities between these lawsuits against Google and those against Microsoft in 1998-2001?
Google and Microsoft have flooded the device market with contractual restrictions guaranteeing the exclusive placement of their software by default. Both cases involve monopolistic charges based on the same section of the Sherman Act (one of the two main antitrust laws). In both cases, we are talking mainly about contracts that had the effect of excluding competitors from the most effective channels to market their products.
For Microsoft, the dismantling ordered at first instance had been annulled on appeal, in favor of restrictions. Were they helpful?
The remedies in the Microsoft case were aimed at separating the operating systems market from software markets such as web browsers or the Java programming language, which could have become platforms that could threaten Windows. But it turned out that the real competitive threat was the move to mobile, which gave birth to the Apple ecosystem. Microsoft also ended up scuttling itself in the web browser market with too slow innovation.
Google and Big Tech have already been fined billions of dollars without their dominance suffering. Is dismantling the only solution?
Economists will no doubt support this thesis at the trial. But my intuition is that Google's monopolies in these different markets are too entrenched for a vertical split (search, advertising, Android...) to reset their competitive advantage for the consumer. Google will respond with convincing arguments about economies of scale – financial and technological – in the search market, and it would be difficult to argue for a horizontal split (by separating Google's advertising network and that of DoubleClick, acquired in 2007, or Google Video and YouTube for example). Corrective measures, such as banning contractual provisions that block innovation in the Android space and the distribution of competing products, are likely and easy to implement. But they are likely to be as ineffective as the remedies imposed on Microsoft.
There is no hope of real change?
The courts will try to impose remedies to restore a certain neutrality between these different markets, hoping that more competition or technological changes will erode Google's power on one or more fronts in the future.
Has the US competition watchdog (FTC) made a mistake in giving the green light to most tech takeovers over the past two decades?
Yes. These cases illustrate the limitations of the Chicago School theory (about a self-regulating market in favor of the consumer), which has dominated competition law since the 1980s. The entrenchment of monopoly power via network effects in many platform (internet) markets is endemic. Besides Google, the FTC is expected to take on Amazon at any time.
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