Today, we unveiled the third and last in a series of policy papers containing detailed evidence and roadmaps for potential antitrust cases against several tech giants. “Roadmap for a Monopolization Case Against Google Regarding the Search Market” is the result of a collaboration between several antitrust experts who have been working in tandem to study competition issues in the digital marketplace and research the specific harms caused by big tech:
- Fiona Scott Morton, Theodore Nierenberg Professor of Economics at the Yale University School of Management and former deputy assistant attorney general for economics at the U.S. Department of Justice’s antitrust division co-authored the third paper;
- Our partners at the DC-based think tank, Public Knowledge; and
- David Dinielli, a senior advisor at Omidyar Network and former special counsel at the U.S. Department of Justice’s antitrust division.
Based largely on information collected by the UK‘s Competition and Markets Authority (CMA) and the European Union’s antitrust decision on Google Android, this paper describes a clear theory of how Google may have potentially violated antitrust laws in the US, assuming that the facts mirror those found in the UK. Google appears to have engaged in anticompetitive conduct that includes setting up exclusive contracts, requiring competitors to enter two markets simultaneously in order to compete, and the foreclosing of potential competitors.
To expand on the first point, Google set up a series of exclusive contracts with handset manufacturers and online content companies, such as AOL and NewsCorp, to be their default search engine. Google paid dearly for these contracts because preventing existing and potential competitors from gaining a foothold in the market was much more valuable to Google than simply the value of each additional customer the exclusive would yield.
Additionally, Google leveraged its power via the Android operating system and app store to gain and maintain power in generalized searches. Google’s Android contracts required phone manufacturers to agree to put the Google search app on every device, and set Google as the default search engine. This meant any other search engine would also need to offer a successful mobile phone operating system and app store in order to compete effectively; a huge upfront investment unrealistic even for a very well-financed competitor.
And with the third area of anticompetitive behavior, Google structured the search engine results page to make it harder for a competitor with a specialized search to secure customers. Specialized search engines are potential competitors to a generalized search engines, and they could collectively take significant revenue from Google. Google recognized that generalized search can be a gateway to specialized search, and the company used tactics such as down-ranking specialized search sites in unpaid results to make it more difficult for these companies to attain users.
“This is a classic tale of a likely monopolization strategy premised on denying scale to rivals, reminiscent of the now decades-old case against Microsoft,” the authors conclude.
Because of Google’s conduct, competitors and potential competitors, advertisers, and consumers have been harmed. Google’s behavior prevented new market rivals, like specialized search applications with significant revenue-growth potential, from growing strong enough to challenge Google’s power over general search. If faced with competition, Google would have had incentives to build a better search engine. And yet, lack of competition has meant that its search engine is a stagnated and basically monopolized product. When innovation is lacking, consumers have less choice and experience an inferior version than they would otherwise.
Omidyar Network supports the development and enforcement of competition policy because we believe that one essential component of platform accountability is competitive markets. If done well, competition policy can result in healthy innovation, more responsible technology, and better outcomes for users. As this paper shows, this is not yet a reality in today’s search engine market.
We call on the relevant US federal and state agencies, who are hard at work determining when and where anticompetitive practices and harms have occurred, to adopt this comprehensive view of Google’s conduct and help establish a fair and responsible tech ecosystem.
To learn more, please read the previous two policy paper in the series: