In 1890, the House of Congress passed the Sherman Act as the United States’ first antitrust law to create a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade.” In 1914, the Federal Trade Commission Act and the Clayton Act were passed to strengthen the Sherman Act, representing the core of US antitrust law today. The Federal Trade Commission was created with the aim of regulating the free market system in the US by maintaining its key features: competition and freedom of choice. The increased competition between manufacturers has a positive effect on consumers, resulting in lower prices, greater innovation, and a wider array of choices.
To simplify, antitrust laws are dependent on four fundamental ideas: (1) to maintain a low market price, (2) to maintain a high level of quality, (3) to protect competitiveness, and (4) to make sure that businesses are incentivized to operate efficiently.
However, the US Department of Justice (DOJ) is currently accusing Google of participating in anticompetitive and exclusionary practices, particularly in the search and advertising markets to maintain monopolies.
The House Judiciary Subcommittee’s report of competitive practices of “big tech” companies such as Apple, Amazon, Meta (formerly known as Facebook), and Google (also known as Alphabet) concluded that these tech titans possessed monopolistic behaviors; and ultimately suggested Congress to consider modernizing antitrust laws to prevent a monopolistic market.
The allegations brought against Google are founded on Sections One and Two of the Sherman Act. In Spectrum Sports, Inc. v. McQuillan, the Supreme Court stated that the law must protect the public from the failure of the free market; it must also stand in opposition against anti-competitive practices.
This is the first major antitrust case against a major tech company since DOJ sued Microsoft twenty-five years ago. In 2001, the D.C. District Court ruled that forms of anti-competitive agreements to shut off distribution channels for rivals were deemed unlawful under Section Two of the Sherman Act. Ironically, Google is also currently accused of the same charges.
The allegations brought up against Google are accompanied by the following facts:
- Google owns or controls more than 80% of the total number of searches in the U.S. between its exclusivity agreements and its owned and operated properties.
- Google has become the most popular search engine in the U.S. in recent years, with almost 90% of all searches conducted by Google and 95% of searches conducted on mobile devices
These accusations will likely focus on Google’s exclusive agreements with Apple, Samsung, and other smartphone manufacturers which follow Google to become the primary search engines on those platforms.
It is indisputable that Google holds a dominant position in the search engine industry. Nonetheless, to evaluate whether Google has in fact abused its position in order to establish a monopolistic market may seem tricky. Judge Mehta has announced that the DOJ must show that the actions undertaken by Google were intended to keep competition away from the web-browsing market. This may represent a challenge, since the US government has struggled as recently as 2022 with the burden of proof, such as in the case Federal Trade Commission v. Microsoft Corp. and Activision Blizzard, Inc.
Google’s defense states of wrongful punishment for success over the past two decades. With the company denying any wrongdoing, the outcome of the lawsuit could result in the potential for the promotion of low-quality search alternatives.
If found guilty under the Sherman Act, Google’s core business and namesake search engine may be heavily impacted and rivals may be looking to further their agendas. Additionally, the business trajectory of Google may be hindered, especially considering its potential in the Artificial Intelligence sector.
Ultimately, Google may have to convince the judge of their compliance with antitrust laws and opposition towards monopolistic practices. It is yet to be determined how Google will be penalized should Judge Mehta decide in favor of the Department of Justice. There are a variety of potential sanctions, starting from small fines to complete corporate restructuring.
Even if Google is successful in its legal challenge, the media attention generated by the testimony of its senior executives in a three-month-long trial may have a detrimental effect on the company, according to experts.
The outcome of this trial will provide insight into the practices of the world’s largest technology companies, which have been the subject of numerous complaints from various stakeholders over the years. Additionally, the Department of Justice has recently filed a second antitrust lawsuit against Google, which focuses on the company’s advertising practices. It is uncertain whether the outcome of this case will ultimately influence the way consumers interact with the Internet.
Written by Johannes Kuehn von Burgsdorff
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