Google in the Antitrust Dock

Justice will need more proof of consumer harm to win its lawsuit

WSJ editorial.

"The Justice Department on Tuesday rolled out its first major antitrust lawsuit against Big Tech, and target one is Google. The search giant makes a ripe political target, but on the evidence in the lawsuit the government’s claims will be hard to prove.

There’s no denying that Google dominates the U.S. search market, accounting for 90% or so of general queries and 95% on mobile devices, according to the Justice suit. About 40% of U.S. smartphones operate on Google’s Android open-source system, with many apps, including its Chrome browser and search engine, pre-installed. But in antitrust law the most important question is whether this dominance harms consumers.

Justice contends Google violates the Sherman Act by using exclusionary practices to maintain its search dominance. For instance, Google requires smart-phone makers that license its Android system together to pre-install its apps as a bundle including browser and search. Google sweetens the incentive by paying manufacturers and browsers, including competitors like Apple and Mozilla, a share of its ad revenue.

But there’s nothing illegal per se about such bundling or tying agreements or other mutually beneficial contracts between businesses. In 2014 Mozilla struck a deal to make Yahoo its default search engine but switched to Google in 2017 because users preferred it. Microsoft and Yahoo also pay to be featured in Apple’s Safari browser.

The government cites the D.C. Circuit Court of Appeals ruling in U.S. v. Microsoft (2001), which held that Microsoft’s practice of bundling its web operating system and browser violated the Sherman Act. Justice says Google uses similar exclusionary practices to maintain its search monopoly.  

But consumers can easily download other browsers and search engines if they don’t like Google’s, unlike in the 1990s when they had to buy special software or jump through hoops to use an alternative to Microsoft’s. Now most general search engines and web browsers are free. Microsoft’s Bing even pays consumers rewards for using it. Where is the consumer harm? 

According to Justice, “When a consumer uses Google, the consumer provides personal information and attention in exchange for search results. Google then monetizes the consumer’s information and attention by selling ads.” Okay, there’s no “free” search. But consumers consent to letting all sorts of companies, including supermarkets, collect data in return for a free service. Google also allows users to limit the data it collects. Most don’t.

In 2005 Google accounted for about 35% of the general search market compared to 30% for Yahoo and 15% for Microsoft. Both of the latter had plenty of data and capital to invest in building better search products. Microsoft pre-loads every Windows PC with its Edge browser and Bing search. Amazon’s Fire operating system uses Bing as its default. Google doesn’t stop users from switching to other search engines.

One other weakness in the Justice lawsuit is its narrow definition of the search market, which excludes specialized queries for commercial products that drive Google’s ad revenue. Google doesn't profit from selling ads based on searches like “How tall is Donald Trump?” or “temperature in Sacramento.”

Google uses its general search function to hook people, but it makes money from selling ads on specialized queries. This broader advertising market includes Amazon, eBay, as well as websites like Yelp, OpenTable and Expedia. About 60% of Americans start product searches on Amazon.

No doubt Google wields enormous digital and political clout, and not always for the public good. We’ve criticized its censorship of conservative videos on YouTube and its profiting off news content produced by others. There’s a case for antitrust scrutiny. But Justice is going to need more evidence than it has released in this lawsuit to prove that it’s the Standard Oil of the internet."