Is Google’s search engine an actionable monopoly that must be stopped or is it simply a big successful organically grown American icon? Unlike the antitrust laws of the European Union, just being a huge dominant company is not enough to find an antitrust violation under US law. There have to be actual efforts to manipulate the market, create barriers for others to compete and/or limit access to obvious markets needed for true competition. And so, in the biggest antitrust case in decades, the Department of Justice is litigating Google’s search engine dominance. You may have seen generic ads on social media and television touting how America’s global economic dominance and power has been government’s willingness to let big corporations do what big corporations do… when governments do not interfere. Is it efficiency, as the ads claim, or simple bullying in a marketplace that government has pretty much left alone for a long time?
Americans tend to be more skeptical about the government and more supportive of corporations, the reverse of the European ethos. But we have decades of experience as big corporations told us that cigarettes did not cause cancer, that air and water pollution were worth the cost to provide jobs, that greenhouse gas emissions from using fossil fuels didn’t matter, that big financing companies were literally “too big to fail” before they did… and there is a slow realization among many that we put away our trust-busting weapons away for far too long. Why and when did the nation decide to push antitrust prosecutions and civil actions in a dusty backroom?
In a September 15th RSS feed, the New York Times explains: “Americans have long been skeptical of big business. Thomas Jefferson, Theodore Roosevelt and Harry Truman all tried to constrain the power of large companies. Their efforts were part of a national culture that long emphasized individual freedom.
“In the 1960s, however, a group of conservative scholars began arguing that large corporations had been unfairly maligned. These scholars — led by Robert Bork, then an obscure law professor — made the case that big business was often efficient and innovative. And if a large company did try to take advantage of consumers, these scholars said, a competitor could swoop in and lure away those consumers.
“For years, Bork and his allies failed to persuade Washington to embrace their views. But after the U.S. economy struggled during the 1970s, policymakers became worried that antitrust laws were keeping American companies from competing with Japanese and European rivals. Slowly, the Bork view won converts, among both Republicans and Democrats. Since the 1980s, that view has dominated, allowing corporations to grow much larger.” Since that same timeframe, US income inequality soared to unanticipated levels. Tax laws also gave income-inequality breaks to billionaires by not taxing massive wealth. One percent of Americans owned more than half our nation’s wealth. Upward mobility seemed to die. Huge companies now had huge lobbying war-chests. They had their thumbs on a lot of scales.
So, in 2023, the Department of Justice seems to be testing a resurrection of anti-monopolistic policies to begin to level a few playing fields. Why start small? They sure did not! But huge companies, relatively recently formed, have become monoliths in newly developed tech and communications spaces. Facebook/Meta, Microsoft, Apple, Tick-Tok and then Google, which accounts for 90% of Internet searches globally. Ah, Google!
“The Justice Department’s case against the company (and a related lawsuit brought by 38 states and territories) argues that Google has unfairly maintained its dominance by paying other companies billions of dollars a year. Payments to Apple, for example, are the reason that Google is the default search engine on iPhones. As a result, the Justice Department says, competitors to Google cannot establish themselves…
“Google responds that its success is simply a reflection of the quality of its products. ‘People don’t use Google because they have to,’ Kent Walker, Google’s top lawyer, has written. ‘They use it because they want to.’… The government’s biggest challenge in winning this case is closely connected to Bork’s framework for antitrust policy. He argued that the most rigorous standard for judging potential monopolies was consumer prices. Only when economic analysis proved that a company was so powerful that it could raise consumer prices should regulators step in, Bork and his allies said. Otherwise, the government was just guessing about when a company was so big as to be problematic.” And maybe, just maybe, Bork’s assumptions and solutions were simply designed for a different era.
The result of this litigation may just redefine American business dramatically. In the Bork era, there were really no rags-to-trillion-dollar valuation companies. The mutual, interlocking dependence of the Internet did not exist. And income inequality was hardly the Godzilla of an issue that it clearly is today. The litigation is the result of a Biden administration’s mandate to rein in the excessive power of companies with such valuations, and concomitant political power, that mirror the GDP’s of a number of entire countries. Is this a Democratic policy that would be crushed under a GOP-dominated government. I’ll let you guess, but this particular case merits your attention… big time.
I’m Peter Dekom, and as the world roils, floods, battles and burns, it’s easy to overlook one of the most important economic cases in American history.
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