Supporters Of Using Antitrust Against Big Tech Should Be Very Disappointed In How Weak The DOJ's Case Is
from the this-won't-go-far dept
As you've already heard, the DOJ filed the long-expected antitrust case against Google earlier this week. Karl has already discussed how it appears to be a politicized weapon wielded by Attorney General Bill Barr to create a bogus culture war around how Trump is "taking on" big tech. Cathy has looked at one weird aspect of the case -- how its own argument regarding trademark genericide actually cuts against the idea that Google is a monopoly.
However, what strikes me as most noteworthy about the filing is how insanely weak the argument is. As was already discussed, many lawyers in the DOJ had said they really needed more time to put together a complete case against Google... and it shows. I know that the folks who have been agitating for antitrust actions against Google for years are cheering this on, but that seems incredibly short sighted. As is currently filed (and it will likely change!), the case is so weak that Google would likely win in court, and it would then be more difficult (though not impossible) to craft another antitrust case later.
First, the case is fairly limited in what it argues. It focuses on Google's search distribution deals (e.g. getting Google to be the default search engine in things like Firefox or iOS, for which Google pays many, many millions of dollars). This seems like a weird choice for a variety of reasons.
For years, Google has entered into exclusionary agreements, including tying arrangements, and engaged in anticompetitive conduct to lock up distribution channels and block rivals. Google pays billions of dollars each year to distributors—including popular-device manufacturers such as Apple, LG, Motorola, and Samsung; major U.S. wireless carriers such as AT&T, T-Mobile, and Verizon; and browser developers such as Mozilla, Opera, and UCWeb— to secure default status for its general search engine and, in many cases, to specifically prohibit Google’s counterparties from dealing with Google’s competitors. Some of these agreements also require distributors to take a bundle of Google apps, including its search apps, and feature them on devices in prime positions where consumers are most likely to start their internet searches.
It seems worth noting here that Google pays a ton for those deals. Mozilla practically lives off of that contract. If Google is somehow forced to stop, that'll do a lot more to hurt Mozilla/Firefox than help it.
Also, when you're talking about abusive monopolies, it's normally how companies use their power to drive down how much they have to pay (because they're the monopoly). And yet, as the filing itself shows, these search deals have involved strong competition from Microsoft, meaning that Google ends up having to fork over huge chunks of cash.
Under the current agreement between Apple and Google, which has a multi-year term, Apple must make Google’s search engine the default for Safari, and use Google for Siri and Spotlight in response to general search queries. In exchange for this privileged access to Apple’s massive consumer base, Google pays Apple billions of dollars in advertising revenue each year, with public estimates ranging around $8–12 billion. The revenues Google shares with Apple make up approximately 15–20 percent of Apple’s worldwide net income.
Perhaps my understanding of how monopolistic markets work is different than the DOJ's, but I don't recall ever seeing it described as being a market where the "monopolist" pays billions of dollars just to be an (easily changed) default. The fact that Google's deal alone is 15 to 20% of Apple's revenue (and Apple makes a shit ton of money) alone seems damning to the underlying argument for the case. If Google were a monopoly, then by any normal economic analysis, it would be driving down how much it pays because Apple would have nowhere to go. The fact that Google has to pay so much suggests that there's actual competition for these deals.
There is also the question of what users want. Frankly, if my phone/browser didn't have Google as the default, I'd change to it. I've tried the alternatives (Bing, DuckDuckGo) many times over. And they just are rarely as effective as Google.
The other troubling aspect of the lawsuit is that it insists totally reasonable (and indeed, important to protect consumers) activity is somehow anti-competitive. Some of these seem to put Google into a no-win situation. They would get killed if they did things differently, and they're getting killed for doing things this way. Here's an example. A key part of the DOJ's argument is that Google's anti-forking agreements regarding Android are anti-competitive. And, as someone who uses a non-standard, Android-based mobile OS on my phone, there are definitely times that I wish there were more competition in forking and building out Android alternatives. But there are non-nefarious reasons why Google would do this:
Google’s anti-forking agreements, however, have inhibited operating system innovation through forking, ensuring that manufacturers and distributors are beholden to Google’s version of Android. Distributors know that any violation of an anti-forking agreement could mean excommunication from Google’s Android ecosystem, loss of access to Google’s must-have GPS and Google Play, and millions or even billions of dollars in lost revenue sharing. Thus, distributors avoid anything that Google might deem “fragmentation”—a term that Google “purposely leave[s] . . . very vague” and interprets broadly.
Pursuant to the preinstallation agreements discussed below, Google also has final say over whether a device is found to be compatible with the technical specifications Google requires manufacturers to meet before they can preinstall GMS. As a Google engineer noted, it must be “obvious to the [manufacturers] that we are using compatibility as a club to make them do things we want.” Google views its anti-fragmentation mandate, and its final approval of devices before they launch, as a “poison pill” to prevent deviation from the Google-controlled Android ecosystem.
One interpretation is that this is anti-competitive and giving Google control. But, remember, this is open source in the first place. The only reason forking is even any option at all is because Google made Android open source. No one can fork iOS. Or Windows. Because those are proprietary. Just the fact that it's open source seems like a weird thing to be the crux to hang an antitrust lawsuit over.
But, more to the point, another (non-nefarious) reason why Google might make those agreements is to hold various device companies to a standard that delivers users the experience they expect. Without those agreements, then you could get bad implementations of Android in which lots of things don't work correctly -- and end users would likely blame Google for that. Also, fragmentation has already been a problem in getting some apps to work smoothly across the wider Android ecosystem. So the efforts at standardization for those who want to offer the wider Google ecosystem are easily explained for the benefit of everyone, rather than as some attempt to block competition.
The lawsuit then immediately undermines its own point that everyone is afraid to fork Android... by showing how Amazon forked Android:
Google’s broad interpretation of the anti-forking agreements, and the reluctance it creates among Android distributors to support alternative versions of Android, presents barriers to entry. These were on display when Amazon developed its Fire OS operating system, a competing fork of Android. Rather than preinstall Google’s search engine, GPS, Google Play, or other Google apps on Fire devices, Amazon preinstalled its own proprietary apps and agreed to make Microsoft’s Bing the preset default general search engine. Amazon originally sold only Fire OS tablets, but in 2014 it launched a phone that ran on Fire OS. The phone was not a commercial success and Amazon quickly exited the phone business. Amazon continues to sell Fire tablets, which account for less than two percent of mobile device usage in the United States.
Right. As the DOJ says, this ended up being a flop for Amazon, but that also undermines the case. It shows that users like the Google services and apparently were not as interested in buying a device without them. So, the entire crux of the DOJ argument seems undermined in the filing itself. Basically, the argument is that Google prevents people from forking (except it didn't), and then shows when Amazon did fork, and says that failed in the marketplace. Which just looks like evidence that Google isn't blocking competitors, but rather consumers just prefer Google's offering.
Also, as Alex Stamos pointed out, a key problem with the assumptions in the DOJ's lawsuit is that the lack of startups entering the general search market is because of these practices by Google. But a much more reasonable assumption is that building a good general search engine is fucking hard.
Two things on the Google antitrust suit.
1) As a technologist, something that is really lacking from the complaint is a recognition that Google Search is dominant because building a competitor is *spectacularly difficult*! https://t.co/4aoTr85NTN
— Alex Stamos (@alexstamos) October 20, 2020
And, a few have tried over the years, but they've had trouble, not because of Google's search deals, but because their products just weren't that good.
If your goal was to breakup Google or even cause real harm for the company... this isn't the lawsuit you're looking for. It's one of the weakest antitrust claims I've seen. I'm honestly perplexed by the people cheering this on because it's so weak that it's not going to work and will make any real antitrust harder down the road.
I will note that this might change. I imagine that there will be amended complaints down the road, and NY's attorney general put out a statement noting that while she and the AGs of a bunch of other states are investigating Google for antitrust, if they do file a case, they will seek to consolidate it with the DOJ's case. It's possible that whatever case the states bring could be much stronger.
I'm open to being convinced that this approach will work, but as it stands, this case looks incredibly weak, seems likely to fail, and even if it somehow succeeded wouldn't create any real structural change. Indeed, at best it would just limit how much Google has to pay out to lots of other companies, which helps support the wider ecosystem. I knew that this was a blatant political move by Barr, but I still expected a lot more meat to be found in the filing.
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Filed Under: antitrust, doj, exclusive deals, market power, search
Companies: google
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I just have to point out that this sounds an awfully lot like the arguments made against right-to-repair. The direct legislation may have been replaced by contracts, but it still invokes the court.
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The difference being that those who want Android, but not the google services, can indeed fork android without restriction. The end user is perfectly free to install a forked android OS without violating contracts. But if the end user or the device manufacturer want Google services, they have to agree to use the non-forked android.
The device is yours to do with as you please. Access to the google services is restricted to supported branches of the OS.
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Not quite. You can still fork Android. And some have! You just can't fork it and still use Google services with it. That is quite different from the efforts to block right to repair...
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Re: Re:
Is that the only consequence now? My recollection is that they used to have a rule that someone who forked Android for one device couldn't use Google services on any other device they make—e.g., Samsung couldn't try releasing a non-Google phone to see how it would do, without endangering their existing product lines.
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Re: Re: Re:
I believe they still do, but I don't think that'll be usable by the DOJ. Microsoft for decades had the same kind of terms in their OEM contracts: if you sold any computers with any OS other than Windows on them you were barred from getting an OEM license for Windows and had to buy and install individual retail copies of Windows if you wanted to offer Windows. The DOJ could never get an antitrust argument based on that to stick in court. I suspect the same arrangements come up in a lot of areas, eg. car dealerships, where if you want to be an authorized dealer for a brand you can't sell competing brands. Those arrangements have never resulted in any legal problems, so I don't think the DOJ can use that argument here. Especially since their argument is that Google is a monopoly in search, not phone operating systems, and there's no coherent argument that Google is using their search engine to force phone makers to use Android. If the DOJ tries, all Google has to do is utter one word: "Apple.".
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Re: Re: Re: Re:
The argument seemed to be that Google was using Android to make people use Google Search. Doesn't make a lot of sense, with Google paying the OEMs to be their default search engine.
Anyway, Apple won't save Google from being classified a phone monopoly, because a) Android has 85% of the market and b) phone makers cannot realistically choose anything else—Apple won't license their OS.
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"Google pays billions of dollars each year to distributors—including popular-device manufacturers such as Apple"
"Google pays Apple billions of dollars"
Erm... I'm struggling here. How does monopoly behaviour fit a situation where the supposed monopolist is paying billions to its major competitor in the markets in question? I can think of price fixing, etc. agreements where this is an issue but I can't think of another monopoly complaint where the supposed monopoly is propping up its competition.
"Mozilla practically lives off of that contract. If Google is somehow forced to stop, that'll do a lot more to hurt Mozilla/Firefox than help it."
Like with section 230 and anti-NN stuff, I wish there was a way to demonstrate what effects the rules these people want to push for will have. So many of them try to demand rules than will in effect make Google, Facebook et al more powerful, not less.
"The phone was not a commercial success and Amazon quickly exited the phone business"
Yep, the phone got bad reviews and wasn't particularly appealing. This seems to be a common theme - Google make a good product and someone else makes a bad one, but Google are the supposed monopoly abuser because their product was more popular?
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My understanding is that the suit is only alleging that Google is a monopolist in the search market, not any other.
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Apple doesn't compete with google in search. They compete in device sales, but those are different markets.
For reasons Mike notes I find the argument rediculous, but not because Google and Apple are competitors.
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This practice is referred to as tying, and it's clearly defined as illegal under section 2 of the Sherman Antitrust act.
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Except that Google is tying use of it's Android services to use of it's version of Android, and they're nowhere near a monopoly in phone operating systems. Apple uses it's own phone OS, and lots of Chinese phone makers are offering phones using their own forks of Android without Google services. Without a monopoly, Section 2 doesn't come into play.
Trying to bring in search runs into the problem that Google doesn't tie use of their search engine to anything. You don't need to use Google's official Android as the phone OS to make Google the default search engine for your phones, witness Apple. Alleging tying is going to be a hard sell when you can't identify what Google's supposed to be tying to use of their search engine.
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"Like with section 230 and anti-NN stuff, I wish there was a way to demonstrate what effects the rules these people want to push for will have."
There is. Most likely we'll get to see these rules in action.
...which won't matter to those of us from outside of the US, except that it may hopefully mean a few EU legislators sit up and notice just why the US tech sector is taking a nosedive into the midden and quietly withdraw a few of their EU bill proposals.
"Yep, the phone got bad reviews and wasn't particularly appealing. This seems to be a common theme - Google make a good product and someone else makes a bad one, but Google are the supposed monopoly abuser because their product was more popular?"
Yup. The principle is called "This is unfair! Waaah!!" and has been the basis of just about every Red Flag Act in existence. Surely a principle hallowed by so many centuries of slavish adherence of governments around the world can't be wrong?
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This seems like a familiar plot point
Wasn't one of the core ideas in Atlas Shrugged about how bad it was for society when the government crippled business that are succeeding, so that their competitors, providing inferior products or services could succeed?
Wasn't "Who is John Galt?" a GOP slogan not just few years ago?
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Re: This seems like a familiar plot point
They used to have a pretty different opinion of Russia, too.
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Randian versions of "bad for society"
Wasn't Rand's idea of a happy ending when all the takers, the useless people, perished horribly so only the elites remained?
I wouldn't trust Rand's ideas of what's good for society to reflect what I think is good for society.
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Re: Randian versions of "bad for society"
"when all the takers, the useless people, perished horribly so only the elites remained?"
Who is going to make their happy meals?
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Re: This seems like a familiar plot point
Since when did cultists actually follow the teachings of their holy book?
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Re: Re: This seems like a familiar plot point
To the extent that it agrees with what they already believe or it can be twisted to maybe sorta do so.
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Re: This seems like a familiar plot point
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Re: This seems like a familiar plot point
"Wasn't one of the core ideas in Atlas Shrugged about how bad it was for society when the government crippled business that are succeeding, so that their competitors, providing inferior products or services could succeed?"
I can't abide by libertarians - whose ideology is as removed from the realities of humanity as the communists are - but that aside I think I'd prefer it if the GOP was libertarian.
Currently they go with an opportunistic mix of outright communism and corporatism only realized in actual national socialism back in the day.
"Wasn't "Who is John Galt?" a GOP slogan not just few years ago?"
Yeah, and most of them didn't believe in it then either. It's pretty simple; If they are on top and they have the money then they believe in John Galt. If some other guy is raking it in John Galt is no longer important and they demand that other guy share the goods.
The current GOP is as principled as a spoiled rotten five year old, demanding everything they see and taking it as a great personal affront if they don't get it.
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Re: Re: This seems like a familiar plot point
The modern American right wing take a lot from Atlas Shrugged, or at least from Rand. In the sense that, like he, they'll spout a lot of ignorant nonsense that could never work in the life in an attempt to deny benefits to others, but when they need those things themselves they'll greedily take it and claim that the rules they set don't apply to them for reasons.
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Re: Re: Re: This seems like a familiar plot point
Color me not too surprised that for a given section of a citizenry weaned on the idea of "might makes right" for decades the concept of an ideology based on "It's all right to be an asshole" must be tempting.
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Not a surprise
The whole anti-trust thing has been a blatant attempt to bully and bullshit into asserting control. They have never shown a care for the truth and evade it at every turn. When you highlight that anything doesn't make sense they just get annoyed at you raising cognitive dissonance, glitch-out and then return to their regularly scheduled out of nowhere talking points and start flunking a Turing test at broad scale.
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To the point
If Donald trump was more politically motivated he would be invading Poland.
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“Using Microsoft as a starting point”
How ##### original billy.
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The administration is desperate for a diversion
Google is not just big, Google is a huge, massive corporation that is integrated into modern life as we get used to instant access to the largest library in human history. Also, we are in the middle of a pandemic with tens of thousands of new cases a day, hundreds of thousands of dead Americans, and an epically incompetent administration. COVID19 has gone unchecked to spread and kill as the administration has lied about the severity, and the country is suffering with an election in less than 2 weeks. They just attacked CNN as 'dumb bastards' for still talking about a virus that is upending day to day life. So, I imagine that they will jump at the chance to create massive headlines any way they can to change the topic.
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The notion of benevolent big data.
Once upon a time, Google had a business model where they housed a giant database of everyone's email, schedules, searches, search preferences and so on.
Hypothetically, only that user would have access to his or her private information (except as it was necessarily brokered for communications or transactions, say to send an email or make a purchase). No one else would have access, and Google would sell analyses of large blocks of data, which could be useful for marketing or deciding what to make that might sell well.
We can argue Google didn't do this very well: plenty of human Google technicians talked their lovers, and malicious state agents often wanted to peek at the private data in order to (allegedly) solve crimes (but just as often, find cause to disappear someone).
I don't think we've ruled out a system in which it was impossible for humans to get a hold of useful private information (with the exception of the owners of that information) but it seems like that would be doable with innovation, if someone wanted to use Google's original business model, but this time with robust security.
Whether or not that's what Google is still trying to do, it feels like a good idea. But then it might be a good candidate as a natural monopoly, since we only want one place where all the private data is, and it's locked down way out of reach of all interested parties, state, criminal or otherwise.
But I am totally not a lawyer, nor am I a database engineer or big data enterpriser.
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So, nothing with regards to any actual things which might be regarded as antitrust violations. Makes sense, as they never seem to go after other monopoly or trust behaviors, in fact they heartily encourage them. They don't want any good precedents.
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'If it was bad when Google did it...'
That thought had occurred to me as well, in that perhaps the case isn't trash just because it's rushed but also because they don't want to set any precedent that might be used against monopolies that they do like, and as such they're very limited in what complaints they can bring forth.
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I am a supporter of using antitrust against big tech
And I am disappointed in how weak the DOJ's case is.
However, I'm still immensely pleased that any action at all has been taken, the first legitimate antitrust action in the past 22 years. What's more, although this is clearly a political stunt designed to drum up support for the Trump campaign with two weeks to go until the election, the timing actually seems fortuitous to me, and here's why:
While the initial filing may be weak on the argumentative side, there's no reason that a DOJ under new leadership appointed by a Biden administration could not amend this filing and use it as a vehicle for real, effective antitrust action (not to mention additional lawsuits against Apple, Facebook, and Amazon supported by the heaps of evidence laid out in the Cicilline antritrust report). The important thing to me seems to be that we have cleared the initial hurdle of filing any sort of case at all. This is something that would have been unthinkable just 4 short years ago during the monopoly-friendly Obama administration, and it genuinely warms my heart to see this conversation get going in earnest.
What this country needs, in my view, is a new antitrust movement reminiscent of the days of FDR and the new deal. FDR was not an idealistic reformer as he is often portrayed these days. He was an indefatigable pragmatist who appointed both progressive and corporatist democrats to positions in his administration. He saw the need for change in the aftermath of the greatest economic crisis in the history of our nation. Biden seems to me much the same, although admittedly a bit worse for wear, and while the Covid recession may not be equal to the Great Depression in terms of scale or length, it has really just been a capstone to decades of slow rot in our economic system.
Are there other, clearly more exploitative monopolies that exist, such as Comcast and AT&T? Of course, but we have to start somewhere and the political will to take on big tech exists now. It would be foolish not to seize this opportunity and use it to liberate the American people from their corporate shackles.
This could mark the turning of the tide against monopoly power in the US. Call me a dreamer, but I've been a pessimist all my life and THIS gives me hope when little else does.
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The DOJ who cried 'Monopoly!'
Are there other, clearly more exploitative monopolies that exist, such as Comcast and AT&T? Of course, but we have to start somewhere and the political will to take on big tech exists now. It would be foolish not to seize this opportunity and use it to liberate the American people from their corporate shackles.
Yeah, the problem with that(and the whole thing in general really) is that it depends rather heavily on those involved having good faith motivations who are actually interested in what's good for the public, and I feel really safe in saying that that's not the case. To the extent that the 'political will' exists to 'take on big tech' it's large due to grossly dishonest fearmonging and lies rather than valid concerns, which are not reasons that should be celebrated.
If they were actually interested in cracking down on monopoly abuses for the sake of the public that would be one thing and could potentially lead to some positive outcomes, but when you're dealing with a blatantly obvious political stunt going after the president's enemies both the motivation and goal are poisoned from the get-go such that the odds that something positive will result from it are vanishingly small, not to mention you are setting some really nasty precedents when it comes to acceptable behavior for government agencies, potentially resulting in even more long-term damage than the monopoly you're currently concerned about.
This could mark the turning of the tide against monopoly power in the US. Call me a dreamer, but I've been a pessimist all my life and THIS gives me hope when little else does.
It really shouldn't, as while 'political hitjob for dishonest reasons in an attempt to influence an election' definitely deserves an emotional reaction 'hope' is not it.
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