Competition or consolidation: Google sued for antitrust


Kyle Young, Managing Editor

With the Bay Area’s high exposure to the forefront of technological development in Silicon Valley, digital ecosystems naturally develop all around us. For example, take Urban’s one-to-one computer program, which is entirely built around Apple’s MacOS ecosystem. These technological ecosystems promote a certain degree of accessibility from a user standpoint given that all services are consolidated and linked together, but they are not without their controversies.

Recently, seven states including California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia, along with the Department of Justice (DOJ) filed a civil antitrust lawsuit against Google, specifically surrounding their digital advertising products. Google Ad Exchange, which has over or equal to 50 percent of the market share according to the DOJ, is the marketplace where website publishers are linked with advertisers to generate money. The DOJ alleges that this system, known as the ad tech stack, is being abused by Google in an anti-competitive nature.

Assistant Professor of Law and Faculty Director for the Berkeley Center for Law & Technology, Tejas Narechania, said in an interview with The Urban Legend, “If you only get Google search results, that means you’re only gonna get Google Maps and you’ll never get a competing map server. And so, that suggests even though it’s efficient to consolidate, we might want the Department of Justice to intervene so we get some of the benefits of competition.”
These benefits manifest themselves in two main ways. Firstly, if one entity or company garners a dominant control of an industry, they can then control the prices and dynamics within that sphere, as there’s nowhere else where consumers can turn to. Secondly, if there is no competition, the company with dominance doesn’t need to work to gain an advantage over their adversaries because they can just buy them out. This results in the plateau of innovation and progress in an industry. Ideally, competition benefits consumers by incentivizing companies to make better products and maintain fair/lower prices.

“[In Google’s case,] it’s a problem of monopoly leveraging, which is if you have a sort of dominant status in one market, you might try to leverage that status to dominance in another market,” said Narechania. “So I suspect that part of what’s going on here is that we’re worried about how much power Google has when it comes to, say, search. And it’s using its power in search to drive revenue and other markets that might otherwise be competitors, including digital ads.”

This dominance mentioned by Narechania rings true for the Urban community as well, with many students using similar programs to do homework, browse the internet and communicate with teachers. “I’m often trying to teach students to use other browsers to avoid having one algorithm give us results, and when I ask students what browser they use, overwhelmingly the answer is Google.” said Librarian Sarah Levin.

“Advertising is the engine that fuels the web,” said Mitch Stoltz in an interview with the Urban Legend. Stoltz is the Electronic Frontier Foundation’s (EFF) competition director and a member of their legal team where he specializes in antitrust, policy analysis and user rights. “If you have a blog or a newspaper, or any kind of media website, and you’re running ads on it to make money, you’re using Google’s technology.” said Stoltz.

The tech sector is always rapidly changing. Dominance in new markets has been a longstanding issue, from breaking up Microsoft Office suite in 1999 to a previous advertising antitrust suit against Google in 2020. Due to the speed of technological development, legislation hasn’t been able to catch up.

“[Antitrust was] used to break up oil and steel and railroad trusts a century ago. And in that era, it was a useful tool,” said Stoltz. “But over the last 30 years the courts and Congress have narrowed antitrust [and] made it less powerful. So right now it’s not clear that it’s going to be a successful tool for holding companies accountable.”
In December 2022, Congress introduced a $1.7 trillion package which incorporated a plethora of funding for antitrust enforcement, but omitted policies that regulate anti competitive behavior from technological conglomerates, such as the American Innovation and Choice Online Act (AICOA) and the Open App Markets Act (OAMA).

The AICOA is aimed at prohibiting companies hosting marketplaces from self-preferencing their products by placing disadvantages on the competition such as Apple spotlighting Apple Music over Spotify on the App Store. The OAMA would open up other application marketplaces to compete with the App Store and Google Play Store and prohibit marketplaces from forcing developers to use their payment system.

“Capitalism without competition is not capitalism. It is exploitation,” said President Joe Biden in his State of the Union address on February 7, 2023. Referencing the AICOA, Mr. Biden said, “Let’s finish the job… Pass bipartisan legislation to strengthen antitrust enforcement and prevent big online platforms from giving their own products an unfair advantage.”

However, government regulation isn’t always viewed as the best solution. “The good thing about antitrust enforcement trying to achieve that balance through competition is that all of these things are ultimately really about free expression,” said Stoltz. “It’s dangerous to have the government step in and say, ‘You have to tell people that this was relevant and this is not.’ That’s a little bit like a government regulated speech, which gets into dangerous territory.”

When it comes to antitrust regulation, there is a fine line between balancing healthy competition and a market that would benefit from consolidation for the purpose of efficiency.

“Where you strike that balance is a difficult question that I think the Department of Justice is going to have to address, which is maybe one [advertising platform] is too few, maybe 100 is too many,” Narechania said. “What does a well run market look like? A market that both balances the gains from efficiency and the gains from competition.”