The Daily Dish
August 7, 2024
The Google Search Case
On Monday, a federal judge handed down his ruling in the Department of Justice’s (DOJ) antitrust case against Google, finding that the company illegally maintained a monopoly in online search and search text ads. Google did so, the court found, using agreements with web browsers and smartphones to be the default search engine. Jeff Westling has the full story. Here are a few key takeaways.
Probably the most important is that current antitrust law works. No additional legislation singling out platform companies and no messing with criteria for decisions. As Westling puts it: “Congress need not change well-established principles to target firms if those firms can be shown to harm consumers.”
The second thing to remember is that Google will appeal (and the process will take years). “Google will have some very strong arguments on appeal, namely that the opinion does not fully consider the company’s competitors – in particular generative artificial intelligence models that have been developed since the case’s beginning – and that Google’s agreements benefit consumers and competition as a whole,” Westling writes.
The third thing is that the economic foundations of the ruling seem weak. The judge says (page 2): “Google has not achieved market dominance by happenstance. It has hired thousands of highly skilled engineers, innovated consistently, and made shrewd business decisions. The result is the industry’s highest quality search engine, which has earned Google the trust of hundreds of millions of daily users.”
That sounds like a company that has earned its position.
But the judge then rules that the key for Google is that it has agreements to be the default search engine. Put differently, if there were no default, or there were another search engine (e.g., Bing) as the default, users would not end up using Google. The notion – based in behavioral economics – is that people suffer too much inertia to make the move to a search engine they clearly prefer. I’m not buying it.
So, round one goes to the DOJ. Stay ready for more to come.
Fact of the Day
As of July 31, the Fed’s assets stood at $7.2 trillion.
