The Judiciary takes a look at the Google Monopoly
Google's monopolies on internet search and control of online advertising are under scrutiny in the ongoing court case United States v. Google LLC.
The biggest story happening right now in the effort to decentralize the American economy is the antitrust trial against Google: United States v. Google LLC. If you’re not familiar with Google it’s a multibillion dollar company that has monopolized the internet search and advertising markets through buying competitors, rigging online and mobile advertising markets and bribing other players like Apple and Facebook. The core of the government’s complaint, brought via the Federal Trade Commission (FTC) under the wise leadership of Commissioner Lina Khan, is that Google’s conduct to win their monopoly has been anticompetitive to the point of violating Sections 1 and 2 of the Sherman Antitrust Act — a landmark piece of legislation from 1890 that outlaws monopolistic business practices.
There are a few reasons why this case is important…
Concentrated industries are undemocratic
Google and its parent company Alphabet conservatively spent $13 million on lobbying the government last year.
When industries are concentrated in the hands of a few players, it’s easier for firms to collude and influence government in undemocratic ways. When markets are decentralized it’s harder for a small group of businesses to hijack democratic governance. We can see this through a hypothetical:
Let’s say one hundred firms shared control of an industry. Those firms have to compete with each other for market share (a word banned internally at Google). If they wanted to influence government through lobbying they’d have to get ninety nine other firms onboard to pool resources, coordinate and act. It’s too much for one firm with 1/100th of the market to influence the federal government so they’d need to act together. Coordinating one hundred companies for a common lobbying vision is next to impossible. Firms that didn’t spend time and money on lobbying the government could focus on making better products and take market share from the companies trying to influence elected officials.
The same dynamic does not play out in concentrated industries like web search where there are two or three companies controlling the industry. Coordinating between a few companies is trivially easy. Additionally since competition in the industry is not as fierce these players with massive monopoly-style profits can pour money into lobbying, hiring ex-government officials to influence current government officials. Google, Facebook, Apple, Amazon and Microsoft coordinate their influence on government through the Internet Association, common law firms they hire and corporate lobbyists they use.
There’s also the issue how concentrated industries breed fascist relations between business and the state. Economic power through monopolized control of industry breeds profits and political power. If that power gets to be too great the state and corporations merge. Either the government can control the company as in disastrous socialism or the corporation can control the government as in authoritarian fascism. The beauty of the American system is the middle way where economic power and industry is decentralized, breeding greater freedom and democratic governance. Antitrust is the ultimate check on corporate power and should be taken seriously in regards to our democratic system of governance!
Google’s abuses
The Sherman Antitrust Act distinguishes between fair and unfair competition. The FTC lays out a few ways in which Google’s conduct has been anticompetitive:
Acquiring competitors: I’ve written before about how companies shouldn’t be able to buy their competitors. The FTC complaint is a searing inditement of Google’s business model, in it they state:
Google’s plan has been simple but effective: (1) neutralize or eliminate ad tech competitors, actual or potential, through a series of acquisitions; and (2) wield its dominance across digital advertising markets to force more publishers and advertisers to use its products while disrupting their ability to use competing products effectively.
Specifically the acquisition of competitors like AdMeld, DoubleClick and AdMob come under heavy scrutiny in the FTC complaint.
Distorting Auction Competition: Google rigged ad markets in its favor through an initiative called Project Bernanke, where it manipulated the advertising auction win rates in its own favor since 2013.
Auction Manipulation: Google insulated itself from competition through a quid pro quo arrangement with Facebook called Jedi Blue that halted the development of new technologies and ad auction houses.
Forcing adoption of Google’s tools: I haven’t read the full complaint yet but essentially the issue is locking in publishers to using Google products.
The trial is ongoing. I’ll be sharing updates as they emerge, I also highly recommend Matt Stoller’s newsletter as they’re going to be reporting directly from the courtroom.
Google has near infinite money and political clout to spend on this case that could result in them being broken up into separate companies. It’s still early days but this trial has the potential to decentralize the American technology economy and set precedent for future breakups of Amazon and Apple. 🚀
New & Updated Pages on Employbl
In addition to working, raising kids and nerding out about about the Alphabet antitrust case I’ve been researching and writing a bit about AI companies.
To start I published a massive list of companies with .ai domain names and putting together some other resources to be shared in a future newsletter.
Also, launching soon will be the new employer onboarding experience on Employbl. If you’re interested in promoting your tech company or startup through the site reply to this email or fill out this form.
That’s all for now! Stay classy out there.
P.S.
I recently bought a ticket to this conference for software developers in San Francisco in November. If you’re going too holler at me!