Stoller wrote a book on the subject which I never properly got through in its entirety, but it included a deep dive on what a monopoly is. You are correct - market share is not an anti-trust violation in it’s own. My assumption is that they will be arguing over whether Google is exercising its total control over the system to prevent competition from emerging, and using that control to extract all the value for itself. All while crippling functionality for the customers, not us search engine users in this case - but the advertisers.
https://www.justice.gov/opa/pr/justice-department-sues-googl...
I think that entire line of jurisprudence is a tragic mistake.
The wording of the law is crystal clear: "shall not monopolize", not "shall not monopolize unless it's just a really good product".
A 95% market share should not be allowed under any circumstances.
We aren’t failing to offer definitions here bc we’re in the tank for big tech. To immediately suggest we have malign motivations isn’t charitable. It’s genuinely a hard problem.
And I agree that it shouldn’t have been “allowed” but here we are.
Google as a default to other browsers doesn’t bother me. It’s the being the ad broker, the exchange, the browser, the os and the search engine that are problematic. They have demonstrated over two decades that they cannot protect the interests of either their users or the ad buyers. Disabling cookies is essentially meaningless when you’re forced to sign into your browser or os. Absolutely no ad exchange can act in the interest of their users’ privacy when they have a browser or os that mandates you to sign in. And yes, even ad buyers get screwed by Google’s exchange (Google’s real customers). There are many fraudulent publishers that stack ads but get paid out for false impressions, Google still collects on fake impressions and has little interest in decreasing the fraud since they have a 30% take on the impressions.
The ideal outcome is that chrome is spun off, android is spun off, and the ad exchange is spun off. Google can keep its suite of productivity tools and search engine and run ad words. That’s a completely reasonable and still extremely valuable business that is highly defensible. I think their interests can align with their users and customers in that scenario. As it is right now, I don’t think you can have the business model they have and not have serious conflicts of interest with users and advertisers.
(There are really important antitrust issues in the ad exchange but that isn’t the case the government brought!)
But to your earlier point: > On the other hand, the case that Google is going to make (and which I think is going to be really hard for the government to overcome) is this: we (google) give our product away for free and so do our competitors. What’s more, the cost of switching search engines is literally zero: just type Bing instead of Google.
Don't you think the counter argument to this, is, "No it's not that easy to just go to bing when you buy out the default search on rivals' browsers and operating systems and have the browser and mobile os with the world's largest market shares"? I get that the attack here is directly on search but it would be surprising to me if this wasn't part of the case. It seems insane to bring this case if there isn't a component focused on the browser and OS conflict of interest in search.
I’m looking for an analogy for you. The claim is that Google has monopolized the search market. It’s difficult to find actual monopolies in real life bc generally antitrust regulation works well (pace Lina Khan).
Think about a small city with two independent hospitals which then merge. That’s closer to a monopoly. There is a potential harm to consumers here bc traveling to go out of your local market for hospital services brings real costs: travel time, inconvenience, etc. That gives the newly merged hospitals power in the market. (Maybe not to the level of a monopoly, but likely substantial market power nonetheless.)
Applying something like this analogy to your counter argument: literally all the consumer has to do to avoid Google’s so-called monopolization of the search market is type the letters “b-i-n-g-.-c-o-m”. That’s entirely different from the hospital case.
It’s going to be very very very hard for the government to establish that google has anything like monopoly power here. Remember: making a better product and as a result having a large market share is not a crime. Google is going to say that since consumers can costlessly switch to a competitor who is also free, the reason they have 95% market share is bc their product is better.
I find it very hard to imagine that they will lose this case. It’s possible! But it seems really unlikely to me.
To me that looks like an actual antitrust violation but the DoJ and FTC aren’t investigating bc they are obsessing about “big tech” uselessly and bringing bad cases they are going to lose!
If you want your regulators to actually do something about a lack of competition in the US economy (which they really should be doing!) there are a ton of markets worth investigating before they waste their time on this loser of a case.
It's also a lot better than the ads market is, with literally one dominant player that monopolizes all stages of the supply chain. This is literally what Standard Oil did, controlling the wells, the refineries, and the distribution railroads to shut out competitors.
If you look at financial exchanges, there's a very good reason for the brokers and exchange to all be different companies.
But, hey, maybe you’re right. Maybe it’s a bad case being done for show. Slap on the wrist, back to business as usual sort of deal.
Search is not Google’s product, it’s a way to get their product. Their product is eyeballs which they sell to advertisers.
>the cost of switching search engines is literally zero: just type Bing instead of Google.
If this is true, why does Google pay Apple billions/year and Mozilla millions/year to make Google the default search? You could be saving that money!
Monopolization of the ad market is not the issue here, because the specific claim is that google has monopolized the search market. You can read that right in the linked article.
Google’s payments to be the default are (as I already said) not obviously pro-competitive to me. I don’t know if you and I disagree there.
But again… in Google’s defense they are going to say (accurately!) “everyone gives search away for free so consumers are free to switch.”
It’s going to be impossible (IMO) to argue that consumers are harmed in the search market. It just won’t be credible.
The department of justice is likely wasting its time, which is similar to the recent behavior of the FTC under Lina Khan which is (if you are American) wasting taxpayers’ time taking on losing cases, while letting mergers which really deserve critical scrutiny through. Microsoft Activision is a prominent recent example.
And if the Justice Department actually does show up in court with a filing that says: “No, your search engine was awesome, but it’s increasingly ad-filled crap. You’re too powerful, you’re too lazy, and America needs some real competition” (this is a direct quote from Stoller’s article) they are going to be laughed out of town and they will richly deserve it.
So again… I like the attention Stoller pays to antitrust issues but his analysis of the economics (especially in the case of some tech firms) is just bad.
That was always ludicrous. The only way for the FTC to win that case was to define the relevant market as "games produced by Activision". That would have made the merger anticompetitive by definition... but no more anticompetitive than Activision already was.
Incorrect. The Stoller article says “government argues that Google has a monopoly of general search and *search advertising*”.
The case in question (1:20-cv-03010) alleges anticompetitive behaviors in multiple interrelated markets: general search services, *search advertising, general search advertising, and general search text advertising*. The other major case (1:23-cv-00108) is about their monopolization of the digital ad market via Doubleclick/Ad Exchange/Google Ads.
Would drive, docs and gmail be free if you divorced them from the ad revenue products?
If they are all free then it’s not a bundle in the antitrust relevant sense. Microsoft Teams is a great example of an anticompetitive bundle if you want one.
> Microsoft Teams is a great example of an anticompetitive bundle if you want one.
Also true.
This is exactly where the anticompetitive effects of bundling arise.
>> With Google, the products are paid for by the ad revenues instead of Windows and Office licenses.
That’s why it’s going to be impossible to argue that this is bundling in the anticompetitive sense.
Yes, probably. They all count against your 15 GB quota of free storage, after which you have to pay Google for more. It's basically the same model as Dropbox.
That is, saying that customers /could/ switch is not necessarily relevant. There is evidence that they believe paying for the "default" billing is worth a ton of money. Not just to Apple, but to Mozilla, too.
That they could lose access to revenue streams by losing default billing is very relevant when that is also a large portion of how they are able to make that payment.
Could see it more as collusion with competition, I suppose? It isn't competing on the merits of their search, but more on their ability to afford default status. Which keeps Apple from entering search, and ostensibly keeps it more expensive for Microsoft to keep Bing.
Consider, if Apple could get more from MS to make Bing default, why wouldn't they?
On the contrary, it’s the whole ballgame in a case like this. Google’s claim will be: “we have high market share because our product is good. Look - customers could switch for free if they didn’t like it.” The government cannot make a monopolization claim solely on the basis of high market share in this case. It’s not remotely persuasive. (Indeed: who do you do your searches with??)
>> “there is evidence…”
Totally agree with this sentence. But it’s not going to be decisive for the government. It will not be remotely sufficient. Again - it’s not clear to me personally that this behavior is pro-competitive. But I’ve already told you what google is going to say. If you’re going to argue monopolization you have to define the market (here search) and then show it’s monopolized. Market share isn’t enough.
>> could see it more as collusion…
Not legally. Sorry. Not without some specific evidence of a conspiracy.
The discovery is what could kill Google, here. They will argue customers could switch, but any negotiations with apple to stay default are discoverable. If any of them note they fear losing share, that is pretty damning.
Note I fully agree with you on difficulty of position. But you don't pay billions for status that you think you earn on your merits.
Especially if you then charge other players to be top search spot for their own name.
All of this “… then you are the product” stuff is totally meaningless legally and economically.
I mean… maybe? (How much is your data worth to google in dollars? Probably not that much.) But I think consumers understand how google makes their money. If your argument in court is “consumers are misunderstanding in dollar terms how much this is harming them,” then you are going to lose.
"So if the government wins, we’ll see immense innovation and new entrants. If Google wins, however, then machine learning/AI will be deployed consistent with how Google, and perhaps Microsoft, chooses to deploy them, which is to say, slowly, un-creatively, and in service to monopoly power."
Specifically, the "slowly, un-creatively" part, which is what I really care about.
Not the only example, but an example most of us had dealt with....
If you are locking a product down so that I cannot choose why are you afraid of fair competition in a free marketplace Google?
That's not a defense, though.
So the government is unlikely to prove anti-competitive outcomes by arguing an increased cost to consumer, but that's not what they seem to be arguing. Going from Ohio v. Amex, The other relevant ways to prove anti-competitive outcomes are through a decrease in product quality in the relevant market or market power and evidence of harms to competition.
The government appears to be arguing that product quality is lower and that Google has market power and has engaged in conduct that harms competition. If those are results from anti-competitive behavior then that is an antitrust violation, and should be.
The government lost Ohio vs. Amex, which was in any event about a two sided market. Google is definitely active in two sided markets but this case does not make those claims.
Good luck to DoJ if they are arguing that the quality of the product is lower! They are going to fall on their faces.
I’m not saying google doesn’t engage in anticompetitive behavior. There is a good case to be made on various things they do. But to go at google for “monopolizing the search market” is just pointless. The DoJ should bring a stronger case! Such cases can be made.
https://www.justice.gov/opa/pr/justice-department-sues-googl...
The press release doesn't mention it, but the actual court document asks the court to:
"Order the divestiture of, at minimum, the Google Ad Manager suite, including both Google’s publisher ad server, DFP, and Google’s ad exchange, AdX, along with any additional structural relief as needed to cure any anticompetitive harm"
However, asking for a structural remedy like divestiture after so much time is going to be a tall order, to say the least. Generally courts don’t like to meddle directly in the way firms are run (correctly, in my view).
Having some kind of default search selection come up on fresh installs of Android, iOS, Macs and Firefox wouldn't really hurt consumers, and barely hurt Google (it became dominant through quality and people remember that). Ironically (and sadly) preventing Google using it's influence over default seach options would probably harm Mozilla the most... but it should still happen.
It doesn't matter if the government lost Ohio v. Amex, and it doesn't matter that it's about a two-sided market - I was using the Court's reasoning and outline of other ways to demonstrate anti-competitive outcomes. When the Court phrases something in their decisions a certain way or creates a test, it doesn't matter if the government fails the test in that case - the test can still be applied in later cases and in lower courts. Here, it wasn't even a new test, it was just a recent illustration of an earlier one.
In Ohio v. Amex, the Court found that Amex improved product quality and increased transaction volume generally. Regardless of the fact that the government would have failed because of the 'both sides of the markets have to have anti-competitive outcomes' elements, the way to see if it meets the bar is cost, quality and volume.
It's difficult in this market to make the case that decreased cost counters decreased quality or competition because the competitors also operate at zero cost to consumers. I'm not so sure they will fall on their faces arguing that the quality of the product is lower, frankly - we'll see. Either way, cost as a balance for anti-competitive behavior should not be a panacea here.
That said, Google will probably win anyway.
> On the other hand, the case that Microsoft is going to make (and which I think is going to be really hard for the government to overcome) is this: we (Microsoft) give our product away for free and so do our competitors. What’s more, the cost of switching browsers is literally zero: just download Netscape instead of Internet Explorer.
> If customers are choosing our browser among two free options, then our product is better. It’s going to be very difficult to establish that there’s an abuse of dominant position in that case. (There is other behavior by Microsoft which is more questionable, but in browsers they are on firm ground.)
Notably the claim is being made that the search market is being monopolized, not that there is a bundle at issue. If the government thinks there’s a bundle here they can make that claim.
The government is claiming that the search market is being monopolized, not by having the best results, but by paying $45 billion dollars/year to various browser suppliers to make Google the default browser. That's the illegal act.
> "Essentially, Google has bought up all of the shelf space where search is placed in front of consumers, which is to say browsers and phones. This behavior is very similar to what Microsoft did in the 1990s, when it bundled its browser with its operating system, and signed deals with ISPs to block its browser rival Netscape from getting access to customers. The analogy isn’t a coincidence, as the Microsoft case is controlling precedent. "
And google is going to say correctly that consumers are free to switch search engines. They are free to enter “bing.com” in google chrome and it will take them right where they want to go: to another search engine!
I note above that I am not sure google’s payments are pro-competitive. They probably aren’t. It’s fair to be uncomfortable with them. But to make an antitrust case on monopolization of search you are going to need more evidence than those payments.
And people were free to download Netscape.
But the thing is that people don't type "bing.com" nor "google.com" because they just use the browser search bar and don't bother with what search engine is being used.
Sure, like a farmer gives his cows pasture.
If one farmer bought up all the land, and then tried to claim he was giving away grass for free I doubt any jury would be fooled.
It's a lot of bloviation, and when you get into the details, he often will, charitably, take interesting interpretations of the actual opinions and views of courts and others, especially when they disagree with his view. Once I read enough to have a sense of continuity (IE how did claims/views/predictions turn out), I ended up giving up my subscription because i just couldn't read it anymore. There are those who are much better at representing what's going on as a whole in a thing, even when they have a point of view and share it. It's not as passionate, for sure, but I find it more useful and enjoyable in the end, whether i agree or not.
In Matt's case, let's take this one: "Judge Mehta tossed these claims, saying that services like Yelp and Expedia aren’t general search engines and are therefore not in the same market as Google. It was a highly technical and annoying way to read certain legal questions, but bringing an antitrust case has become virtually impossible unless it’s done perfectly."
First, no, it's a super standard way in antitrust to try to actually define the markets. It's not highly technical or annoying, just because Matt thinks it is somehow wrong.
You'll note that Matt does what he often does here - when he can't explain why he's right, things become more abstract - there aren't any examples of how it was "highly technical" or "annoying" or what "certain legal questions" are. Not a single example anywhere to be found Or even an example that backs up that it is "virtually impossible" to bring antitrust cases unless they are "done perfectly". Nope, just some abstract complaint and throwaway language about how, you know, whatever he said in the last newsletter about how this part was gonna be a slam dunk or whatever is really right, it's just, you know, "highly technical" things got in the way.
Let's look at what actually happened here: No, the judge did not throw them out because they aren't general search engines. He threw it out because they rely entirely on an expert who cites no evidence, only theorization, and he felt the plaintiffs were way short on the evidence.
See page 46 of the opinion. "The court agrees with Google’s second argument.16 Plaintiffs’ theory of anticompetitive harm rests on a multi-linked causal sequence that relies not on evidence but almost entirely on the opinion and speculation of its expert, Professor Jonathan Baker. Plaintiffs cite Professor Baker’s report for the following propositions:
< a page elided >
Remarkably, not one of Professor Baker’s opinions, on which these fact assertions are based, cites to any record evidence.
Indeed, a closer inspection of Professor Baker's reports shows he has largely theorized the anticompetitive effects in the relevant market of Google's conduct toward the SVP's ...
Plaintiffs are required to show with proof "that the monopolist's conduct indeed has the requisite anticompetitive effect", and they have fallen well short of that burden".
This isn't even the end.
It goes on, where the Judge points out this state at oral argument and the states confirm they have no evidence, etc.
It then explains why unsupported expert opinions aren't enough to get past summary judgement, etc. It is a clear step by step refutation of the claims, unrelated to the market question.
So to where we started, this is not a problem of "oh they aren't general search engines" or "you have to do it perfectly" - this is literally "you haven't proven anything".
I stick with the folks who are willing to change their opinions and views based on what actually happens, rather than those who try to change reality to fit what they said before.
This is hogwash though. They take an 80% cut of the advertising profits (could be more now, this is just my dated figure that I know from a decade ago). Are the courts really incapable of dealing with an ad-supported monopoly in 2023?
I agree that some of google’s conduct is very questionable. It’s not obvious to me that paying to be the default search product is pro-competitive.
On the other hand, the case that Google is going to make (and which I think is going to be really hard for the government to overcome) is this: we (google) give our product away for free and so do our competitors. What’s more, the cost of switching search engines is literally zero: just type Bing instead of Google.
If customers are choosing our search product among two free options, then our product is better. It’s going to be very difficult to establish that there’s an abuse of dominant position in that case. (There is other behavior by google which is more questionable, but in search they are on firm ground.)
Having a large market share is not an antitrust violation, nor should it be.