The Justice Department’s antitrust suit targeting Google’s search monopoly “is too narrow, if not the wrong target,” says Research Professor Kislaya Prasad at the University of Maryland’s Robert H. Smith School of Business. However, the case foreshadows broader pressure on big tech, he adds.
The DOJ alleges Google collects and uses billions of dollars from advertisements on its platform to pay for mobile-phone makers, carriers and browsers to maintain Google as their preset, default search engine. “However, the real issue is the range of businesses that Google is in while being a gatekeeper through control of Internet search,” says Prasad, also academic director of Maryland Smith’s Center for Global Business. For example, listings for hotel or flight bookings, which Google also offers, forces competitors to advertise to climb above their listings.
“Furthermore, the standard of U.S. antitrust law has been about harm to the consumer, not competition,” Prasad says. “So, one would ask whether Google’s monopoly power leads to higher prices for consumers. But consumers are not even paying for Google’s search services.”
Google’s response to the DOJ suit, Prasad notes, “has been that ‘for consumers, switching is easy, and competition is just a few clicks away and that actions against them would be to the consumers’ detriment.'” In effect, he says, “the Google response is that such action would force substandard products on consumers.”
A takeaway here, Prasad says, is that the DOJ case against Google reflects “U.S. antitrust law’s ‘appropriate standards of harm’ have not kept up with the digital age, and that gatekeepers such as Google need more regulation – namely targeting the too many different businesses it’s in that create the unfair advantage in its search engine monopoly.”
Despite the narrowness, the present case does appear to foreshadow broader pressure on big tech, Prasad says. “Congress, via the House Subcommittee on Antitrust, issued a new report on digital markets as a perceivable call to action for the next Congress and administration to create and maintain robust competition in digital markets. Also, the EU appears to be putting together a ‘hit list’ of Internet companies to be subject to stricter regulation.” (Prasad examines such further in the Center for Global Business’ Global Pulse-series video “The EU’s Big Target on Big Tech.”)
Prasad says closer attention to regulation of “big tech” is just beginning, including with support from both sides of the aisle in Congress. “While the ultimate outcome [of the current DOJ case against Google] is unclear — whether a fine or divestment, what is clear is that governments are waking up to the task of finally regulating ‘big tech.'”
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