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United States v. Google and the Legacy of the Microsoft Case

United States v. Google and the Legacy of the Microsoft Case

September 19, 2023

The long-awaited trial in United States v. Google began last week in the District Court for the District of Columbia, which commentators have heralded as the “first antitrust trial that goes after a Big Tech company’s business practices since the Department of Justice (DOJ) took on Microsoft in the late ‘90s.” To be sure, that’s not exactly true—in the interim, the antitrust agencies faced off in court against Meta, Qualcomm, Apple, and Oracle (not to mention notable consent decrees with companies like Intel and, yes, Google)—but without question the case represents the most significant challenge to a large technology company on the grounds that it abused a monopoly position since the seminal United States v. Microsoft.

The Google case comes against the backdrop of not just the D.C. Circuit’s Microsoft decision, which is undoubtedly the major controlling precedent for evaluating Google’s business practices, but a radical antitrust movement that has captured the leadership of both the DOJ and FTC. For these so-called “neo-Brandeisians,” the status quo represents, in the words of President Biden, a “failed” experiment of underenforcement typified by the rise of tech giants like Google, who managed to avoid a major antitrust lawsuit from the Federal Trade Commission during the Obama administration. On this view, it is pivotal to tame Big Tech using the antitrust laws, which many reformers believe should be supplemented by new far-reaching legislation like the proposed American Innovation and Choice Online Act.

The DOJ’s case against Google centers around a series of agreements Google has with both web browser developers and companies that manufacture or sell Android devices and which require Google be preinstalled at various access points (i.e., in the browser, or on the Android home screen) as the default search engine. For the DOJ, these agreements restrict rival search engines’ access to two significant and highly efficient distribution channels to reach users—reducing their revenues and maintaining Google’s monopoly in general search. As such, the DOJ argues that Google’s behavior is clearly anticompetitive under Microsoft, where the D.C. Circuit condemned Microsoft for similarly foreclosing Netscape from, among other things, original equipment manufacturers (OEMs) and internet access providers (IAPs), which represented the two leading distribution channels for its browser.

There are three key differences between Google and Microsoft’s conduct that suggest the DOJ should face an uphill battle in court. First, under the legal standard in Microsoft, to engage in unlawful monopolization, a company’s behavior must harm rivals in some material way. In Microsoft, the combination of agreements and product design changes prevented many OEMs from pre-installing a rival browser, and thus effectively led to total foreclosure of Netscape from these distribution channels. Google’s browser and Android distribution agreements, on the contrary, explicitly do not prohibit either web browser developers or companies that manufacture or sell Android devices from preinstalling or promoting rival search engines. As such, Google’s agreements reflect at best partial foreclosure from these sources of distribution and are therefore less likely to result in anticompetitive harm.

Second, to constitute unlawful monopolization a company’s behavior must not just harm rivals, but also harm consumers. And, here again, there is a major difference between the Microsoft and Google cases. In Microsoft, the D.C. Circuit found that the ability for users to more directly access Netscape through means other than the channels that Microsoft had foreclosed was limited: not only were OEMs practically unable to preinstall Netscape as a second browser, but mass mailing its browser on a disk or offering it for download over the Internet were seen as much more costly and inadequate ways of reaching users—ensuring that Microsoft’s practices would have an anticompetitive effect. In the Google case, however, users who do not wish to use Google have very little difficulty accessing rival search engines. Indeed, Mozilla users are literally one click away from rival search engines vis-à-vis its Firefox Suggest feature. Similarly, the Android Play Store allows users to download other search apps with ease and make it the home screen default.

Third, and finally, even if a monopolist is found to have engaged in anticompetitive conduct, the legal standard in Microsoft allows it to offer procompetitive justifications for its behavior that would have to be balanced against their anticompetitive harms to determine the overall effect on competition. Despite its best efforts, Microsoft was not able to offer any legitimate procompetitive justifications for either OEM and IAP agreements, or most of the conduct associated with its exclusionary product design, which allowed the D.C. Circuit to condemn its behavior without conducting any balancing analysis. By contrast, Google’s browser agreements and Android distribution agreements seem to clearly admit procompetitive justifications that the court will have to consider, such as enhancing its search engine through greater usage and increasing competition against iOS.

The question of remedy is also worth briefly exploring. Typically, exclusionary conduct has been addressed through behavioral remedies aimed at prohibiting anticompetitive conduct. Indeed, in Microsoft, while the district court judge ordered structural relief that would have included the separation of Microsoft’s operating system from its browser, the DOJ and Microsoft ultimately entered into a settlement agreement that kept Microsoft together. In Google, the DOJ is similarly leaving the door open to structural relief, with former White House official Tim Wu arguing that Google should be forced to divest its Chrome Browser. However, such a remedy would make even less sense for Google than for Microsoft: unlike Microsoft, there is no allegation that Google is seeking to maintain its monopoly through exclusion in the browser market, or alternatively monopolize the browser market by leveraging ancillary monopoly power. Simply put, divestiture of Chrome would not address any of the concerns raised by the DOJ and would thus seem to be about punishing Google rather than protecting competition.

At bottom, United States v. Google promises to be a hugely influential case not just for Google and Big Tech, but the future of antitrust law. However, given the crucial differences between the two cases involving foreclosure, consumer harm, and pro-competitive justifications, it is likely going to be difficult for the government to prevail under the Microsoft standard. Indeed, the weaknesses in the DOJ’s challenge in Google add to concerns about increasing the powers of the Agencies given their recent record of losing cases in court, including against Big Tech in challenges to the Microsoft/Activision and Meta/Within transactions. While winning cases under existing laws would help to demonstrate the requisite competency to garner public confidence and justify increased authority, in United States v. Google, the government appears to be heading toward another major defeat.

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