On Tuesday, the Trump administration announced a major new investigation of Google, accusing the U.S. tech company of unlawfully protecting its monopoly power. Specifically, the Department of Justice alleged that Google struck agreements with device and software manufacturers — including Apple — to pre-install its search engine as a default (and sometimes the exclusive default) on phones and in Web browsers, making it hard for other search engines to compete.
This is the broadest U.S. investigation of a technology company in over 20 years, since the government took action against Microsoft. Since then, European and U.S. regulators have lost some big cases against tech firms and imposed only minimal fines for misconduct in other cases. After all, for companies worth hundreds of billions of dollars, a fine of a few billion dollars may not do much to change behavior.
So will things be different this time? My research suggests there are reasons it’s hard for regulators to pin down technology companies like Google.
Big Tech is hard to regulate
In a new article, I draw an analogy between tech companies and the two-faced Roman god Janus. Indeed, tech companies can have many faces — and this makes it much easier for them to slip through the cracks in the regulatory system. Monopoly and antitrust laws work best when they can identify the precise market that a company is operating in. But these laws can’t easily target technology platforms that work across many markets.
My research shows how Google has depicted itself simultaneously as a search company, an advertising company, a media company and a telecommunications company. This makes tech giants look less powerful than they are. If you look at them market by market, rather than as a whole, they can look like small fish in big ponds.
This isn’t Big Tech’s only advantage. While these companies have users all over the world and often depict themselves as democratizing global media, they are typically headquartered in just two countries, the United States and China. This means other governments that might be concerned about the impact of Facebook on their elections, say, have limited jurisdiction to do anything. Furthermore, even though social media platforms play a central role in public debate and sometimes claim regulating them would erode free speech, they have limited legal liability, if any, for images and content that appear on their sites. These platforms often host marketplaces for others, while also selling their own products, generating powerful lock-in effects.
It’s Google’s lock-in effects that caught the attention of the Justice Department. Facebook took a similar approach, using data from its external advertising service for news websites to secure exclusive distribution contracts with media companies. Columbia law professor Lina Khan argues that Amazon uses consumer purchase data on other brands on its site to precision engineer its own products to outsell them. (Amazon’s founder and chief executive, Jeff Bezos, is also the owner of The Washington Post.)
This has led some policymakers and scholars to call for “structural separation,” or a ban on companies operating as players in their own marketplaces. India recently introduced legislation to this effect for online retail, forcing Amazon and local competitor Flipkart to pull their own products from their websites. The new U.S. investigation doesn’t propose any remedies, but separation is one possible outcome.
Antitrust law is changing
The new investigation may signal more active antitrust enforcement in the United States and not just toward the technology sector. Scholars have documented how U.S. monopoly regulators have moved away from challenging existing monopolies and prioritized preemptive scrutiny of mergers that might bring monopolies into being. Influenced by the work of conservative legal scholars such as onetime Supreme Court nominee Robert Bork, American courts and regulatory officials have focused on how proposed mergers would affect prices for consumers, rather than broader public interest issues such as fairness, which antitrust law previously considered.
However, it’s hard to apply these price standards to technology companies. Very often, tech platforms are free for users. Prices for advertisers are set in individual markets according to secret algorithms. And, research shows, tech platform companies are better able to resist pressure from government because they can combine their market influence with other forms of political influence to push back.
This has led some scholars to argue that a new era means it’s time for a different approach, harking back to Theodore Roosevelt’s claim in 1910 that the railroad and oil trusts of the Gilded Age posed a threat to democracy, not just to the economy. Returning to that approach, as some scholars call for, would reverse the changes wrought by Bork and others, making it possible to regulate for a wider range of public interest goals.
However, such calls are not yet shaping antitrust enforcement in practice. While the new lawsuit against Google represents a shift away from narrow merger scrutiny, accusing a dominant company of abusing its power, it still focuses on the economic harms caused by lack of competition.
Maha Rafi Atal is a postdoctoral research fellow at the Copenhagen Business School, where she researches the political economy of corporate power, and a former business journalist. She tweets at @MahaRafiAtal.