For the past few years, American tech companies have seemingly taken up residence in the minds of bureaucratic regulators rent-free, as evidenced by the Department of Justice’s (DOJ) recent lawsuit against Google, alleging anticompetitive behavior for helping make itself the default search engine on smartphone devices and third-party browsers.
While this lawsuit is indicative of an unhealthy tech antitrust obsession on the part of American regulators, it also reveals a fundamental misunderstanding of markets in a technological age. Administrative staff have predicated a number of antitrust actions based on market definitions that are outdated at best and deceptively manipulated at worst. In an increasingly interconnected world, lawmakers and enforcers have to reconsider what constitutes a market in a given area.
First, this lawsuit mistakes the word “default” for exclusivity. Merely because Google is the default search engine on these devices does not mean it is the only option available. On browsers like Mozilla Firefox, for example, it takes only a couple of clicks to change the default search engine from Google to any one of five other options – Bing, DuckDuckGo, Wikipedia, Amazon, or eBay. Similarly, on an iPhone, a user can easily change its default search engine in the Settings app to Yahoo, Bing, DuckDuckGo, Yandex, or Ecosia.
Options are not only readily available, they are also incredibly easy to access if users want them. This is the type of free market competition regulators should champion, instead of attacking ruthlessly. The only alternative to having defaults would require consumers themselves to set up every aspect of their devices. This is hardly a move that would benefit smartphone users, to have devices and browsers that don’t work as soon as they’re fired up .
The lawsuit also shows how narrowly regulators define the “search engine” market. It is telling that browsers like Firefox include Amazon and eBay in their list of available search engines. One doesn’t normally consider these companies to be search engines, but rather online marketplaces. However, most consumers looking for goods and services go straight to an Amazon or eBay app to search for what they want and find options, rather than doing a general search.
Similarly, consumers might use a map app or an app like Yelp or OpenTable to find good dining options near them, as opposed to going through a browser. The age of technology has broadened the scope of what we ought to consider the search market. Google may dominate web-based general searches, but the playing field is far larger than just what happens within web browsers now. Tech firms are adjusting to this new reality. Regulators ought to do the same.
This problem is not just inherent to the tech sector either. Earlier this year, federal policymakers began to drum up support for antitrust proceedings targeting TicketMaster, in the wake of the ticketing debacle surrounding Taylor Swift’s latest tour. However, the premise rested on the notion that tickets were physical property, rather than the purchase of a temporary license to a seat or venue. This outdated view would hinder ticketing vendors from taking necessary steps to actually address the issues that undergirded the Eras Tour troubles.
Just last month, over a half-dozen states petitioned the Federal Trade Commission (FTC) to stop the merger of grocery chains Kroger and Albertsons. Once again, lawmakers were thinking narrowly in terms of purely brick-and-mortar grocery stores. However, Kroger and Albertsons not only compete with a host of other grocery stores, they also compete against online food delivery services. Technological advancement has eliminated the ability for the nation to consider markets so narrowly.
There are real consequences to this blindness to the true scope of markets. More traditional businesses will have to compete in this new age. They need to be able to expand to meet the challenges their new, unorthodox competitors pose. If commonsense business practices meant to compete are considered anticompetitive, many firms will have no choice but to fold. In order for competition to thrive, market definitions must be appropriately broad.
Google bid on an available contract to boost its profile in web browsing amidst growing challenges from large online retailers and other smartphone apps. Nothing about this deal made it exclusive on these devices. Other companies will do the same to meet new competitors in the coming years. Agencies like DOJ and FTC need to resist the urge to make it more complicated by inserting themselves into the fray. The market is changing, but it is working. Let it.
