The government’s case against Google is on its way to the U.S. Court of Appeals in Washington. Google is likely to contest both the finding last April that it is a monopolist and the remedy just ordered by Judge Amit Mehta ending Google’s exclusive agreements with Apple and other platforms. The government is likely to appeal as well, claiming that the remedies ordered are insufficient and renewing its call to strip Google of its browser, Chrome.
This case marks the first high-tech antitrust case to go to the U.S. Court of Appeals in Washington since 2001, when the Clinton Administration sued Microsoft for monopolizing Intel-compatible operating systems for personal computers. The Microsoft case was settled as the Bush II administration took over, so we never received the Supreme Court’s views.
The Google and Microsoft cases are strikingly similar, with implications for how the Google decision should be reviewed.
The predicate for the Microsoft antitrust case was that there was a market for operating systems on Intel-compatible personal computers, and Windows had monopolized it. The government admitted that Microsoft had created a superior product: the Windows operating system. The trial court and the court of appeals found Microsoft had unfairly excluded opportunities for other operating systems by pre-loading Windows on laptops. The courts found that Microsoft had then used its monopoly position in operating systems on PC’s to exclude competitors in another market: web browsers.
In the Google case, the government claimed and Judge Mehta held that Google had monopolized the market for general internet search. Google had a superior product, no one doubted. The problem was its exclusive deals with Apple and other platforms that did not allow for other search engines (Bing, Yahoo, DuckDuckGo, etc.) to compete. This allowed Google to achieve a monopoly in general text search advertising as well.
Each case started with a definition of a relevant economic market. The Microsoft court found that Windows had more than a 90% market share. The Google court found Google had an 89% share of its market. Each court concluded a monopoly had been proven to exist. If the market shares were lower, the cases could not have proceeded as they did. A company’s actions against a rival are judged entirely differently in antitrust depending on whether that company has a monopoly in a relevant market. This makes the definition of the market crucial in each case.
In Microsoft, the trial court had excluded the operating systems for what it called “handheld devices.” In 1998, when the Clinton Administration initiated its antitrust suit against Microsoft, there were no iPhones. Tablets had limited functionality. Laptops were less common than desktops. The court of appeals excluded the operating system for Mac’s from the market, due to the “effort involved in learning the new system.”
Today, smart phones allow for uses that we thought only possible on a desktop, or a main frame, in 1998. The market shares for operating systems today, reported by GlobalStats, lists Windows’ share down to 27%, with Apple at 16%; and the dominant player Android at 44%.
A similar change in the market for search has already begun, through the influx of generative AI hardware. Google has its own AI product. Other competitors abound: Open AI (with Microsoft as a large shareholder), Microsoft’s own product (Azure), and AWS are each significant competitors.
While Judge Mehta was writing his ruling this summer, Google was announcing a major change in its search technology, integrating AI so fundamentally as to challenge the dividing line between AI and traditional search. If the relevant economic market is most accurately considered to be AI, Google would no longer be the must-have app on a cell-phone. Apple has its own AI tool, Apple Intelligence. Samsung has its own AI tool, Galaxy AI. Each platform will preload AI or a search engine, or both, responding to its users’ preferences. The market consisting of search engines, without including AI, is already obsolete.
