In 1969, the United States government sued International Business Machines (IBM), which at the time was the world’s biggest corporation, for violating antitrust laws. Since both IBM and the Justice Department could afford an army of lawyers, the case dragged on through the seventies until it was dismissed in 1982 as “without merit.” The reason the case was dismissed was that, by the early 1980s, IBM was losing market share to (then) smaller computer companies like Apple and Microsoft—both of which literally started in garages.
History may be repeating itself. Both the Biden and Trump Administrations sued Google, the world’s most popular search engine, for allegedly violating antitrust laws. Last year, Federal Judge Amit Mehta ruled that Google held an illegal monopoly in online searches and advertising. The Biden Justice Department proposed that, as a remedy, Google should be forced to sell its popular Chrome browser and Android operating system. The Trump Justice Department decided to continue pursuing these “remedies.”
Despite siding with the government last year, Judge Mehta rejected the government’s request that Google be forced to sell Chrome and Android. One reason he gave for denying the government’s request was that selling Chrome and Android could not reasonably be described as remedies “tailored to fit the wrong.” Judge Mehta also acknowledged that Google earned its success because of its “best-in-class search quality, consistent innovations, investment in human capital, strategic foresight, and brand recognition” rather than to any violations of antitrust laws.
He acknowledged that a judge should approach evaluating proposed remedies that would reshape a major market with “humility” because “here the court is asked to gaze into a crystal ball and look to the future. Not exactly a judge’s forte.” This humility is also why he rejected the government’s request that Google be forced to end its revenue sharing program. Under this program, Google shares revenue raised from purchases made by customers who came to the seller's website through a Google ad. Judge Mehta wrote that “cutting off payments from Google almost certainly will impose substantial—in some cases, crippling—downstream harms to distribution partners, related markets, and consumers, which counsels against a broad payment ban.” He also denied the government’s request to stop Google from paying Apple and other companies for placement as the default search engine on Apple’s iPhones. Judge Mehta said stopping the payment program would hurt Google’s ability to compete with “GenAI products that pose a threat to the primacy of traditional internet."
The rise of AI actually played a big part in Judge Mehta’s decision, and for good reason. Since he handed down his ruling finding Google guilty of antitrust violations last year, AI applications like Chat GPT have continued chipping away at Google's (and other “traditional” internet search engines') share of the online search market—similar to how Microsoft and Apple chipped away at IBM’s dominance of the computer market in the late seventies and early eighties. Judge Mehta commented that “the money flowing into this space, and how quickly it has arrived, is astonishing.” Which is why he wrote that “these companies already are in a better position, both financially and technologically, to compete with Google than any traditional search company has been in decades (except perhaps Microsoft)."
Judge Mehta’s ruling did not let Google completely off the hook. The company will be required to share some data with competitors which could include AI companies. Judge Mehta also prohibited Google from conditioning access to popular Google apps like the PlayStore on the “distribution, preloading, or placement of Google Search.” According to Cantor Fitzgerald analyst Deepak Mathivanan, forcing Google to share even a limited amount of its data with its rivals both in “traditional” internet search and AI poses a long-term competitive problem for Google.
While the ruling is not a complete victory for Google—much less for free markets—it does show a rare acknowledgement that judges (and bureaucrats and politicians) must proceed humbly when enforcing antitrust laws. The Google case, like the IBM case before it, does not demonstrate the need for government to forcibly “break up” monopolies, but the need for government to, in the words of Judge Mehta “let the markets work.”
