On May 18, 1998, the Justice Department filed an antitrust lawsuit against Microsoft for the company’s actions of unlawfully monopolizing the computer software markets. This was a turning point for the tech industry which had not been strictly regulated until that point. The Justice Department accused Microsoft of eliminating competition like Netscape (a web browser that threatened Microsoft’s Internet Explorer) by making deals with computer manufacturers to set Windows as the default software. Nevertheless, the Justice Department ultimately decided to not break up Microsoft while Microsoft agreed to allow PC manufacturers to adopt non-Windows software. The decision of the court was not seen as enough by many people. Today, Microsoft Windows’s market share in desktop operating systems is 68%, while the closest rival is MacOS at 20%.
Now, Google is facing similar accusations in the biggest antitrust lawsuit since 1998. The Justice Department filed a lawsuit against Google in 2020 for violating antitrust laws by engaging in exclusionary agreements and using the profit from these agreements to create a “continuous and self-reinforcing cycle of monopolization.” This is the first of several planned cases against Big Tech companies to go to trial.
Google pays billions of dollars to companies like Apple to ensure that it is the default browser engine on the devices produced by these companies. This makes it harder for rival companies like Bing and DuckDuckGo to compete against Google. A major development in the trial happened when Microsoft CEO Satya Nadella became the biggest witness for the government. He explained that Google’s defense that users can change the search engine anytime they want does not make sense because they tend not to change the default engine most of the time. He also stated that even as a big company, Microsoft’s Bing stands no chance of challenging Google’s hold over the search engine market.
What are the effects of Google’s monopoly over the search engine market on consumers? One Google executive testified that Google has the ability to raise advertising prices without major consequences, and it has even done this at times to meet quarterly revenue goals. This problem’s roots go back to a concept called “network monopoly.” This means that as a network grows, the value of being in it and the cost of being excluded grows. Consequently, this puts the owner of that network in a stronger position, leading the network to grow more and thus creating a self-reinforcing cycle. This is the case with Amazon’s dominance in online retail, Meta’s dominance in social media, and Google’s dominance in search engines.
Teo Kitanovski, a freshman computer science major student at Vanderbilt, is aware of the dominance of Google over the web.
“As someone who spends lots of time on the internet, I can’t think of searching the web without thinking about Google,” Kitanovski said.
He also thinks that Google’s trial is similar to Microsoft’s and will end up in a similar way, stating “They had the same kind of trial for Microsoft too which effectively didn’t change anything. Google is too big and powerful to be broken up, they’ll eventually just reach a settlement.”
What could this trial imply for the future of Google and the tech industry? Well, although breaking Google’s dominance seems challenging, it may be done with a few simple steps. In Russia, after the adoption of a choice screen for search engines instead of Google being the default engine, another rival called Yandex was able to compete and gained more than 20% market share. This trial could end Google’s dominance easily and if a result like that comes out, who knows who’s next? Companies like Meta, Amazon, Microsoft, and Apple are all facing similar cases that are ready to be sent to trial. This trial could be the beginning of the end of the era of big tech.
Image by Rajeshwar Bachu from Unslash
