United States v Big Tech: A Rare Antitrust Phenomenon

By: Patrick Ales

Edited By: Joni Rosenberg and Tess Ballis

Over the last twenty years, the United States has seen a significant shift in the balance of power within the realm of “big” business. This very simple term has been used to describe companies or sectors that have exerted large amounts of influence over the general well-being of the economy, as well as essentially dictated corporate economic policy. The newest sector to have a hegemony on the S&P 500 is commonly referred to as “tech,” encompassing most large corporations that are involved in software development or general technological advancement. At the head of this surging sector stand some of the most valuable companies in the world by market cap, including Google, Facebook, Apple, and Microsoft. These companies have also been allowed to grow with virtually no oversight or regulatory policy, as opposed to other industries that underwent the same drastic growth in a short period of time, like radio or television [1]. One of the few actions taken against Big Tech companies in the twenty-first century has been the Sherman Antitrust suit levied against Microsoft in 2001 [2], and the newest suit against Google that alleges a monopoly over search engine advertising [3]. The rarity of such regulatory policies in a period of immense growth within the sector certainly had much to do with a lack of precedent on how to regulate the internet, a space in which Big Tech has made most of their market inroads. There has been a recent proclivity to use the Sherman Antitrust Act to lessen the market impact of some of these corporations, evidenced by the European Union’s first ever antitrust suit against Google in 2019 [4], and the United States’ parallel action [5]. Despite the coordinated efforts to take issue with Google’s dominance, there still remain many concerns regarding the definition of a true “tech” market and how antitrust can be efficiently employed against Big Tech.

An ever-evolving internet inherently means that the companies that contribute to this advancement are also changing rapidly. Facebook, for example, has faced litigation regarding issues of privacy and data sharing, but is yet to face an antitrust suit, even after their acquisition of Instagram in 2012. The Clayton Act provides the government with the ability to retroactively undo the merger, but only if there is an unreasonable disruption to competition in the market [6]. There are ample concerns regarding how to treat the market in which Facebook operates, and thus, a monopoly with no concrete market is at the face of the American tech and social media sector [7]. The dynamic changes that Facebook has undergone in their market dominance, from once being more reliant on the potential number of people in their network to now being defined by their advertisement, are largely emblematic of the shift in the way innovation is treated in the economy. The one constant in the regulation of Big Tech across the last two decades is that when the Sherman Act is involved, there seems to be continuity in how it is applied to internet giants such as Microsoft and Google, with a focus on exclusionary practices and Section 2 [8].  

The two most recent cases of Sherman Act litigation against Big Tech may be eighteen years apart, but there are stark similarities as to the market in question. The space of search engine advertising and search queues comprises the bulk of Google’s revenue stream, and represents their highest relative market dominance [9]. In the same vein, Microsoft once had a commanding portion of the web browser market, as Internet Explorer was the de facto exclusive browser on all Windows PCs, which at the time of United States v Microsoft Corp (2001), was the leading distributor of operating systems [10]. It seems to be the case that the Federal Trade Commission (FTC) and regulators take the most active stance on how access to the internet is purveyed and the ability of any individual company to regulate that access. The 2001 suit against Microsoft found that they were in violation of Section 2 of the Sherman Act, as the FTC deemed their actions in preventing other web browsers from being as easily compatible with Windows as exclusionary [11]. Eighteen years later, Google is also being sued by the U.S. government for exclusionary practices in regard to their dominance over the access of search engines to consumers [12]. This includes a perceived barrier to entry for many competitors in the search engine market, as well as concerts over the power that Google holds over companies that are reliant on advertising through search engines [13]. Google CEO Larry Page has previously said that competitors are only one click away from establishing themselves within the market, but lawmakers have become more skeptical on the true openness of the internet under the thumb of many tech conglomerates [14]. The comparisons between the two most recent applications of the Sherman Act pertaining to the companies usually grouped in Big Tech paint a picture that the use of the law and its related policies are not going to actively stop the mergers of many tech companies [15], as market sizes and the relative dominance of companies in these dynamic markets can change much faster than traditional large cap markets. Instead, the government has relied more heavily on Section 2 of the Sherman Act and its ban on exclusionary and anticompetitive practices. Going forward, this newest challenge to the “sovereignty” of large tech conglomerates could start a new era of government oversight on a once unregulated sector. This could also just be a blip on the radar for companies like Google that are at the forefront of innovation and are always expanding, in the same way that Big Tech saw no further challenges after the case against Microsoft twenty years ago. There are many considerations to be taken when looking at action against Big Tech, most notably the relative health of the stock market when the future of its fastest growing and most influential sector is uncertain. 

notes:

1. Brannon, “Regulating Big Tech: Legal Implications.

2. United States v. Microsoft Corporation

3. “Justice Department Sues Monopolist Google For Violating Antitrust Laws.”

4. “Antitrust: Commission Fines Google €1.49 Billion for Abusive Practices in Online Advertising.”

5. Romano. “Don't Ask Whether Facebook Can Be Regulated. Ask Which Facebook to Regulate.”

6. 15 U.S.C §19

7. Brannon,“Regulating Big Tech: Legal Implications.”

8. 15 U.S.C § 2

9.  Hazan,“Stop Being Evil: A Proposal for Unbiased Google Search.”

10. Cohen, Amanda. “Surveying the Microsoft Antitrust Universe.”

11. Brannon,“Regulating Big Tech: Legal Implications.”

12. “Justice Department Sues Monopolist Google For Violating Antitrust Laws.”

13. “Justice Department Sues Monopolist Google For Violating Antitrust Laws.”

14. Brannon,“Regulating Big Tech: Legal Implications.”

15. Lambert,“The Limits of Antitrust in the 21st Century.”

Bibliography:

“Antitrust: Commission Fines Google €1.49 Billion for Abusive Practices in Online Advertising.” European Commission, European Union, 2019, ec.europa.eu/commission/presscorner/detail/en/IP_19_1770. 

Brannon, Valerie C. “Regulating Big Tech: Legal Implications.” Federation of American Scientists , 2019, fas.org/sgp/crs/misc/LSB10309.pdf. 

Cohen, Amanda. “Surveying the Microsoft Antitrust Universe.” Berkeley Technology Law Journal, vol. 19, no. 1, 2004, pp. 333–364. JSTOR, www.jstor.org/stable/24117552. Accessed 9 Nov. 2020.20.

Hazan, Joshua G. “Stop Being Evil: A Proposal for Unbiased Google Search.” Michigan Law Review, vol. 111, no. 5, 2013, pp. 789–820. JSTOR, www.jstor.org/stable/23812653. Accessed 9 Nov. 2020.

“Justice Department Sues Monopolist Google For Violating Antitrust Laws.” The United States Department of Justice, 2020, www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws. 

Lambert, Thomas Andrew. “The Limits of Antitrust in the 21st Century.” SSRN Electronic Journal, 2020, doi:10.2139/ssrn.3533549. 

Romano, Aja. “Don't Ask Whether Facebook Can Be Regulated. Ask Which Facebook to Regulate.” Vox, Vox, 12 Apr. 2018, www.vox.com/technology/2018/4/12/17224096/regulating-facebook-problems. 

United States, Congress, Antitrust Division Manual. Vol. 5, U.S. Department of Justice, 2012. Antitrust Division Congress. 

United States Court of Appeals for the District of Columbia Circuit, United States v. Microsoft Corporation. Federal Reporter, Third Series, vol. 253