Here is the link to a video my friends and I created on the Google Lawsuit by the US Department of Justice (DOJ): https://www.youtube.com/watch?v=Gdan1x5tpII
In a world where Amazon can deliver your groceries, Apple can unlock your car, and Facebook can find your friends instantly, it's hard to deny the dominance of big tech. But what about Google, the search engine that knows what you're thinking before you even finish typing? As one of the world's largest and most successful tech companies, Google's reach extends far beyond search, from maps and email to cloud storage and AI. But with this power comes a responsibility to play fair and promote healthy competition in the market, and recently google has not been keeping up.
Since 2017, Google has been attacked with quite a few antitrust actions both by Europe and the US. Europe alone charged Google $2.7 billion for misusing its search tactics in 2017, $4.4 billion for not responsibly handling its market dominance in 2018, and $1.7 billion for abusing advertising practices in 2019.
In October 2020, the DOJ filed an antitrust lawsuit against Google, accusing the company of participating in anti-competitive practices that have harmed both its consumers and rivals. It mainly centers around Google's dominance in the search engine market, which they have maintained through illegal means. For example, Google has crafted agreements with search engine developers and device producers to have Google show up as the default search engine, which is the sole reason it has maintained its spot as the dominant search engine.
In January of 2023, another lawsuit was filed by the DOJ against Google with the support of 8 states, this time focused on Google’s online advertising business. The complaint alleges that Google’s dominance in the advertising market limits competition and innovation, leading to lower quality and higher cost transactions for market participants. In other words, Google's monopoly power in the advertising market has created an environment where website creators earn less money, and advertisers pay more than they would in a more competitive market. Whereas with a more competitive economy, we could stimulate lower prices and better quality.
Google continued to acquire and get rid of any potential threats, so it is not put at risk of no longer being dominant. An example of this would be when the company found out that publishers were adding code so that other ad exchanges could compete for ad space on their website before Google had the chance to bid. Google saw this as a great threat and immediately created its tool called “Open Bidding.” Publishers and ad exchanges who take part in this were required to give Google complete transparency in their bids.
Horizontal vs Vertical Integration
A phenomenon I learned in my AP US History class that I want to touch on is the difference between horizontal and vertical integration, both of which Google implements.
Horizontal integration is when a company takes over another company in the same industry. Both companies would be selling similar products and have similar customers. The goal is to increase market share, reduce competition, and gain economies of scale by consolidating similar businesses. A famous example would be Facebook’s (now Meta’s) acquisition of Instagram. They both were social media platforms, meaning they offered the same product and have the same customer base as mentioned before. Facebook was able to access a new audience and eliminate the competition.
Vertical integration is on more of a micro level. It is when a company becomes more self-reliant by merging with a company that works for its products supply chain or creating its supplies for its product. An example would be Netflix. Although it originally started as a DVD rental business, Netflix slowly grew to be a streaming service. They ended up releasing many Netflix Original movies/shows to build the company. Some of them are great hits: Mowgli, To All The Boys I’ve Loved Before, Enola Holmes, Outer Banks, and more.
Since Google exhibits both horizontal and vertical integration, the company became untouchable. My friend Naisha Patel goes into more depth about the concept specific to Google in the linked video.
Who cares?
Now let’s get down to why any of this matters. Why did US and Europe go through all that hassle to punish Google? What do they gain out of it? Market competition is essential to a prospering economy. The fundamentals of economics show that when numerous firms are competing for business, there tend to be lower prices, better quality in goods/services, and more variety.
Lower prices: It is the easiest way for a company to bring in more customers. If two companies are selling the same product but at different prices, I would go for the one with the lower price. Although they are selling at a lower price and bringing in less money per unit compared to the other company, in the long run, they have outrun the higher-priced company as they have a larger customer base.
Better quality: Another way to bring in customers would be to create better-quality products. Most people would invest a little more money in something that does a better job than in something that does a lousy job. Better quality can mean many things: lasts longer, is tastier, works better, has friendlier service, etc.
More variety: To stand out in the market, each company will work to make its product unique. This not only allows more choices for consumers but also a wide range of innovations as they need to get creative.
All of these are to attract more customers, which ends up boosting the economy as well as there is more economic activity. People can buy product that suits them in terms of quality and price. And that's exactly what we want as consumers, right? The same concept also applies to labor markets. To bring in more employees, income and working conditions need to be high. Slowly over time, it has become easier for companies to climb up the ladder, acquire smaller competitors, and ultimately settle into a monopoly, such as Google.
We now know why competition is good, but why are monopolies bad? When a company becomes a monopoly, it gains significant market power, which allows it to control prices and quality without fear of competition. This leads to higher prices and lower quality for consumers since the monopolistic firm knows that consumers have no other options. Monopolies do not have the incentive to appeal to the customer base as they do not face competition. This can result in stagnant markets and limited technological advancements, ultimately harming the overall economy.
Solutions
These are just a few of the many solutions that can be explored and implemented to address Google’s anticompetitive practices:
Increase Transparency: By making information about their algorithms and policies more available, users and competitors can better understand what's behind the scenes. It would allow rivals to rise as they have something to go off and companies can build and feed off of others’ genius.
Splitting Up: In Google’s case, this could mean separating its search engine business from its advertising and data collection businesses. Specialized companies would be more competitive and agile, and would foster innovation and creativity. Smaller companies would also be less likely to take part in anticompetitive practices, as they would have fewer resources to dominate the market. However, splitting up comes with its challenges. It can be a lengthy and costly process, and there's no guarantee that the new companies would succeed or avoid old habits.
Government Oversight: With stricter antitrust laws and hefty fines for anticompetitive behavior, Google would have to think twice before engaging in any shady business practices. And if that's not enough, the government could even get involved in the company's operations. It would be a cautionary step to prevent the situation from getting this far.
Search Neutrality Policy: This solution advocates for the implementation of a search neutrality policy, which would require search engines to present all search results in an unbiased manner. Imagine going to a bookstore and asking the worker for a book recommendation, but instead of getting a fair answer, the worker only recommends books from a specific publisher that pays them off. That wouldn't be fair, right? Similarly, search neutrality ensures that search engines like Google don't show a preference for their products and services over those of their competitors, giving everyone a fair chance to compete in the search engine market.
While there are many potential solutions to address the problem, it’s clear that action should be taken immediately to ensure the health of our economy and democracy. The all-knowing search engine may be dominating the tech world now, but its recent antitrust issues clearly show it's not playing by the rules of the game. As the saying goes: "With great power comes great responsibility," and it seems Google needs a reminder.
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