In 2021, Google paid $18 billion to Apple to become the default search engine on Appleās Safari internet browser. Those payments were at the center of a landmark decision issued recently by Judge Amit Mehta in the U.S. District Court of the District of Columbia that declared Google had abused its monopoly over the search business.
It was the first time that Google has been declared a monopoly of this kind, but . What happens to Google now? Is there a new political consensus in the United States about combatting tech monopolies? And can government regulation ever really keep up with technological developments?
Those are a few of the questions that came up in my recent conversation with Foreign Policy economics columnist Adam Tooze on the podcast we co-host,Ā Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look forĀ Ones and ToozeĀ wherever you get your podcasts. And check out AdamāsĀ Substack newsletter.
Cameron Abadi: Does anything specific now change as a result of this ruling against Google? It seems like the precedent of Microsoft suggests that legal judgments are one thing, but the application of these judicial rulings to businesses seems to be another. Should we expect this time to be any different?
Adam Tooze: Itās a great question. The way this works procedurally in the United States is that they now start a separate set of hearings, a trial if you like, to decide the remedies. And that will be in September, so thereās this break now while we wait. And of course Google will appeal, but this initial finding is just the beginning of a process that could go on for years. Whatās clear is itās really bad news for Google. This isnāt a slap on the wrist. Itās a real blow. I think the real question is whether itās basically a slap across the face or a blow to the body that will really change the company fundamentally.
The ruling is very unflattering in the ways in which it gets into the nitty gritty of the business, the abuse of attorney-client privilege, the systematic erasing of chat flows. Google shares sold off 5 percent immediately. Seventy-seven percent of Googleās revenue is in the advertising stream, so this is a big deal, and it will set the stage for the raft of other cases that are being brought through the courts against big tech.
Itās really a comprehensive list. Thereās a suit by the FTCāthe Federal Trade Commissionāand 17 states against Amazon. Thereās a case brought by the Department of Justice (DOJ) with 15 states and the District of Columbia against Apple for blocking non-Apple approved apps. Thereās a separate DOJ case against Google for bullying advertisers. And then in December 2020, the FTC sued Meta for acquiring Instagram and WhatsApp and trying to block social media competition. And the Google ruling, I think, will give tailwind to all of those cases.
Whatās very likely is that the judgment will rule out the most offensive item, which is this revenue-sharing deal between Google and its privileged partnersāthe likes of Apple, Samsung, and whateverāthat put Google at the center of their businesses in exchange for money. Now, of course, the partners donāt want to lose that revenue stream, so there will have to be some redesign of those contracts that makes them less evidently uncompetitive. I think the real acid test of whether the courts are getting radical is about sharing data. The courts donāt like doing this because theyāre complicated deals to do. They would in some senses prefer to break the company up and say, āProblem solved; we did a structural breakdown.ā
But if you actually wanted to disrupt Googleās business, what you would require it to do is to publicly expose the search data from which it derives its actual power, its actual efficacy. The problem with that from a privacy point of view is horrendous. There are huge limitations on how far you want the company to be sharing literally billions of peopleās online browsing habits. But if you were serious about trying to shift the balance of power in the sector, thatās what you would be talking about: various types of firewalled, anonymized mechanisms for enabling other people to train their algorithms to do the search job as well as Google does it currently. And that is really where the nub will be.
Of course, the reality is that we live in a world transformed very much for the better by many of these tools, so we donāt want to destroy or abolish them. But I think shifting the political terms is a hugely significant move, and I do think of it as an expansion of democratic power and oversight by means of one of the fundamental branches of any liberal constitution, the judicial branch.
CA: Both Republicans and Democrats seem to support a shift toward a new approach to antitrust questionsāspecifically a more European approach, with a focus and this ruling on how the monopoly position is reducing innovation rather than just the consumer experience. Is this really a kind of shift in U.S. politics, and does that matter?
AT: I think this was also a very fascinating aspect of digging into this a little bit, because it came as a real surprise to me. Because thereās been so much dirt dished against Lina Khan, the head of the FTC, whoās this hotshot young lawyer. Itās really an incredibly interesting development in Americaās social history and political history. There has been so much talk about neo-Brandeisianism and hipster antitrust. So to discover that this case was brought during the Trump periodāand the case against Meta as wellāit really scrambled my coordinates a bit. Because as you say, thereās also been a big conversation about the way in which the Europeans were moving much more aggressively on this.
There was a set of arguments about the perverse and malign influence of the Chicago school of law and economics and, by contrast, European liberalism and its focus on market functioning. It appeared like a solid rock of competition and accountability. I mean, at Columbia University, we hosted Max Schrems, the Austrian activist who brought cases against Facebook and Google. Heās a star; heās a superstar. We had loads of people in the audience.
But I do wonder a little bit whether we arenāt overthinking this, or just indulging our desire to tell interesting intellectual history stories about a very brute realityāwhich is that over the last 20 years, these gigantic corporations, which are now the most valuable businesses in the world, have not just accumulated huge wealth, but theyāve transformed everyoneās lives. āGoogleā is a verb, and the position of power the company has established is vast. At some pointāit doesnāt take rocket scienceāthe penny has got to drop.
Google has a 90 percent share of the online search market. Itās a monopoly, right? So you could say itās testament at least to the fact that even in Americaās radically polarized political environmentāwhere even basic indicators of economic well-being can be viewed from very different angles depending on the time of day and the balance of partisan political forcesāwe can all kind of agree that, Your Honor, it kind of looks like a monopoly. It smells like it, and itās got 90 percent of the market; sir, I think itās actually a monopoly. I think we need to do something about this.
We got there. So now the question is: What do we do next?
CA: Isnāt artificial intelligence (AI) rather than web search the current technological frontier? And, to that extent, does this ruling reveal something about how regulation necessarily always falls behind technology, that the workings of administration ultimately canāt keep up with innovation in the economy?
AT: How government relates to AI through all the branchesāthrough the legislative, the executive branch, and the judiciaryāis going to be crucial in shaping the future. And to that extent, I think the problem isnāt simply that weāre slow to respond to tech. I think the American government state apparatusāand itās not alone in thisāis slow to respond to power aggregation in general, and this would be a particularly important case of that.
But when thereās a win, we should celebrate the win. And this is a win. This is at least a questioning of the structures, calling something what it clearly is, calling a monopolistic position a monopolistic position, opening up the space for a serious conversation and debate and struggle. Because thatās what it will takeālegal and other types of struggleāto shift the terms here.
Iāve been to dinners in New York with senior big tech people who have quite openly spoken about the fact that they are profoundly concerned. Theyāre not even talking about Congress. Everyone knowsāI mean, congressional hearings about any topic tend to be embarrassing. But theyāre seriously concerned about the level of technical knowledge inside the judiciary and inside the executive branch. And not as some sort of slapdash accusation about government in general, but because they know perfectly well how hard they run all the time to keep up with the technological developments. They know what kind of incentives they can offer for people inside that world. They get rich by being experts, and public service, generally speaking, canāt offer those benefits or doesnāt currently offer those benefits.
There is a structural problem here of how to empower the public bodies, the public discourse, to respond to this challenge. Itās a really profound challenge. And AIābecause it eats into the problem of our brains and how they workāof course just compounds this problem, because companies literally are, in a monetized way, trying to industrialize the thinking process. Thereās no easy solution for that.
And this is a generic problem, right? It was a huge topic of debate within the financial regulation sphere. Folks like me got into the history of 2008 in part because it seemed crucial to upgrade public laypersonās knowledge about whatās going on. That is a crucial challenge for democracy, for the question of power in generalāand it extends also to thinking about geopolitics and defense strategy and national security issues. There, too, there are all these knowledge asymmetries. When one of those asymmetries gets very extreme and moves very, very fastāthis has been the case with techāit poses really profound political questions.
I was very struck by the way the people inside the business were super conscious of this and were saying itās quite alarming that there is so little joint expertise when youāre running something like a giant map or a giant database or AI or this search engineālike, āI need to be able to interact with and seek guidance from folks on the other side, on the regulator side, who are knowledgeable enough to help me think these things through.ā And in finance, to a degree, we have that because we have the revolving door between finance and the Fed bureaucracy in particular, and the regulators to a degree, and the big law offices. Thatās where you get that kind of circulation of elite expertise, and we need more of that in the tech sphere.