The DOJ’s Frivolous Case Is About So Much More than Google

Today, in a Washington, D.C. courtroom, the Department of Justice (DOJ) has begun the most significant antitrust case brought in decades against the tech industry. The government alleges that Google Search has obtained a monopoly status among search engines and it maintains this market dominance through unfair, anticompetitive practices. Specifically, it objects to business agreements that place Google Search and other services as the default for many web browsers and smart devices.

But the DOJ’s case has two legally fatal flaws. First, although Google dominates the search-engine market, the relevant online search market is much broader, including Amazon and other online marketplaces, product-specific services’ apps (e.g., Expedia), and, increasingly, social-media platforms such as Instagram and TikTok. Second, Google’s arrangements to receive default-search status – often referred to falsely as “exclusivity” agreements – in fact benefit consumers and otherwise enhance competition. These deals do not preclude users from conveniently choosing to use another search engine and have clear analogues to accepted off-line retail practices. Despite the DOJ’s pretenses to the contrary, Google’s success stems almost entirely from its product’s functional superiority over those of competitors.

The outcome of Google’s trial has implications far beyond the online search market. The underlying question at issue is whether antitrust authorities should subvert the market’s competitive forces, and consumer welfare, to satisfy their own arbitrary economic preferences and discomfort with big business.

Misidentifying Markets

The DOJ’s myopic market definition reflects aesthetic considerations more than economic ones. Particularly in digital markets, consumers use apparently dissimilar products for similar purposes. Video-based social-media platforms – e.g., TikTok – compete with such text- and image-based platforms as Facebook and Twitter. Remember, Blockbuster was not vanquished by another brick-and-mortar movie-rental outlet. Competition is rarely an apples-to-apples comparison.

Likewise, Google Search competes with products far beyond traditional search engines. For instance, more than three fifths of consumers begin their product searches on Amazon, whose online advertisement revenues have recently skyrocketed. Nascent artificial intelligence (A.I.) products, moreover, pose an imminent – and potentially mortal – threat to Google Search.

Google’s Default Search Agreements are Pro-Competitive and Pro-Consumer

Aware of its own competitive mortality, Google has innovated unrelentingly to better its product and to ward off insurgent competitors. This dynamic typifies a properly functioning market, in which the company that provides the best product – irrespective of its status as either an upstart or an incumbent – wins.

Google’s default-search contracts benefit it, of course, but such practices, known as “slotting fees,” are common to many industries. Food companies, for example, regularly pay grocery stores for a more prominent display location.

The DOJ has asserted that these sorts of contracts, which Google has long maintained, became anticompetitive only once the company reached a certain size. Under this theory, the government believes it ought to disallow certain companies from using standard, pro-competitive business practices based only on those companies’ large size. To artificially boost certain competitors – i.e., rival search engines – it hopes to hamstring the very process of free competition.

Moreover, it is not Google, but browser owners, phone manufacturers, and phone carriers that initiate these default agreements. They gain revenue or free access to Google’s mobile app suite, and they provide to their users a pre-set, usable product that requires minimal configuration out of the box. Further, Google’s agreements with Android-device manufacturers and cell carriers have enabled those companies to compete more robustly with Apple’s iOS line and to lower the consumer cost of devices and services.

Consumers Have Made Their Choice

Despite default-search agreements, any consumer who dislikes Google Search may easily switch to a competitor. The consumer has no less choice due to Google’s default status. Android users may remove the pre-loaded Google Search widget with two clicks. On iPhone, it requires just four clicks to change the default Safari search engine. The Safari on a Mac contains a drop-down menu from which the user may select her preferred option.

Even should another search engine supplant Google Search as a common default, many users would continue to prefer it. Indeed, in 2014, Mozilla Firefox adopted Yahoo as its default search engine only to replace it with the superior Google Search following user dissatisfaction. On Bing, the native default search engine on Microsoft’s Edge browser, “Google” is one of the terms users most often search. Put simply, other search engines fail to compete with Google because their products fall short.

The DOJ seems aware of Google Search’s competitive superiority – and the legal threat this superiority poses to the government’s case. In a recent filing, it sought to preclude Google from presenting evidence that the company’s conduct and products benefit consumers.

What’s Really At Stake

The DOJ has embarked on an unholy crusade to reshape tech markets and eventually the entire economy. Such efforts end invariably in limited consumer choice, high prices, and stunted innovation. The American tech sector, conceived in liberty, has proven indispensable to the country’s continued economic dominance. Meanwhile, would-be technocrats stateside need only study Europe’s technological stagnation to understand the economically stifling effects of hyperregulation.

Since the internet’s advent, skittish observers have often worried that momentarily successful companies wielded unbreakable monopoly power. Such supposed monopolists include MySpace, AOL’s instant messenger, and other services whose names have faded into history. In 1998, the year Google launched, Fortune declared the Yahoo to be the victors of the “search-engine wars.”

Google has maintained its market share primarily through rough-and-tumble competition. It’s continued success does not, however, suggest that it will remain forever successful. A.I., other innovations, and the ineluctable force of creative destruction will ensure that tech markets remain prosperous and competitive.

Only economically foolish, short-sighted government tinkering can ruin this process.