Consumer Watchdog Previews Pitfalls of Landmark Antitrust Case

For Immediate Release                                                 Contact: Courtney Mattison (202) 525-7492

WASHINGTON, D.C. – The Taxpayers Protection Alliance (TPA), a nonprofit, nonpartisan taxpayer and consumer advocacy organization will be monitoring developments in the landmark antitrust trial United States v. Google, set to begin this week. The arguments pursued by the Department of Justice (DOJ) against Google would have sweeping anti-consumer impacts across the economy should the government prevail in this case.

TPA Executive Director Patrick Hedger provided the following comments regarding what consumers need to know:

“While the case is United States v. Google, what’s really on trial here is the consumer-focused approach to antitrust, which has been the standard for the past half-century. The Biden administration is in the middle of a sweeping overhaul of antitrust law, and its goal is to grant the government vastly more authority to micromanage business practices. This will shape entire markets to bureaucrats’ liking rather than consumers’. The case against Google is one of the most significant attempts thus far to set new precedents towards this end and to marginalize consideration of the consumer.

“The specifics of the case target agreements Google has made with companies that provide web browsers and smart devices. These deals make Google search and certain other applications the default options on these browsers and devices. For these deals to be illegal, the DOJ must prove that Google is a monopoly within the relevant market and that these deals unfairly exclude competition to the detriment of consumers. The facts show decidedly otherwise.

“First, while Google is by far the most popular general search service, it faces enormous competition in searches that facilitate commerce. General searches, such as ‘How tall is the Empire State Building?’ provide little in the way of facilitating the advertising and sale of a good or service. When it comes to searching for consumer goods, for example, most of those searches actually begin on Amazon, an enormous competitor to Google in several markets.

“Second, there is little that differentiates Google’s agreements with browsers from common practices in marketing and product promotion. These agreements are like retail slotting fees, where a company such as Coca-Cola will pay for better placement within a grocery store. Google does indeed have agreements to be the default provider of search and other services in browsers and on Android-powered devices, but these deals do not prevent customers from selecting other services. Switching away from Google on a browser or device requires no more than a few seconds and even fewer taps or clicks. To extend the grocery store analogy, Pepsi is still on the shelves and well within reach.

“In addition, the evidence suggests that these deals provide enormous benefit to the consumer. They provide resources to browsers and device manufacturers, with benefits passed on to consumers in the form of greater selection and, particularly in the case of devices, lower prices. Google’s agreements with device manufacturers utilizing the Android operating system mean the manufacturers get the operating system free of charge. The savings are ultimately enjoyed by consumers.

“Consumers also benefit from having browsers and devices that work out of the box – without the need for the consumer to shop around and download or choose software. Imagine if car manufacturers were barred from preloading cars with tires and sound systems, despite the fact nothing currently precludes consumers from changing these things out down the road. This highlights the absurdity of the DOJ’s case, as the question must eventually turn to what changes the government would impose on the market. There is not a logical remedy to having a default option other than to force users to navigate an unnecessary set-up process before they are able to use even the most basic features of their new devices.

“Consumers would also be harmed if only one of Google’s rivals could be the default option. When it comes to general search, consumer data routinely shows consumers prefer Google over its rivals. In 2014, Mozilla struck a deal with Yahoo to be the default search engine in Mozilla’s Firefox browser. In 2017, Mozilla terminated the deal and switched back to Google due to user feedback. Perhaps the most glaring evidence of consumer preference is the fact that the most popular search term on Microsoft’s rival search engine Bing is ‘Google.’

“When unpacked, there are clear consumer benefits and parallels in other markets to Google’s deals with browsers and device manufacturers. Further, there is nothing in these deals that prevents users from switching away from Google. Yet should the DOJ prevail in its case and set precedent that such deals are illegal, the ramifications will ripple across the economy, rendering countless other promotional and marketing deals with clear consumer benefits subject to regulatory scrutiny. This will further deter companies from creating any such new pro-consumer arrangements as well.

“A ruling against Google would also set a clear precedent that considerations of the consumer are no longer paramount to the considerations of individual competitors within a market, opening the floodgates to potential litigation from companies who offer inferior products but are seeking a new way to target their rivals. All told, what is on trial in United States vs. Google is the company’s stellar track record of providing a superior product or service for vast numbers of people over an extended period of time. This should not be considered illegal. For that reason alone – and many others – consumers have a clear interest in Google prevailing.”

###

Taxpayers Protection Alliance (TPA) is a non-profit, non-partisan organization dedicated to educating the public through the research, analysis and dissemination of information on the government’s effects on the economy.