Query about: Big Tech Regulation - US Government Sues Google

[James Kitching]

Hi all,
So I've read a couple of times today about the US government going after Google for its staggering dominance over the search engine market. It is my belief that the anti-competitive laws in place exist to protect consumers etc, but in what way is Google having such a dominance a bad thing and why are such resources invested into stopping it?
Google is simply (in my opinion) a better product than its competitors, I literally used to (until very recently) search for Google out of habit before I searched for anything to ensure I used Google!
Long story short, what are the negative implications of Googles dominance and why is there an urge to stop them?

 

[whisperingrock]

The easy answer is that through its market dominance, google has squeezed out any possible alternative which could be better than it. For example, google is not particularly good at vertical search and has bullied and delisted vertical search engines in the past in order to remain the dominant online query service.

The less easy answer involves explaining the history of antitrust law in the US, which is not particularly suited to this forum.

 

[James Kitching]

The easy answer is that through its market dominance, google has squeezed out any possible alternative which could be better than it. For example, google is not particularly good at vertical search and has bullied and delisted vertical search engines in the past in order to remain the dominant online query service.

The less easy answer involves explaining the history of antitrust law in the US, which is not particularly suited to this forum.

Okay, that first part makes good sense, thank-you!

I'm really interested in your latter statement, is there any chance you could super simply elaborate? Sorry if that's a big ask, can't tame the curiosity!

 

[Jaysen]

Hi all,
So I've read a couple of times today about the US government going after Google for its staggering dominance over the search engine market. It is my belief that the anti-competitive laws in place exist to protect consumers etc, but in what way is Google having such a dominance a bad thing and why are such resources invested into stopping it?
Google is simply (in my opinion) a better product than its competitors, I literally used to (until very recently) search for Google out of habit before I searched for anything to ensure I used Google!
Long story short, what are the negative implications of Googles dominance and why is there an urge to stop them?

It's a fair point to make and one that has protected the big tech giants for some time now. US antitrust law has been shaped by a school of thought, which, put very simplistically, is that monopolies are okay as long as they don't abuse their powers. And when thinking about abusing their powers, we consider whether consumer welfare is being harmed, traditionally by monopolies raising their prices.

The issue is Facebook and Google are free to use and exceptionally convenient. Amazon also doesn’t use its monopoly power to raise prices; instead prices are often far lower than could be found anywhere else. If consumers welfare, in terms of price, isn’t being harmed by monopoly power, the question is should antitrust law be concerned?

A few issues though:

• The problem with some of the Big Tech platforms, notably Amazon and Google, is that they sell products against competitors on their platform, which simultaneously operates as a marketplace. In other words, they own the platform and set the rules. This gives them an unfair advantage and an ability to prioritise their own products (which Google has done previously by prioritising its own products in its search results).
• While platforms are 'free', consumers are often paying by giving up their data. The more data these companies gain, the more a competitive advantage they have, and the harder it is for new companies to enter the market.
• Google has the resources and position to pay companies to be the default search engine, preventing competitors from having a chance. If it's hard for new companies to enter the market and no-one can reasonably challenge Google, the argument is that consumers (and advertisers) lose out on innovation and choice.

With that in mind, there is a new wave of thinking around antitrust law that is starting to challenge the traditional view.

 

[James Kitching]

It's a fair point to make and one that has protected the big tech giants for some time now. US antitrust law has been shaped by a school of thought, which, put very simplistically, is that monopolies are okay as long as they don't abuse their powers. And when thinking about abusing their powers, we consider whether consumer welfare is being harmed, traditionally by monopolies raising their prices.

The issue is Facebook and Google are free to use and exceptionally convenient. Amazon also doesn’t use its monopoly power to raise prices; instead prices are often far lower than could be found anywhere else. If consumers welfare, in terms of price, isn’t being harmed by monopoly power, the question is should antitrust law be concerned?

A few issues though:

• The problem with some of the Big Tech platforms, notably Amazon and Google, is that they sell products against competitors on their platform, which simultaneously operates as a marketplace. In other words, they own the platform and set the rules. This gives them an unfair advantage and an ability to prioritise their own products (which Google has done previously by prioritising its own products in its search results).
• While platforms are 'free', consumers are often paying by giving up their data. The more data these companies gain, the more a competitive advantage they have, and the harder it is for new companies to enter the market.
• Google has the resources and position to pay companies to be the default search engine, preventing competitors from having a chance. If it's hard for new companies to enter the market and no-one can reasonably challenge Google, the argument is that consumers (and advertisers) lose out on innovation and choice.

With that in mind, there is a new wave of thinking around antitrust law that is starting to challenge the traditional view.

That's so helpful, thank-you very much!

 

[James Kitching]

For future people reading this thread, the FT headline today makes for an interesting (albeit slightly speculative) development on this situation. Specifically, it addresses how Apple are suggesting their own search results in light of the Google antitrust situation and may be using its enormous capital reserves to produce an Apple search engine to replace Google on IOS devices. This will be a daunting task considering the significant data advantage Google has combined with years of development and refinement. Apple will also lose >$8bn/annum in payments from Google. Can Apple manage it? Is it worth the huge financial commitment and development time? Do they really have a choice?

 

[Jaysen]

For future people reading this thread, the FT headline today makes for an interesting (albeit slightly speculative) development on this situation. Specifically, it addresses how Apple are suggesting their own search results in light of the Google antitrust situation and may be using its enormous capital reserves to produce an Apple search engine to replace Google on IOS devices. This will be a daunting task considering the significant data advantage Google has combined with years of development and refinement. Apple will also lose >$8bn/annum in payments from Google. Can Apple manage it? Is it worth the huge financial commitment and development time? Do they really have a choice?

Another update today as the EU is to announce formal antitrust charges against Amazon: https://www.ft.com/content/4908995d-5ba4-4e14-a863-bcb8858e8bd2

 

[James Kitching]

Another update today as the EU is to announce formal antitrust charges against Amazon: https://www.ft.com/content/4908995d-5ba4-4e14-a863-bcb8858e8bd2

This is just the digital equivalent of a shop putting their products at the front of the store/in the window instead of third party lines. It (to me) is hardly a surprise and makes sense, why wouldn’t a marketplace promote their own brands/lines! All because it’s Amazon and contains the word ‘data’ it is a crime? Im interested in knowing other peoples views!

 

[James Kitching]

big news - https://www.ftc.gov/news-events/press-releases/2020/12/ftc-sues-facebook-illegal-monopolization

 

[James Kitching]

https://www.ft.com/stream/d6b12f0c-bf3f-4045-a07b-1e4e49103fd6 - will it stop?

 

[Jaysen]

This is just the digital equivalent of a shop putting their products at the front of the store/in the window instead of third party lines. It (to me) is hardly a surprise and makes sense, why wouldn’t a marketplace promote their own brands/lines! All because it’s Amazon and contains the word ‘data’ it is a crime? Im interested in knowing other peoples views!

Missed this one - I think one of the big differences here is that Amazon isn't just any shop but it's the marketplace that controls so much of the online shopping space (so much so that some independent brands have to list on Amazon if they want to access a huge proportion of potential consumers). In the past, they've been accused of using data about third-party sellers to determine which products they want to sell and how to price those products to undercut their competitors.

Again, you could still argue all of that isn't unfair and that Amazon should be allowed to do what they want. I think it just depends on your own view of the role of competition law!

 

[James Kitching]

Missed this one - I think one of the big differences here is that Amazon isn't just any shop but it's the marketplace that controls so much of the online shopping space (so much so that some independent brands have to list on Amazon if they want to access a huge proportion of potential consumers). In the past, they've been accused of using data about third-party sellers to determine which products they want to sell and how to price those products to undercut their competitors.

Again, you could still argue all of that isn't unfair and that Amazon should be allowed to do what they want. I think it just depends on your own view of the role of competition law!

Makes sense, the size of these tech companies is clearly making antitrust guidelines very blurry. An interesting future career I’d imagine.