Big Tech on Trial

Photo by Colin Lloyd on Unsplash

This month has featured two marquee match ups between Big Tech behemoths and antitrust enforcers.

In the first case, lauded as the most significant antitrust trial since the Microsoft case more than two decades ago (a lawsuit that paved the way for Google’s very existence), the Justice Department has alleged anticompetitive actions by Google’s search business. In the second case, the Federal Trade Commission is suing Amazon for abusing its dominant position in the e-commerce market.

The cases are significant both legally and culturally. From a legal standpoint, they are a bold challenge to the business practices of modern Big Tech companies and have the potential to redefine what it means to operate a monopoly during the Internet era. US antitrust law was first established in 1890 with the passage of the Sherman Anti-Trust Act. Apart from the passage of some additional antitrust provisions in 1914, including the establishment of the Federal Trade Commission, antitrust laws in the US have remained largely unchanged for over 100 years and are arguably grossly outdated. Although antitrust cases have been brought against some technology companies, most notably AT&T and Microsoft, these laws were written in an era that couldn’t even imagine the technical innovation, business models, and market power of modern Big Tech companies. 

That is why I doubt either case will be successful.

By our antiquated antitrust standards, predicated on physical infrastructure, tangible goods, and simple supplier-consumer business models, it is hard to argue that either Google or Amazon even are monopolies. Despite the fact a grade schooler could tell you they are. As a user, nothing locks me in to using Google for search. Even though few competitors even bother to challenge Google in search, Bing or DuckDuckGo are only a click away. I could change my default search engine. Change my default browser home page. Yet, like the 92 percent of the population that uses Google, I don’t. Google argues this is simply because they provide a superior product, not due to anticompetitive practices. 

Although Google has successfully motioned to keep much of the case secret, the argument that consumers have voluntarily granted Google a monopoly seems to be the basis of their case. While Google pays Apple, Samsung, and other partners billions of dollars per year to be their default search engine, that is not the case on Microsoft devices where Bing is the default. Yet the majority of Microsoft users still use Google for search.

The same could be argued by Amazon. Nothing is forcing me to buy products online using Amazon. Although many features of Amazon make it more convenient—including free and fast shipping for Prime members, broad selection, low prices, and convenient and fast payment—competing e-commerce offerings are, again, only a click away. And, unlike in search, there are innumerable e-commerce competitors. Amazon can and does argue their online shopping dominance is not a function of illegal business practices but simply a better customer experience. Consumers are choosing it, not forced to use it. With nearly infinite alternatives, how can it be a monopoly?

The answer is an outdated concept of anticompetitive business practices. The basis of our century-old antitrust laws was fundamentally to realize lower prices for consumers. The fear was that a lack of competition, resulting from unlawful practices that enabled a monopoly, would drive up prices because consumers would have no other choice of provider. But in these modern cases, we can choose other providers, quite easily. In the case of Google (and other semi-monopolist Big Tech companies like Meta), their product is free to consumers. So what harm is their 90 percent market share doing? In the case of Amazon, many products are sold and/or delivered below cost. How does one make the case that is harmful to consumers? Let alone that those companies need to be regulated, fined, or broken up?

And yet most of us have lost confidence in Big Tech companies and, intuitively, believe they wield unfair power and undue influence over our lives.

This brings me to the cultural significance of these cases. While they may not achieve a clear-cut legal victory (after all, to break a law, that law has to exist in the first place), these cases may very well capture and accelerate a cultural shift. Which could very well, in turn, lead to new legislation to codify that emerging cultural consensus—just as the Sherman Act did in 1890 by articulating in law the widespread popular sentiment that the anticompetitive practices of businesses at that time were unfair and detrimental to the public’s well being.

That is what makes the case against Amazon particularly interesting. FTC chair Lina Khan has argued for a new antitrust standard for judging Amazon's business practices that focuses not only on consumer benefits or detriment, but those of a broader ecosystem of suppliers, distributors, advertisers, and other partners who are effectively coerced into fealty to the oligarchy of Amazon.

Such monopolies are nothing new in the tech industry. Again and again we have seen the emergence and eventual dominance of technology platforms. This is what investors seek. It’s what every founder wants to establish. It’s what every truly dominant Big Tech company has: a platform. From the earliest days of tech to today—IBM mainframes, Microsoft Windows, Apple iOS, Facebook, Android, Salesforce, and dozens of other companies, protocols, and standards—the industry has always gravitated toward platforms. There’s a very easy explanation for this dynamic: it’s easier. Building modern technology applications is incredibly complex. If companies had to write software down to the silicon for every app, nothing new would ever get built. As an industry, we not only accept but embrace platforms—they provide a standard, a fixed foundation both technically and economically, on which new innovation can flourish.

Unfortunately, they also provide the basis of monopolies.

These digital platforms enable their providers to extract disproportionate rents from those individuals and businesses who are dependent on their ecosystem. As consumers, we intuitively know this. Even though we might still search on Google or shop on Amazon, we know that over-concentration on those platforms is bad. Public awareness of why and how this is bad has grown—particularly for Big Tech companies that are built on advertising, as is clearly the case for Google and Meta, and more and more so for Amazon. The loss of privacy, the limitation of choice, the erosion of quality, the subtle manipulation of our purchase decisions, we all feel these things in every digital interaction we have. Although the products may be free in dollar terms, we increasingly understand and appreciate the real price we are paying.

And that is the victory I hope these antitrust cases can achieve. By exposing the sheer market power of these modern monopolies, these cases can capture the public’s attention, raise awareness, and provide the rallying cry for a new set of laws that will protect consumers in the digital economy of the 21st century vs the industrial economy of the 20th.