The End Of Google’s Reign? Antitrust Case Similar To 1998 Suit Which Hurt Microsoft
The US government’s antitrust lawsuit against tech behemoth Google could have a similar outcome to its successful attack on Microsoft in 1998.
The Department of Justice case, which argues Google unlawfully abused its monopoly and dominance over its smaller rivals, focuses on large payments Google made to ensure its search engine was the default on smartphones and desktop browsers.
Officials said the anticompetitive practices of Google spending profits in the billions made from its already powerful position to buy special treatment from tech companies created a “self-reinforcing cycle” of monopoly power abuse.
The suit mimics a similar case the US government made against Google rival Microsoft in 1998, when it alleged the software giant was requiring computer manufacturers to set its web browser Internet Explorer as the default.
Plaintiffs in the Microsoft suit argued Microsoft’s abuse of monopoly power was responsible for its victory in the 1990s browser wars as every Windows user had a copy of Internet Explorer.
The lawsuit dragged on for years and only ended after a settlement in November 2001. The distraction of the high-profile lawsuit gave Microsoft rivals – including Google – a leg up.
The settlement required Microsoft to share its application programming interfaces with third-party companies and it was made to appoint a panel of three people who would have full access to Microsoft’s systems, records, and source code for five years in order to ensure compliance.
Microsoft’s obligations under the settlement expired in 2007.
In a statement about the ongoing lawsuit, Google described the filing as a “dubious complaint” that is “deeply flawed”.
“Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives,” Kent Walker, SVP of Global Affairs at Google, wrote in a blogpost.
“This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
Walker used the analogy of cereal brands to defend Google’s practise of paying companies such as Apple and Samsung to feature its search engine browser.
“Yes, like countless other businesses, we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level. For digital services, when you first buy a device, it has a kind of home screen ‘eye level shelf’,” Walker said.
“On mobile, that shelf is controlled by Apple, as well as companies like AT&T, Verizon, Samsung and LG. On desktop computers, that shelf space is overwhelmingly controlled by Microsoft.”
However, antitrust lawyer Gary Reback told Bloomberg this is a weak defence and the government won’t have any trouble establishing that Google unlawfully abused its monopoly power.
“It’s not just Google has a better shelf and its competitor is on the next shelf,” Reback said. “It’s that Google has all the shelves and its competitor is in a different store in a bad neighborhood 400 miles away.”