Antitrust Lawsuits and Big Tech – What You Need to Know

by | May 1, 2021 | Business

The world has changed significantly since the turn of the 20th century, and, in fact, the differences between the present day and the early 1900s far outweigh the similarities. However, certain aspects of our world remain the same. One such concept is the antitrust laws in the United States. This set of laws was developed primarily between 1890 and 1914 and set the groundwork for American businesses in the 20th century and beyond.

Though there have been minor adjustments, these laws have remained relatively unchanged and have a significant impact on modern life. This has never been more obvious than it is right now. In September of 2020, the US Department of Justice filed a lawsuit against Google, a move that could alter the power of Big Tech companies indefinitely.

What Is An Antitrust Lawsuit?

As defined in the Sherman Act of 1890, trusts are corporations or companies that have a damaging monopoly on their markets. This law, and those that followed to support it, aim to keep the United States market competitive by preventing one single corporation from getting too big and consuming too much of the available business. An antitrust lawsuit occurs when the Department of Justice believes that a single company has violated these protective laws and is damaging other businesses and consumers in the process.

Why Are Antitrust Laws Important?

Antitrust laws are just one of the ways that the government aims to protect small businesses and keep the market competitive and free. If a single company becomes too powerful, others in the industry are unable to reasonably compete with the money and resources of the dominant corporation. When they were first created, antitrust laws were aimed to break up large oil corporations and ensure that consumers had options to choose from, but as written, they were purposefully vague to allow for unforeseen future applications.

During the 70s and 80s, the law became slightly more specific, stating that antitrust laws were to be enforced if they were hurting the consumer; these updates clarified that the market exists to the benefit of consumers, and if they were being harmed by a lack of options, the Department of Justice should investigate.

Google’s Antitrust Case

The September 2020 lawsuit against Google is a unique application of these laws. Where past antitrust cases have surrounded businesses with physical products, Google offers services that can seem intangible. What’s more, they have been the leaders of the industry for so long that many people rely on them to set the standard. Their developments have driven search engine technology to where it is today, and they have thoroughly revolutionized online advertising.

This may be part of the reason that there has been no concrete action against them in the past. As they developed updates to the industry, they were simply innovating, not necessarily creating a monopoly that prevented other tech companies from succeeding. It seems that the story is different now.

How Did Google’s Situation Change?

As it stands now, Google has forged advantageous relationships with other large tech companies: Motorola, Apple, and LG, to name a few. The relationships rely on these phone production companies using Google as their primary search engine, robbing other search engine companies of traffic and preventing consumers from being able to choose their phone’s search engine. Critics of the lawsuit argue that consumers always have the ability to change their primary search engine app or company if they so choose, but the reality is that many people stick to the default without making a definitive choice at all. These relationships aren’t even the only problem. Google has been participating in potentially antitrust behavior in other ways, including purchasing their competitor DoubleClick in 2008 and successfully absorbing their competitor’s business. This kind of behavior creates a monopoly on the industry, which is precisely the situation that antitrust laws were created to prevent.

It’s Not Just Google

The Department of Justice is not only investigating Google’s presence in the Big Tech marketplace, but they are also considering the power that companies like Facebook and Amazon have over competitors. At a glance, it would appear that Facebook has engaged in similar behaviors, such as purchasing WhatsApp and Instagram and tucking their management under the Facebook umbrella. This eliminates two major Facebook competitors and allows the corporation to relax in the comfort of knowing that if individuals want reliable internet-based messaging services or photo-sharing platforms, they will likely have to do it on a Facebook-owned site. Amazon is a bit different.

Though it’s clear that Amazon has a large advantage when it comes to online sales, they have been accused of prioritizing their own products and services over independent sellers in search results. This puts small Amazon sellers at a significant disadvantage, as most consumers will simply pick one of the first few results for their search and neglect to shop at an independently-owned “storefront.”

The Department of Justice

When it comes to offenses that violate federal laws, the Department of Justice is in charge of taking action. Trusts do not violate one single state’s guidelines but rather infringe on basic rights at the federal level. The aim of the Department of Justice is to protect the public from a myriad of issues, one of which being unfair monopolies on essential markets. What’s more, trusts stand in the way of the United States free market. The Department of Justice is required to step in to defend the framework of the American marketplace and ensure that the basic necessities of capitalism are available to citizens.

Google’s Lawsuit and Small Businesses

Though the Department of Justice just filed its lawsuit against Google, the potential ramifications for small businesses may be huge. On the one hand, Google’s advertising potential can significantly help small businesses to grow and gain attention. However, for smaller tech startups, the lawsuit could lead to better recognition within the market.

If Google is required to downsize or split apart, other small and mid-sized tech companies may be able to step in and gain recognition for their unique features and setup. As of right now, very few startups that deal with search engines or advertising have the ability to step out of Google’s giant shadow, and antitrust law enforcement could provide the opportunity to do so.

What Happens Next?

Any potential changes to the tech industry likely won’t happen for a while. Unless Google opts to settle the suit, the case could drag on for years, so don’t hold your breath waiting for results. It is reassuring to note that lovers of Google will likely still have access to the corporation’s services regardless of what happens with their antitrust suit. Even if other competitors get a fair shot at the market, consumers always have the option to choose Google. If they are found to be a trust, Google will simply have to make more room for competitors to shoot their shot.

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Gabby Vandenavond