A Matter of Trust: The Sherman Act in the Age of Technology
On January 24, 2023, the U.S. Attorney General and the Attorney Generals of eight other states filed U.S. and Plaintiff States v. Google against Google LLC, the parent company of Google, YouTube, Waze, Fitbit, and numerous other Internet services, for violating Sections 1 and 2 of the Sherman Act in the field of digital advertising. This antitrust lawsuit comes as no surprise, as Google is a ubiquitous household name in its corner of the Internet. But how did this action come about, why is it happening now, and what precedent will it set for the future of Internet advertising?
The Sherman Act is the basis for the suit against Google LLC. The Sherman Act was passed in 1890 in an attempt to regulate capitalism. It aims to prevent one corporation from creating a monopoly within a given market, under the philosophy that competition in an economic market breeds innovation. Sections 1 and 2 of the Sherman Act are most relevant to this case. Section 1 stipulates that every contract, trust, or conspiracy with the intent to restrict trade in a given market is illegal. Section 2 elaborates on this, specifying that any attempt at monopolizing a market or any conspiracy to further a monopoly is a felony.
The Sherman Act has been used semi-recently in the technological market. The most relevant precedent in this case is the famous antitrust lawsuit against Microsoft, leveled at the software mogul by the U.S. Attorney General and the Attorney Generals of twenty other states including the District of Columbia in 1998. Though Microsoft won the “browser wars” of the 1990s, it may not have been through legal means. The suit alleged that Microsoft was in violation of Section 2 of the Sherman Act, as Microsoft's web browser software, Internet Explorer, was built into consumers’ operating systems. This practice made it cumbersome to access, download, and utilize other web browsers.
The anticompetitive strategies that Microsoft used in the 1990s are mirrored today in the omnipresence of Google’s function as a search engine. One of the primary alleged offenses in lawsuits against Google have been its inescapable nature, and the business strategies that have led to that reality. In the U.S. today, Google accounts for 80% of all Internet searches. This is no accident. Google has positioned itself to be the preinstalled search engine on certain browsers that come built into mobile devices. One example is the Safari browser on Apple products, which make up the majority of all smartphones and computers purchased in the U.S. In addition to being preinstalled on certain products, Google has stipulations in its contracts with smartphone companies (such as Apple) that forbid preinstallation of any other Internet search service. These contracts also make Google unable to be removed from devices where it is preinstalled, regardless of user preference.
Investment in Google’s advertising capabilities has given the search engine a monopoly over the field of digital advertising, the main method by which search engines make money. Website owners often pay search engines to have their links displayed as one’s first option on a given page. Search engines earn more money with increasing traffic to these links. Google reaps significant profits from digital advertisement given its ubiquity.
The lawsuit against Google LLC is evidence that monopolies continue to wreak havoc upon economic competition. Moreover, big tech monopolies put public information at risk. To quote the U.S. Deputy Attorney General Lisa O. Monaco, “In pursuit of outsized profits, Google has caused great harm to online publishers and advertisers and American consumers.” It is possible that the damage of such a monopoly on information may not only cause economic issues. If a tech company such as Apple were to be compromised, the safety of public information would be severely undermined. Big tech companies have violated antitrust laws in the U.S. for too long. They must be prosecuted not only to preserve competition in the market, but also as a safety measure.
Editor: Simone Swersky
Lead Editor: Steely Forrester