The Corner Newsletter: October 11, 2024
Welcome to The Corner. In this issue, Open Markets policy counsel Tara Pincock — who helped write the original lawsuit against Google — discusses a potential breakup.
DOJ Moves to Break Up Google: Q&A With OMI’s Tara Pincock, Who Helped Draft Original Case
Anita Jain & Tara Pincock
This week the Department of Justice announced it will likely follow its recent court victory over Google with a call to break off key parts of the corporation. After a 10-week trial that focused on how Google protected its dominance of online search, Judge Amit Mehta of the federal district court in Washington in August ruled that the corporation is an “illegalmonopoly.” Anita Jain, OMI’s editorial director, spoke with OMI policy counsel Tara Pincock, who in her previous role at the Utah attorney general’s office helped write the original complaint against Google’s search monopoly. That complaint grew out of an investigation by 50 U.S. states and territories.
Anita Jain: Can you tell us why the DOJ and state AGs filed the case against Google in 2020?
Tara Pincock: The government alleged that Google used its dominance in Android and Chrome to ensure that it was the default search engine on every search access point. It also paid Samsung, Apple, and others for exclusivity — Google Search was the default search engine on devices out of the box.
Anita: How did you feel about the judgment that Google is an illegal monopoly?
Tara: Judge Mehta wrote an excellent opinion. Instead of being fooled by Google's arguments that it competes with the entire internet and has high market share because it's the best search engine Judge Mehta understood that Google's market share is bolstered by its access to data and benefited greatly from network effects. This was a giant step forward for those of us who want to see antitrust enforcement restored to its former glory.
Anita: This week, the DOJ said it is looking to break up the tech giant. Did this come as a surprise?
Tara: I was expecting this. Structural remedies were always on the table. The question is and has always been, what would be spun off?
Anita: What does this proposal say about antitrust enforcers' vision to dismantle monopolies in general?
Tara: The government is taking a broad, out-of-the-box approach to remedies. They are considering options that have the best chance of breaking Google's dominance and restoring competition to the market. This includes banning exclusive contracts, allowing competitors to Google's web content, and even licensing or syndicating Google's ad feed.
Anita: In your opinion, what should a breakup look like and why?
Tara: My number one choice would be Android. If Google can't use Android as a lever to force manufacturers (likeSamsung) to install Search, it could open the door for other search engines. To get access to Google’s proprietary software, manufacturers must agree to a ton of requirements that favor Google search. You can't get Google's apps like maps, Gmail, play store, etc., without agreeing. What choice do manufacturers have?
Anita: Google has said it can't share data associated with its Search Index with the rest of the market out of privacy concerns. What do you think of the DOJ’s response, which is that Google should therefore also be banned from using such data for its own business?
Tara: I loved that proposal when I read it. If it's too sensitive to share with others, it's too sensitive for Google to use for itself.
Anita: Google spent the first two decades of the century amassing enormous power. What do you say to criticism that antitrust enforcers took their eyes off the ball?
Tara: First, I think it's clear that enforcers took their eyes off the ball. They allowed Google (and others) to acquire companies that led to dominance. Google, for example, bought Android. It didn't develop that company.
Anita: The DOJ has also brought a second case against Google, arguing that the corporation’s control of the core technologies of the online advertising system is also illegal. If the DOJ also wins that case, what might breakup there look like?
Tara: Ad tech is a great example of Google buying its way to dominance. It bought the companies in the ad tech stack(like Doubleclick) and then used its massive number of advertisers as leverage to convince publishers to use Google's tools.
Anita: Google is such a powerful corporation. What does a diminished Google look like? After all, Google is a verb.
Tara: Google will continue to be the dominant search engine for the foreseeable future. The case doesn’t hinge on search itself but on the advertising revenue generated by search. The remedies need to make it so other search providers have a better chance of getting more advertising.
Anita: When was the last time we saw such a broad restructuring of a corporation?
Tara: We haven't seen a company brought to its knees this century. Maybe not even in our lifetimes.
Anita: What do these remedies signal to Amazon, Facebook, Microsoft?
Tara: I think the DOJ has signaled that they're looking at every possible solution to the problem. It's not just structural remedies or blocking contracts. It shows that they're interested in doing what needs to be done to restore a competitive market.
Open Markets Files Amicus Brief on Algorithmic Price-Fixing Case Gibson v Cendyn Group
Open Markets Institute filed an amicus brief in Gibson v. Cendyn Group, a case on appeal before the Ninth Circuit. The case is based on allegations that hotels on the Las Vegas Strip used an algorithm designed by Cendyn Group to conspire to fix prices on their rooms. “With the growth of extraordinary computing power and data processing capabilities, the ability of firms to work together to fix prices and take other coordinated actions for their collective benefit — at the expense of consumers, suppliers, and workers — is rapidly becoming more sophisticated and more difficult to detect,” the brief reads.
Supporting the plaintiffs, the Open Markets brief urges the courts to apply longstanding law against collusion between competing firms, regardless of whether they do so directly or through a third party. The district court made critical errors of law in dismissing the case, including placing improper emphasis on the method of price-fixing and its efficacy. The amicus brief received coverage in Law360. Read the full brief here.
📝 WHAT WE'VE BEEN UP TO:
The Open Markets Institute filed a comment letter urging the Federal Trade Commission to terminate the 2012 consent order governing Coopharma, a cooperative of independent pharmacies in Puerto Rico, saying it is unjust and should be set aside on legal and public interest grounds. The consent order bars Coopharma and its independent pharmacy members from collectively bargaining with CVS Caremark, Express Scripts, and other powerful pharmacy benefit managers(PBMs) and payors on reimbursement rates and other contractual terms. “The 2012 consent order perpetuates the profound inequality in power between independent pharmacists and PBMs,” the comment leader reads. “Across the country, the market might of the PBMs has driven many independent pharmacies out of business to the detriment of the patients and communities that they serve.” Read the comment here.
Open Markets executive director Barry Lynn appeared on the KeenOn Podcast to talk about his cover story in the October issue of Harper’s magazine, “The Antitrust Revolution: Liberal Democracy's Last Stand Against Big Tech.” On the podcast, Lynn opines that tech giants such as Google, Amazon, and Microsoft pose a bigger threat to America’s democracy and economic freedom than Donald Trump.
In a profile on Lina Khan, Bloomberg narrated her journey to becoming FTC chair, which included her role early in her career at the New America think tank, which ousted the Open Markets team after her boss Barry Lynn “wrote a statement celebrating a European antitrust crackdown against Google’s parent, Alphabet Inc., which was a key donor along with its then-chairman, Eric Schmidt.”
In Politico, Lynn shared his view that presidential candidate Kamala Harris is likely to continue the Biden administration’s strong antitrust push, citing a speech by Commerce Secretary Gina Raimondo at the Democratic National Convention in which she called out “monopolies that crush small businesses, workers and startups.”
Ars Technica cited senior policy analyst Karina Montoya’s on-the-ground coverage of the Google ad tech trial, quoting her comment that a confusing chart presented by Google may have “backfired” since it “made evident that Google is ubiquitous in digital advertising.”
Courtney Radsch, director of the Center for Journalism & Liberty, appeared in a video produced by More Perfect Union on Big Tech’s role in the demise of local news. “At every point, they’re siphoning off revenue that used to be this direct relationship between advertisers and publishers,” she said.
TIME quoted policy director Phil Longman in an article narrating J.D. Vance’s journey to become former President Trump’s vice presidential pick. “He became this kind of agent who would come and tell you from behind the lines what the enemy is thinking,” Longman said.
Open Markets Institute lauded the DOJ’s move to call for a breakup of Google. “Antitrust enforcers have a duty to stop existing monopolistic behavior as well as to prevent future abuse where possible,” senior reporter Karina Montoya said in a statement. “That is exactly what the Department of Justice has proposed in US v. Google: a set of structural and behavioral remedies to not only stop Google's monopolistic behavior in search to date, but also to prevent Google from monopolizing new AI systems that are expected to power its search products in the future.”
Open Markets Institute commended the U.S. Department of Agriculture for releasing a report that exposes the anticompetitive and exclusionary tactics that new meatpackers are up against such as slotting fees, opaque accrual fees, category captains, and kickbacks. “This report is a crucial first step to better understand the tricks and cheats that packers and retailers use to lock out the competition,” Claire Kelloway, food program manager at the Open Markets Institute, said. The statement was covered by the Successful Farming website.
🔊 ANTI-MONOPOLY RISING:
A coalition of 13 states and the District of Columbia filed lawsuits against TikTok over allegations the social platform knowingly made several application design decisions that heightened its addictive nature and contributed to the youth mental health crisis in order to maximize its advertising revenue. (New York Times)
A federal judge overseeing the Federal Trade Commission’s lawsuit against Amazon denied the e-commerce giant’s motion to dismiss the case, clearing the way for a trial that is expected to begin in 2026. (Reuters)
Germany’s national competition authority, the Federal Cartel Organization, announced its intention to designate Microsoft as covered by a special abuse control regime, unlocking greater authority to scrutinize and challenge the corporation’s deals and partnerships, especially in the AI space. (TechCrunch)
📈 VITAL STAT:
$3.8 trillion
The total amount of U.S. debit transactions processed by Visa in the year ending in June, equivalent to 60% of the market, which netted the financial services giant $7 billion in annual processing fees. The Department of Justice has filed an antitrust lawsuit against the company for monopolizing the market in debit cards. (New York Times)
📚 WHAT WE'RE READING:
How TV Watches Us: Commercial Surveillance in the Streaming Era — The Center for Digital Democracy’s Jeff Chester and Kathryn Montgomery provide an eye-opening look at the streaming TV ecosystem’s increasing use of deceptive and invasive data and advertising practices. After pulling back the curtain on the way connected television has become the next frontier in the erosion of Americans’ privacy rights, Chester and Montgomery outline policies that could reorient the industry to better serve consumers and democracy.
Order Sandeep Vaheesan’s forthcoming book:
Sandeep Vaheesan, the legal director at the Open Markets Institute, will publish his first book Democracy in Power: A History of Electrification in the United States on December 3. Vaheesan examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives.