The Justice Department Should Pursue a Breakup of Google's Monopoly | Opinion

Decades from now, secondary school students in America will learn about Sundar Pichai, Tim Cook, Jeff Bezos and Mark Zuckerberg—instead of Cornelius Vanderbilt, John Rockefeller and Andrew Carnegie—as the archetypal robber barons.

In its first major monopolization case in 20 years, the Department of Justice has answered Congress's call—issued in a report on the House's 17-month investigation into Big Tech—by filing an antitrust case against Google. The department will target the corporation's dominance in search and digital advertising.

The 450-page House report released on October 6 is not a quick read. But it is the most thorough investigation into a sector of the economy in 50 years. It thoroughly details a surfeit of harms and the tactics that tech monopolists use to corner markets. The report, all but a judicial indictment of the lawless behavior Big Tech has engaged in during the past decade, offers a roadmap for future antitrust litigation.

Significant portions, almost more than the space allocated to Facebook and Apple, focus on analyzing Google's conduct. The committee examined how Google used its market power in instance after instance to favor its own products and services, crush rivals, copy competitors' products, impose arbitrary rules, elbow its way into adjacent industries and lock in users. The Justice Department had more than enough information to build an effective case, and decided to initiate a narrow lawsuit—targeting only Google's dominance in general search and search advertising.

Like the House Report, the Justice Department's complaint against Google exposed how the corporation grew to dominance and used its industrial might to obtain monopoly power in search and digital advertising. The Justice Department focused on two different, but deeply intertwined, harms in its complaint. Through a series of agreements, Google entrenched its monopoly in search with the Android mobile operating system, which in turn helped entrench Google's dominance in digital advertising and mobile search.

Google owns and licenses out Android to smartphone manufacturers, and took steps to prevent rivals from using the open-source nature of Android to circumvent its monopoly in search. Similar to Microsoft in the late 1990s, Google used its market power to coerce and incentivize manufacturers to deeply integrate its various applications (such as the Chrome Browser, Google Search bar and application store) to the Android Operating System and set its applications as the default. Setting Google products as the default is key to Google's strategy. Despite Google's claim that switching defaults is easy for consumers, they rarely change the selected provider for various applications.

Sundar Pichai
CEO of Google, Sundar Pichai, speaks before signing the White Houses Pledge To Americas Workers at El Centro community college on October 3, 2019 in Dallas, Texas. Ron Jenkins/Getty

Additionally, Google used contracts to restrict manufacturers' ability to modify various aspects of the Android operating system. These agreements ensured the maintenance of Google's monopoly and foreclosed on any potential competition that could arise on this platform. Google's agreements ensured that, despite Android being an open-source system available for anyone to modify and change, Google would be in the driver's seat controlling and locking core aspects of the operating system.

Ensuring Google's success in the search and advertising industry is crucial to the corporation's long-term strategy. Both search and advertising depend on scale to be successful and are complementary services. Once Google obtained dominance in search, it shared those profits with device makers to close off alternative pathways for competitors to attack its monopoly. Dominance in search then served as a backbone to its digital advertising platform, providing the company with the broad scale, large user base and significant data inputs needed to entrench its position.

The Justice Department failed to provide any significant guidance to the court as to what structural remedies would be appropriate. But it should vigorously pursue what the House report recommended: structural breakups. Google should be structurally separated from its Android operating system and from significant aspects of its vertically integrated advertising platform. From Standard Oil and American Tobacco in 1911 to AT&T in 1984, structural breakups have reinvigorated competition, led to waves of innovation and inhibited the ability of monopolists to extend their dominance to adjacent industries.

The House report clearly established that America has a monopoly problem in digital markets, and that tech giants have used a wide range of unfair practices, likely in violation of the law. The subcommittee provided as much factual evidence as any report could to demonstrate these claims. In the wake of such a landmark congressional investigation, the Department of Justice has now taken the first federal strike against one of the tech giants; it should honor the bipartisan report as a complementary antitrust enforcement agency and commit to the most stringent remedies possible.

Daniel A. Hanley is a policy analyst at the Open Markets Institute. You can follow him on Twitter @danielahanley.

The views expressed in this article are the writer's own.