Please, Somebody Google ‘Hubris’

The pretense of knowledge is on full display in the Department of Justice’s proposed remedies for the Google trial. The government’s suggested fixes are not confined to what the ruling deemed illegal, but are much more broad. Not only is that bad law, but it’s potentially bad for consumers. 

This summer, Judge Amit Mehta found Google guilty of illegally maintaining its search monopoly through default contracts with device manufacturers, such as Apple, and browsers, such as Mozilla’s Firefox. The trial revealed that Google pays Apple approximately $20 billion a year to be the default search tool out of the box on Apple devices. In exchange for Google being the default search engine in Firefox, Mozilla receives around $400 million per year. Strong evidence that Google simply provides a better product that consumers prefer was insufficient to persuade the court that those default-placement contracts were not an antitrust violation. 

One might assume the appropriate remedy is to prohibit those supposedly anticompetitive contracts. But that’s not how the DOJ is proceeding.  

The DOJ’s proposed remedies go far beyond prohibiting deals that give Google’s general search engine preferential treatment, default placement, or preinstallation on any “Search Access Point,” like devices or browsers. The DOJ also wants to prohibit any Google revenue-share agreements, including the one currently keeping Firefox a viable browser competitor to Google’s Chrome. The government seeks to force Google to pull all investment in other search-engine and AI companies, a critical frontier of innovation right now. There are also demands that Google turn over its data and technology, including its search index across all of its platforms, to rivals deemed by the DOJ as qualified competitors, and that Google not preference its search engine on even its own products, among other restrictive requirements. 

There are other “behavioral” remedies on the DOJ’s wish list, all having little to nothing to do with the default contracts at the heart of the trial. But the structural remedies requested are even further beyond the pale. 

The DOJ wants a forced divestment of Google’s Chrome browser. Chrome is a major distribution channel for Google search, and it aids in data gathering for delivering more accurately targeted ads, generating billions of dollars in revenue. Yet Chrome isn’t the subject of the Google trial. If the government believes it must ask for remedies beyond the matters at issue during the trial or germane to the ruling in order to “fix” the Google monopoly, it suggests that the government did not bring the correct case, even by its own appraisal. The same goes for the government’s conditional proposal that Google also sell its Android mobile-operating system. These were not matters before the court and are therefore inappropriate subjects for remedies. If the government wants those remedies, it must bring separate cases. 

So why is the DOJ going so far beyond the actual scope of the trial and the ruling?

The philosophical answer is that the DOJ vastly overestimates what any court or regulator can know. Deeming default contracts anticompetitive and seeking to prohibit them is something very distinct from believing that a judge can fundamentally restructure, harshly restrict, and micromanage one of the most successful companies in the world with no harmful, unintended consequences to consumers, the economy and, for that matter, America’s national interest. The services and value Google creates can likely only be achieved by the decentralized knowledge of all the executives, engineers, and investors at Google, as well as those in the same roles at the companies with whom Google interacts, all informed by consumer preferences and price signals. Courts should enforce the law, not act as central planners. 

The consumer-welfare standard (CWS) is supposed to represent users’ interest in antitrust cases. The CWS is critical in antitrust law because consumers aren’t as politically organized as the rent-seeking competitors who stand to benefit from the market leader’s losses in court. Neo-Brandeisian leadership at the DOJ and the Federal Trade Commission has moved away from the CWS in recent years and toward an antitrust agenda more focused on the interests of smaller competitors. 

The practical implications if the DOJ gets its way are no better. Chrome is pleasing to consumers in part because it is integrated with many other useful Google products, such as Google Docs and password management. Breaking those ties will degrade the product that consumers prefer. Forcing Google to aid rivals will distort incentives in investing and innovation, further harming the user experience. There are also serious privacy and security risks to compelling data sharing. Meddling at this granular level risks losing the free access to information, convenience, personalization, and — for those holding Google stock in their 401(k) accounts — wealth creation.   

Read the full article at National Review.