A bipartisan coalition of Attorney Generals have slammed Google
What is antitrust law?
The concept of antitrust law is simple. Antitrust laws are in place to keep one company or group of companies from becoming too powerful. These laws protect consumers from unfair price gouging, and they level the playing field for smaller businesses.
Two approaches to antitrust law
There are two perspectives concerning antitrust law. The "market first" approach argues that companies achieve dominance based on economic efficiency and consumer preferences. Those of this view believe that overbearing enforcement of antitrust laws interferes with the free market and harms consumers.
The opposite approach, or "fairness first approach," obviously focuses on fairness. All of the ongoing lawsuits seem to fall under this perspective. Broadly they allege that Google and Facebook of using their power to "suppress competition" and "take advantage of consumers," according to Fortune.
Only a few decades ago, regulators sued Microsoft
The Case against Microsoft
In the late 90's Microsoft's Internet Explorer came pre-installed on Windows operating systems. The U.S. Department of Justice (DOJ) claimed this sort of software bundling gave Internet Explorer "an unfair advantage" against competing web browsers.
We can see striking similarities to the Microsoft case in the current case against Google. Like Internet Explorer, Google comes as the default search engine on Android and Apple smartphones. Today, as back then, the DOJ argues this bundling on Google's part gives the tech giant an "unfair" advantage over its competitors, according to the Washington Post.
In the 90s, the DOJ failed in its efforts against Microsoft. The legal battle took years, and Microsoft narrowly avoided being split up when an appeals court overturned this initial ruling on appeal.
While the past is no predictor, the Microsoft case is instructive and shows that the plaintiffs in today's antitrust suits will have to navigate overcome considerable hurdles to succeed.
Perhaps what's more important than the current lawsuits are the grounds on which they're based.
Once, under the market first view of antitrust laws, companies could avoid regulatory scrutiny if they didn't use their clout to limit consumer choices or engage in price gouging. Google and Facebook are free, and their dominance doesn't seem to hurt consumers. In fact, these tech companies have succeeded because so many people use their services.
But under the "fairness first" perspective, these large companies hurt consumers simply by being too large. The current lawsuits make it clear that maintaining market fairness and not market efficiency is the main focus of today's regulators. And it's this shift on the part of regulators has significant implications for big business.
Increased legal costs could weigh down mergers and acquisitions. Google and other tech companies might need to defer favorable deals with retailers and distributors to avoid appearing "anti-competitive." Regulators will likely emphasize economic inequality and other social factors over economic ones.
All of these factors will make deal-making even more difficult, even if Google and Facebook prevail in their current legal battles. It's these factors, coupled with regulator's renewed focus on fairness, that will reshape the business landscape of Silicon Valley and beyond.