Whimper or bang, Google’s antitrust outcome will echo through tech

LAST week, Google and the US Department of Justice (DOJ) officially began legal fisticuffs in the biggest antitrust case since the DOJ took on Microsoft in 1998. The irony has not been lost on anyone old enough to remember the cacophony of a dial-up connection – it was Microsoft’s run-in with regulators decades ago which created the very circumstances that permitted Google to flourish.

Other Big Tech firms are racking up billable hours with their own lawyers this year: Apple is being investigated by the DOJ, while the Federal Trade Commission has Amazon and Meta in its crosshairs.

The renewed antitrust scrutiny that Silicon Valley faces will force us into an updated confrontation with the age-old contradictions of capitalism and its resulting monopolies.

“How can we have a system that is based on competition, when the end result of that competition is the elimination of it?” law professor William Magnuson asked in his book, For Profit: A History of Corporations, published last year.

Society’s views on market dominance have been surprisingly fluid. US antitrust law got off to an absolutist start in 1890 with a very broadly worded prohibition on monopolistic behaviour. Over time, the interpretation of antitrust law has evolved. In modern times, it is not enough to merely be a monopoly in order to get on the wrong side of a judge; this must be found to be an unfair or unreasonable one.

Even within Google’s lifetime, markets and legal stances have undergone tectonic shifts. In a 2007 case involving the tech giant, a court opined that since Google’s search engine services were free, antitrust law did not apply.

This attitude is unlikely to prevail in 2023. “That’s just not likely to be the holding in this case because we’ve realised that free products aren’t really so free,” a law professor told Bloomberg Technology last week.

As the trial over Google’s alleged unlawful use of monopoly power unfurls in the next few months, the definition of both “unlawful” and “monopoly” will doubtless be aggressively manhandled by both sides.

How the lines are ultimately drawn for these concepts will have lasting consequences for tech, an industry that has become synonymous with winner-takes-almost-everything.

Should this legal battle leave Google no less formidable than before it started, startups will reconsider going up against the behemoth and its mammoth peers. All the more so in a time when interest rates are high and venture capitalists’ risk tolerance is low.

The discouragement of new entrants matters less in online search, where Google already dominates, but might reshape the future of other areas such as artificial intelligence.

Thanks to the open-source nature of development in that field, the crown is up for the taking – both among existing tech companies and young scrappy firms. Google was once that young and scrappy firm in 1998, the fateful year of its founding.

Some onlookers already think that this trial might end with more of a whimper than a bang. Antitrust laws are weak to begin with, some say. Others also reckon that the scope of this lawsuit is too narrow to result in a breakup of the tech giant.

If this indeed comes to pass, Google and its peers might not be replaced by young and scrappy versions of themselves for a long, long time. That would be a pity.