If you’re inclined to root for the underdog, go ahead and applaud the antitrust suit against Google. Just don’t expect it to make much of a dent in the search-engine giant’s monopoly.
The Justice Department’s suit targets some of Google’s specific tactics, such as paying Apple and other companies to be the default search engine on their devices. Even if those tactics are declared illegal, however, they’re not what makes Google dominant.
What gives Google so much power is the fact that consumers, by an overwhelming margin, have decided it’s the best way to find information online. We don’t look up the answer to a question, we Google it.
Internet search, like many technology-driven markets, is driven by network effects. The more people that use a given search engine (or social media site, or e-commerce site) the more valuable it becomes to each user.
Google uses data from billions of searches to provide a better answer to your query, so a search engine with 92% of the global market is more useful than one with just 3%, like Microsoft’s Bing.
Because the government’s trustbusters can’t change the economics of the internet, they’re unlike to succeed in creating competition in search or any other market where network effects are strong.
“You can imagine an outcome where the Justice Department prevents Google from paying Apple to be on its phones, but Apple would probably do the same thing it’s doing now,” said Robert Atkinson, president of the Information Technology and Innovation Foundation.
Apple — or Samsung or any other device manufacturer — would risk alienating consumers if it switched to a less popular search engine. If anything, Atkinson speculates, banning the payments might lead to higher phone prices as manufacturers look to make up the lost revenue.
“The argument the government is making is that somehow search would be better if there were more competition,” Atkinson said. “I’m happy to believe that in the car industry, but it’s different in the software market. Search is pretty good, and having more choice doesn’t seem to be something consumers are clamoring for.”
The Google suit probably won’t be the last antitrust case involving Big Tech. Several state attorneys general are investigating Google’s dominant role in online advertising, and the Federal Trade Commission is considering a case against Facebook.
Politicians from both right and left, including Republican Sen. Josh Hawley of Missouri and Democratic Sen. Elizabeth Warren of Massachusetts, have called for a crackdown on tech monopolists.
For decades, antitrust enforcers have mostly gone after behavior that harmed consumers in some way. Free internet services don’t obviously meet that criteria, and in fact they have created tremendous value for consumers. One study estimated that search engines alone are worth $17,530 a year to each of us.
If we shift to a big-is-bad approach, in a world where network effects make size a compelling advantage, we risk losing some of that value.
That worries Atkinson. He also fears that aggressive antitrust enforcement could hurt U.S. competitiveness in cutting-edge industries.
“That’s the other danger here,” he said. “You don’t want to take away the capitalist incentive to compete and compete hard.”
So root for the underdog if you wish. Perhaps the government can swing a bit of market share to other search engines like Bing or DuckDuckGo, but I’ll bet that when you go to look up something, you’ll still Google it.
Daily updates on the latest news in the St. Louis business community.