Breaking Up Google: Why This Is Not Microsoft Circa 2000

🌈 Abstract

The article compares the antitrust cases against Google and Microsoft, arguing that Google is not the same as Microsoft circa 2000. It discusses the key distinctions between the two cases, the potential remedies against Google, and what the court may have missed in concluding that Google has an unlawful monopoly.

🙋 Q&A

[01] Why Google is not Microsoft circa 2000

1. What are the key distinctions between the Google case and the Microsoft case from 2000?

• Microsoft bundled its browser Internet Explorer with Windows and pressured ISPs and PC vendors to distribute it, while Google secures default placement of its search product through distribution contracts that are mutually beneficial to the parties involved.
• Microsoft effectively had exclusive ownership of the distribution channel (Windows), while Google does not own the means of distribution for its search product and enters into arms-length contracts with other companies like Apple.
• Apple could choose to contract with Bing or build its own search product, but it chooses to use Google search because it is a quality product.

2. How did Microsoft and Google maintain their monopolies differently?

• Microsoft used anticompetitive tactics like bundling Internet Explorer with Windows and pressuring ISPs and PC vendors, while Google has secured default placement of its search product through distribution contracts that are mutually beneficial.
• Google's distribution agreements are procompetitive as they improve the quality of the distributors' products, unlike Microsoft's actions which forced a product on users.

3. What did the District Court miss in concluding that Google has an unlawful monopoly?

• The court undervalued the procompetitive benefits of Google's distribution agreements and failed to recognize that Google's dominance is a result of having a superior search product, not anticompetitive actions.
• The court did not adequately consider how the rise of generative AI could disrupt Google's business model and search market in the future.
• The court underemphasized the difficulty and high costs of running a successful search business, which makes it unlikely that restricting Google's distribution agreements would lead to more competition.

[02] Potential Remedies Against Google

1. What are the potential remedies the government may seek against Google?

• A breakup of Google, similar to the initial remedy ordered against Microsoft, is possible but unlikely to be effective in remedying Google's monopoly in search.
• The more likely remedy would be to ban Google from entering into exclusive distribution agreements, which were central to the court's conclusion that Google maintains an unlawful monopoly.
• Banning exclusive distribution agreements would have significant consequences for Google's distributors like Apple, who receive substantial revenue from their partnership with Google.

2. How would a consent decree be worse for Google than a complete breakup?

• A consent decree, like the one Microsoft had to endure, would essentially involve the government having veto power over many of Google's key business decisions, which could be less effective than a clean breakup.
• A breakup may actually benefit Google by allowing the company to focus on its core areas and extract value from assets like Android.

3. Who stands to benefit the most from checking Google's monopolistic power?

• Established players like Microsoft, which owns Bing and has a stake in OpenAI (ChatGPT), are likely to benefit the most, rather than smaller competitors or startups.
• Reallocating market share in search across other big tech companies is unlikely to significantly benefit anyone except the big tech firms themselves.