Following the recent US court ruling on Google’s market dominance, Washington may be aligning more closely with the Brussels approach to tech competition regulation, hinting at possible enforcement measures.
Judge Amit Mehta for the District Court of Columbia ruled, last Monday (5 August), that Google has an illegal monopoly in the search engine and advertisements market, dominating search results. A key issue was Google’s deal with Apple, which made it the default search engine on Apple devices.
But according to the search engine giant, “This decision recognises that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” said Kent Walker, Google’s president of global affairs.
The judge, however, pointed out that Google maintains an illegal monopoly by paying other platforms for exclusivity. The firm spent $26 billion alone on such deals in 2021, said Mehta.
The ruling may mark a shift in US big tech regulation. The case, brought by the Department of Justice, points to growing transatlantic alignment on tech regulation, with the US possibly mirroring the EU’s digital competition regulation, the Digital Markets Act (DMA), despite uncertainties about its effectiveness.
Google has previously faced significant regulatory challenges in the EU over its competition practices.
In March, the EU launched a DMA investigation into Alphabet, the parent company of Google, which focused on its app store policies, search result biases, and compliance with the DMA’s choice screen requirements, which prompt users to select default apps.
Google has also been found to hinder competition in online advertising in June, boosting its search engine dominance on Android devices, and promoting its own shopping service on search. The latter two investigations ended with the largest antitrust fines in EU history in 2017 and 2018.
Google has appealed the fines, and plans to appeal Mehta’s ruling, which could extend the legal battle into 2025 or even 2026, Reuters reported.
The European Commission is opening non-compliance investigations into Alphabet, Google’s parent company, Apple, and Meta under the Digital Markets Act, the institution announced on Monday (25 March).
The US is “playing catchup” with the EU’s earlier antitrust rulings on Google, said Amelia Fletcher, professor of competition policy at the University of East Anglia and research fellow at the Centre on Regulation in Europe (CERRE), an EU regulation think tank.
The 2018 Android decision “found many of the same agreements to be problematic that the US now has,” said Fletcher.
US regulators rely primarily only on the Sherman Antitrust Act of 1890, but the EU has the DMA along with older antitrust regulations at its disposal to address digital competition, said Florian Cortez, a Joint Research Fellow at the Egmont Institute and the European Policy Centre.
Brussels effect
While many agree that the US is adopting the EU’s approach, potentially reflecting the Brussels effect—where EU regulations influence global standards—some question whether this is a wise decision.
But the court ruling is also more “wide-ranging” than the EU DMA regulation, because it addresses the agreement between Google and Apple, not just Google’s own practices, said Fletcher.
The EU approach takes into account behavioural economics, which studies how psychological factors influence economic decisions, said Fletcher. However, Google’s behavioural economics team finds users often stick with default settings despite the ease of change, noted Cortez.
Effectiveness
The DMA has not been effective in notably reducing Google’s dominance, raising doubts as to whether it is a model to follow, Lazar Radic, Adjunct Professor of Law at IE University and Senior Scholar for Competition Policy at the International Center for Law & Economics, a think tank focused on legal and economic research, told Euractiv.
Cortez disagreed. He argued that the DMA remedy of removing default browser settings may just take a while to manifest with new entrants to the market.
Under this measure, tech companies allow users to easily choose and switch defaults to boost competition.
Driven by political motivations and the upcoming EU elections, European regulators have unleashed a storm of enforcement actions and investigations related to the Digital Services Act (DSA) and Digital Markets Act (DMA), experts told Euractiv.
Remedies
The US court is also addressing Google’s advantage as the default search engine on Apple devices. The judge is likely to look at what the EU has already implemented, said Fletcher.
The “remedies phase” in the US is set to begin next month. Several measures to reduce Google’s dominance are touted.
Uncertainty around the remedies is furthered by the fact that the ruling did not clarify whether Google’s dominance stems from exclusive deals or a superior product, which means remedies might not alter user preference, said Geoffrey A. Manne, president and founder of the International Center for Law and Economics.
One option is to break Google up. Experts speaking to Euractiv said this is unlikely to happen. The judge focused on exclusive deals, which breaking up the company would not prevent, said Manne.
Precedent also makes breaking up Google less likely, said Cortez. A US judge decided not to unbundle Microsoft in 2001 over its use of its dominant Windows operating system to unfairly promote its Internet Explorer browser. Instead ruling that the firm allows users more software choices, such as alternative browsers. Mehta referenced the Microsoft case in his ruling.
This hints that possible remedies will be closer to the DMA-required choice screens. Other options include banning exclusivity deals like the one between Google and Apple, Manne told Euractiv.
But in the Google case, it may be difficult to make choice screens work. The judge can only impose obligations on Google, not on third parties like Apple or Mozilla, so they could keep Google search as the default, Manne and Cortez both said.
Similarly, even if exclusive deals are banned, Google could retain its dominance and gain a financial advantage. Its search engine may remain the default option on major platforms, without needing to pay for that privilege through exclusive deals.
“It is the opposite of a remedy,” said Manne.
