After a string of recent legal defeats, antitrust enforcers finally have a high-profile win. In August, the US District Court for the District of Columbia ruled that Google holds an illegal monopoly in the internet search market. Google intends to appeal the decision, but that has not stopped the Department of Justice (DOJ) from suggesting draconian remedies in the meantime. Just last week, the DOJ floated one particularly ill-conceived idea that Google be broken up altogether.
None of this bodes well for American consumers.
In the case, Google was accused of forming anti-competitive agreements with other companies to make Google the default search engine on their devices. This allegedly gave Google an illegal advantage with users that do not make changes to default settings.
The DOJ’s proposed remedies are nothing short of extreme. The DOJ recommends some targeted remedies such as limiting Google’s ability to preference its search engine through contracts which would stop the company from making the search engine the default setting on devices. However, the DOJ has also discussed breaking off products and services like Android and Chrome from Google, and separating advertising services from its search engine altogether.
Put all of this together and it becomes clear that the remedy is much worse than the disease.
Google search is popular and free. The Department of Justice even acknowledges in its proposed remedies that Google offers a superior product and continues to innovate, unlike other monopolists. Government intervention threatens to undermine these advantages and hurt consumers at every turn.
In practice, Google may no longer be connected to Android and Chrome. With operating system development no longer subsidized by Google, these services would need to find new revenue sources, which could drive up the costs.
A final decision on remedies has yet to be made, but the DOJ intends to use this case to radically restructure the tech giant.
While under normal circumstances, an antitrust decision that goes this far would be shocking, nobody should be surprised. The ruling is the natural conclusion of shifting regulatory approaches that have been evident for years. With this win, regulators now have their chance to make “big is bad” the law of the land.
Until recently, antitrust enforcement was guided by the consumer welfare standard (CWS). This standard emphasized that the main goal of antitrust should be to create an economy that is good for consumers: only stepping in when there is empirical evidence that private market activity would raise prices, reduce output, stifle innovation, or otherwise harm consumers.
Under the Biden administration, antitrust has moved away from this objective enforcement standard and has instead embraced a philosophy known as neo-Brandeisianism. In theory, the New Brandeis ideology does not necessarily mean “big is bad,” but in practice big is at least suspect. This focus on market structure presupposes that concentration harms competition—even when consumers benefit.
As the case draws to a close, Uncle Sam’s competition enforcement agencies finally have their win. And with it comes the long-dreaded opportunity for government regulators to restructure the market as they wish. But if that “win” formally dislodges consumer welfare as the primary concern of regulators in competition enforcement, it will be American consumers that will lose.
Trey Price is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.