❗Help close the gap: We still need to raise $40,000 by the end of March. Donate now
The FTC had a monopoly lawsuit against Google in its sights, and it blinked
Mar 19, 2021

The FTC had a monopoly lawsuit against Google in its sights, and it blinked

HTML EMBED:
COPY
An investigation published in Politico found that in 2012, commissioners ignored Google's monopolistic behavior. The company faces multiple antitrust challenges now.

All this week, Congress has been holding antitrust hearings with a specific eye on big tech companies. Also this week, an investigation published in Politico found that nearly a decade ago, commissioners at the Federal Trade Commission apparently ignored evidence that Google was building an anti-competitive monopoly in web search and advertising.

It’s a topic for “Quality Assurance,” where I take a second look at a big tech story. I spoke with Matt Stoller, research director at the nonprofit American Economic Liberties Project. The following is an edited transcript of our conversation.

A headshot of Matt Stoller, research director at the non-profit American Economic Liberties Project.
Matt Stoller (Photo courtesy of Sophia Lin)

Matt Stoller: In 2012, the Federal Trade Commission said, “We have a bunch of evidence that Google is trying to monopolize the entire internet.” And the five commissioners voted 5 to nothing not to bring a case. So you fast-forward eight years and Google is this giant that mediates the flow of information all over the world, controls the internet, and there are antitrust cases against it from a whole bunch of states and enforcers all over the world, which are effectively the antitrust cases that the FTC did not bring in 2012.

Molly Wood: Companies trying to get bigger is not that unusual. What was it about what Google was doing at the time that suggested that there should have been a case?

Stoller: Competing by improving your product or service is what we want. But competing by signing agreements to exclude your competitor so that they can’t get into the market, that’s the essence of antitrust law. Google pays today about $10 to $15 billion a year to Apple, saying, “When consumers use their iPhones and they open Safari on their iPhones and they do a search, that search automatically goes through Google.” There were emails that were revealed in this case, they were in the footnotes, that said effectively that Google executives were saying, “Yeah, we’re signing these deals to monopolize. We’re signing these deals to exclude competitors from the market.”

Wood: In some ways, tech was a new-ish industry then. It is clear from these papers that the economists working with the FTC made some predictions that couldn’t have been more wrong, let’s say. Can you chalk this up to simply not understanding what was happening in the tech industry, or what could happen?

Stoller: So one, this is part of a broad problem of elite lawlessness in America and across the West. The way that antitrust lawyers think about the world, they just are completely out of touch. That has to do with a very old-school framework where they only look at what’s called consumer welfare. So if something is good for consumers, that’s the only thing they care about. And they were like, “Oh, Google offers a bunch of free stuff,” and then, “If they’re doing that, then nothing that they do is bad.” And so they accepted a whole bunch of arguments from Google and essentially said to the commission, “Don’t file a case.” Meanwhile, the antitrust lawyers at the FTC were like, “Yeah, this is obvious stuff. This is really bad.”

Wood: Although, it sounds like you’re saying, given this country’s attitude toward companies over the past few decades, it’s still not that likely we would have done anything differently?

Stoller: Well, I mean, I’m an optimist. But also, historically, the post-1982, ’82 to probably 2015 or so, was a very weird, very pro-corporate, pro-monopoly time. And before that, really all the way back to the founding of the country up until the 1970s, you had a lot of skepticism about monopoly. And we’re returning to that. So I do think that we can do a lot. Had we been organizing around saying, “Hey, we have a monopoly problem,” in the early 2000s, yeah, I think we would have absolutely nipped this problem in the bud, but we didn’t. So we are where we are, and we’re trying to deal with the problem as it exists now.

Wood: Do you think that these, as we move forward now, you know, we are a country that likes to fix a problem after it’s way out of hand. But I wonder, will documents like this help going forward in what is already an uphill battle?

Stoller: I absolutely think that these documents leaked have been incredibly important. I mean, the House antitrust subcommittee, which is Congress…. The Republicans and the Democrats did an extensive, 16-month investigation, led by Chairman David Cicilline, into these big tech firms. They recommended a host of changes to the market structure, including breaking them up so that their businesses are simpler. It was an enormous undertaking, very powerful, with CEO testimony. And I think one of the things they found is that our enforcers are a catastrophic failure. And one of the things that the FTC did, and Google was aggressive about, is they refused to explain why they didn’t bring this case.

Related links: More insight from Molly Wood

In House testimony Thursday, the FTC said it should examine its past decisions and that it’s taking a more aggressive posture these days.

Google, of course, responded on the topic. The “too long; didn’t read” version of the post is that Google said: “Case closed. The commission’s decision was unanimous and bipartisan.” The post suggested that, in fact, Google’s competition, and especially Microsoft, were the biggest drivers behind the push to sue the company.

We asked the FTC for a response, and the agency declined to comment. It pointed us to Thursday’s House antitrust hearing, in which that Politico article obviously came up. Both Acting FTC Chair Rebecca Slaughter, a Democrat, and Republican Commissioner Noah Phillips said that although that decision predated their terms, the agency is moving toward a posture that’s less worried about overenforcement and more worried about underenforcement, and that’s why you’re seeing more activity and lawsuits these days. Slaughter said the agency needs to look back at what it might have done wrong, and moving forward, should “bring hard cases” even if it wasn’t sure it would win.

There was, as you might imagine, partisan dispute among lawmakers about what the remedy should be for dealing with Big Tech. Democrats primarily talked about existing antitrust law, monopoly power and whether companies were improperly using their monopoly power to push out competition. Republicans pretty much only wanted to talk about Section 230 and the perceived censorship of conservative voices. The Republican commissioner, Phillips, responded that antitrust and consumer protection are the FTC’s job and content moderation is not.

By the way, most analysis has shown over and over that conservative voices are not censored on social media, although deliberate mis- and disinformation and hate speech increasingly have been. So one does start to wonder what these Republicans are arguing that they’d like to see more of on Facebook.

The future of this podcast starts with you.

Every day, the “Marketplace Tech” team demystifies the digital economy with stories that explore more than just Big Tech. We’re committed to covering topics that matter to you and the world around us, diving deep into how technology intersects with climate change, inequity, and disinformation.

As part of a nonprofit newsroom, we’re counting on listeners like you to keep this public service paywall-free and available to all.

Support “Marketplace Tech” in any amount today and become a partner in our mission.

The team

Molly Wood Host
Michael Lipkin Senior Producer
Stephanie Hughes Producer
Daniel Shin Producer
Jesús Alvarado Associate Producer