House Judiciary Committee publishes antitrust report on tech giants, Google argues against proposals

Following an over year-long investigation and Congressional testimony from CEOs in July, the House Judiciary Committee on Tuesday published a report on “Competition in Digital Markets.” Google is one of the four companies facing scrutiny for its dominance and antitrust concerns.

With Google, Congress took a look at Search, Digital Advertisements, Android and Google Play Store, Chrome, Maps, and Cloud.

• The report says that Search “benefited from economies of scale and the self-reinforcing advantages of data, as well as from aggressive business tactics that Google wielded at key moments to thwart competition. The combined result is that Google now enjoys durable monopoly power in the market for general online search.”

• “One key factor that market participants and industry experts cite when accounting for why Google is likely to maintain its dominance in digital ads is its conflict of interest. With a sizable share in the ad exchange market, ad intermediary market, and as a leading supplier of ad space, Google simultaneously acts on behalf of publishers and advertisers, while also trading for itself—a set of conflicting interests that market participants say enable Google to favor itself and create significant information asymmetries from which Google benefits.”

• “The Subcommittee’s investigation revealed that Google has used Android to entrench and extend its dominance in a host of ways that undermine competition. These include: (1) using contractual restrictions and exclusivity provisions to extend Google’s search monopoly from desktop to mobile and to favor its own applications; and (2) devising Android Lockbox, a covert effort to track real-time data on the usage and engagement of third-party apps, some of which were Google’scompetitors. Additionally, Google’s Play Store now functions as a gatekeeper, which Google is increasingly using to hike fees and favor its own apps. Overall, Android’s business practices reveal how Google has maintained its search dominance through relying on various contractual restrictions that blocked competition and through exploiting information asymmetries, rather than by competing on the merits.”

• “Perhaps most critically, Chrome serves as a way for Google to control the entry points for its core markets: online search and online advertising. Chrome uses Google Search as its default search engine, a default setting that market participants say Google makes difficult to change. Chrome also provides Google with another source of user data that the company can feed into its ad business to offer behavioral ads.”

• Several factors suggest that Google Maps is well positioned to maintain its dominance. The high fixed costs of creating mapping data pose a significant barrier to entry. Apple, which recently built its mapping database from the ground up, told the Subcommittee that the effort required billions of dollars. Google, moreover, also benefits from an enormous lead in the tracking and processing of location data, as well as from the prevalence of tracking-enabled Android devices.

• According to interviews with market participants and Google’s internal documents, Google employs two strategies that raise concerns about potential anticompetitive conduct. First, Google appears to leverage its dominant business lines, including popular APIs such as Google Search and Maps, along with machine learning services, to attract customers to its platform through discounts and free tier services.

In response, the report offers three high-level proposals: 

1. Promote fair competition in digital markets
   1. Reduce Conflicts of Interest Thorough Structural Separations and Line of Business Restrictions 
   2. Implement Rules to Prevent Discrimination, Favoritism, and Self-Preferencing
   3. Promote Innovation Through Interoperability and Open Access 
   4. Reduce Market Power Through Merger Presumptions
   5. Create an Even Playing Field for the Free and Diverse Press
   6. Prohibit Abuse of Superior Bargaining Power and Require Due Process
2. Strengthen laws relating to mergers and monopolization
   1. Restore the Antimonopoly Goals of the Antitrust Laws 
   2. Invigorate Merger Enforcement
   3. Rehabilitate Monopolization Law
   4. Additional Measures to Strengthen the Antitrust Laws
3. Restore vigorous oversight and enforcement of the antitrust laws.

In response, Google reiterated that it “compete[s] fairly” and that today’s report features “outdated and inaccurate allegations from commercial rivals about Search and other services.” 

Americans simply don’t want Congress to break Google’s products or harm the free services they use every day. The goal of antitrust law is to protect consumers, not help commercial rivals. Many of the proposals bandied about in today’s reports—whether breaking up companies or undercutting Section 230—would cause real harm to consumers, America’s technology leadership and the U.S. economy—all for no clear gain.