Google Antitrust Case: Court Will Examine Internet Giant's 'Effects on Innovation'

The ongoing antitrust lawsuit against Google has reignited debates about the company’s market dominance and the legal frameworks used to evaluate such cases. One expert believes the case and how the judge views Google’s stranglehold on the search market will come down to the consumer welfare standard and how the court views Google’s “effects on innovation.”

In a recent article published by the Hill and titled “How To Think About the Google Antitrust Case,” Joel Thayer, president of the Digital Progress Institute, discusses how to view the current antitrust case that the Department of Justice has brought against Google.

(The Associated Press)

Thayer believes the case comes down to the consumer welfare standard, writing:

Since the 1980s, courts have used the consumer welfare standard to evaluate whether the actions of a firm with market power violate federal law. The standard takes into account prices, of course, but also considers other factors that are harder to measure. As the D.C. Circuit in the AT&T/Time Warner case put it, the standard extends “beyond higher prices for consumers, including decreased product quality and reduced innovation.” Or, as former FTC Commissioner Christine Wilson explained, the standard considers the effect of “competition on quality … in the analysis of vertical restraints” and requires an evaluation of the “effects on innovation.”

Thayer further likens the current case against Google to that of Microsoft v. U.S., writing:

Let’s take a closer look at that case: When the government sued in the 1990s, Microsoft enjoyed a roughly 90 percent market share over personal computer operating systems and distributed Internet Explorer, its web browser, to consumers for free.

The result according to the court? Microsoft had market power; it leveraged that market power to deny consumers the ability to choose a competitor, and the resulting lack of competition reduced innovation in the browser market. In other words, Microsoft had violated the antitrust laws with its “free” browser.

Google’s tactics mirror Microsoft’s. Google has arranged for service providers, browsers and device manufacturers to make its Search the default engine. For example, Google pays Apple over $15 billion per year to make Search the default search engine for Safari — a direct competitor to Google’s browser, Chrome. Google requires device manufacturers that use its Android operating system to preinstall certain apps that use Google Search as their default search engine.