- October 21, 2020
- Posted by: Bastion team
- Category: Markets
Microsoft cofounder Bill Gates.
- The Department of Justice on Tuesday filed an antitrust lawsuit against Google, alleging the company ensures search dominance by securing contracts to restrict distribution of competitors.
- The complaint is very similar to an aspect of the antitrust lawsuit filed against Microsoft decades ago.
- While the cases share similarities, experts including Gary Reback, the lawyer who helped launch the antitrust case against Microsoft, told Business Insider the cases have important differences.
- Unlike the Microsoft case, the complaint against Google is narrow and zeroes in on Google’s alleged “grip over distribution.” That’s the general claim that ultimately stuck in Microsoft’s 2001 antitrust settlement.
- Are you a Microsoft employee? Contact this reporter via the encrypted messaging app Signal (+1-425-344-8242) or email (email@example.com).
- Visit Business Insider’s homepage for more stories.
The Department of Justice explicitly cites Microsoft’s legal battles over alleged monopolistic practices when it filed antitrust lawsuit against Google on Tuesday.
Specifically, the DOJ argues Google is restricting distribution for its competitors by making its own software the default – and undeletable – option for consumers. This behavior, the DOJ contends, was proven to be illegal and anticompetitive during Microsoft’s antitrust case nearly 20 years ago.
“Google’s practices are anticompetitive under long-established antitrust law,” states the complaint, filed Tuesday in the US District Court in Washington, DC. “Almost 20 years ago, the DC Circuit in United States v. Microsoft recognized that anticompetitive agreements by a high-tech monopolist shutting off effective distribution channels for rivals…were exclusionary and unlawful.”
While the cases share similarities, Gary Reback — the lawyer who helped launch the antitrust case against Microsoft back in the early 2000s — told Business Insider the key difference is scope.
The Department of Justice originally took a much bigger swing in its antitrust pursuit of Microsoft with a broad list of allegations, but what ultimately stuck in the settlement Microsoft and the DOJ reached in 2001 was that Microsoft couldn’t force PC makers to work exclusively with the company.
The Google complaint zeroes in on this kind of behavior, alleging it uses its market power to negotiate contracts that limit the ability of other search providers to get their apps pre-installed on Android-powered smartphones. That could make the government’s case against Google more successful because it won’t become mired in claims that may be harder to prove.
Google was a critic of Microsoft, but now says times have changed
Decades ago, Microsoft found itself under similar scrutiny around distribution after it released its Internet Explorer browser for free to PC makers as part of its operating system to edge out competitor Netscape, which charged a licensing fee. Microsoft and the DOJ ultimately reached a settlement in 2001.
Fast forward to Tuesday, and the new complaint against Google brings up the search giant’s vocal criticism of Microsoft at the time.
“Back then, Google claimed Microsoft’s practices were anticompetitive, and yet, now, Google deploys the same playbook to sustain its own monopolies.” Google called the lawsuit “deeply flawed” in a blog post on Tuesday, but declined to comment further to Business Insider.
“This isn’t the dial-up 1990s, when changing services was slow and difficult, and often required you to buy and install software with a CD-ROM. Today, you can easily download your choice of apps or change your default settings in a matter of seconds—faster than you can walk to another aisle in the grocery store,” Google said in the blog entry.
The differences between the Microsoft and Google cases are small but important
Michael Carrier, a Rutgers Law School professor and antitrust expert, notes that the cases actually have a lot in common, however: They’re both under scrutiny for allegedly ensuring that important products — Internet Explorer for Microsoft, and search for Google — would come pre-installed on devices in such a way that would all but ensure they become the default option for most consumers.
A court found in the case that most of Microsoft’s behavior anticompetitive and unjustified, Carrier said.
So, Google will have to show its actions are less anticompetitive, measured by the bar set by Microsoft so many years ago. They might do that by arguing that a search engine is less vital to a device’s functioning than a web browser, which would then also reduce the emphasis on competition in the space. Google might also argue that it has better reasoning for wanting to ensure that Android phones have Google search front and center.
Another, but likely less consequential, difference between the two cases is the Google complaint’s absence of what Reback called “inflammatory documents” cited in Microsoft’s case, such as one executive who was alleged to have said the company intended to “cut off [Netscape’s] air supply.”
Instead, the complaint against Google references a memo in which Google’s chief economist cautioned employees to choose words carefully and avoid similar phrases.
Overall, Reback said the government appears to have a strong case, but notes Google has yet to respond in court. “You never feel better about a case than you do on the day you file because the other side hasn’t said anything,” he said.
Got a tip? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email (firstname.lastname@example.org).
Bastion Balance Seoul, Korea.