The Justice Department is suing Google in the biggest antitrust case this country's seen in a quarter century.
The allegation? Google is using its power to crush other search engines.
"It probably means less of Google, and more of other firms in the future. ... Maybe it forces Google to do business in a different way," Tim Wu says. "The outcomes are kind of unpredictable, but it certainly shakes things up."
The question of what a monopoly is and how it harms citizens has long been a part of American history.
But now the scrutiny is on big tech, and the companies that control the information economy.
"This trial, along with the cases against Amazon and Facebook, have revealed something about the big tech," Wu adds.
"All of these companies are no longer what they used to be."
Today, On Point: Big tech, monopoly power and how this case might impact on you.
Tim Wu, professor at Columbia University Law School whose work focuses on tech and antitrust law. Contributing opinion writer for the New York Times. Author of "The Curse of Bigness: Antitrust in the New Gilded Age."
Matt Schruers, president of the Computer & Communications Industry Association, a trade association that includes Google as one of its members. He teaches intellectual property and internet law at the Georgetown University and American University Washington.
Michael Cusumano, deputy dean, MIT’s Sloan School of Management.
MEGHNA CHAKRABARTI: It began as a simple idea. Most genius is in its simplicity, isn't it? Measure the importance of a web page by the number of links to it. And then, build a search engine around that.
In 1996, that's what Stanford grad students Larry Page and Sergey Brin did. First, in their Stanford dorm rooms, and then, proving that all clichés have a hefty measure of truth to them, they moved their nascent company into a Silicon Valley garage.
In 1998, propped up by a $100,000 check from a tech investor, a ping pong table, bright blue carpet, and drab tan computers as large as foundation stones, Page and Brin built Google. From the start, while their idea was simple, their mission was massive. Quote, "To organize the world's information and make it universally accessible and useful." End quote.
Google may not have accomplished that yet in its entirety, but the company certainly has changed the world. In 2004, Six years after it was founded, Google held its initial public offering and was already valued at $23 billion. Today, Google, now called Alphabet, its parent company, has a market cap nearing $1.7 trillion.
In 2022, the company tallied $279 billion in revenue. As of August 2023, so just a couple of months ago, more than 90% of all search queries worldwide were done on Google. 90% of the questions all of humanity asks and the answers that you seek online in a search engine are served to you via Google.
Google is more than a company, right? It's a verb now. It's part of what we do and how we think. Who says, "Did you Bing that?" Nah. Everyone says, "Go ahead and Google it."
This is On Point. I'm Meghna Chakrabarti.
GUPTA: We know that free and fair competition is essential to economic freedom. And we know that anti-competitive conduct threatens innovation, weakens workers' rights, and stifles free expression. When any company, including a big technology company, violates the antitrust laws, our economy and our democracy suffer.
This year, the company whose mission is to, quote, "Organize the world's information." And whose corporate motto used to be, "Do no evil." Has run into a government that thinks Google is doing evil by dominating how the world queries online information. President Biden's Federal Trade Commission, and Justice Department and many state attorneys general have joined forces to try to reign in Google's power.
In January, the Justice Department filed a suit against Google for allegedly monopolizing search advertising. You heard Associate Attorney General Vanita Gupta there talking about why she thinks an advertising monopoly hurts democracy. And right now, in Washington, a trial is underway in which the government charges that Google has broken antitrust laws by illegally crushing other search engines like Bing and Yahoo, remember that one?
This is the biggest antitrust case since the government sued Microsoft a quarter century ago. And big tech has gotten so big, the FTC and Justice Department have their eyes on Amazon and Facebook, too. In other words, is this the beginning of big tech's reckoning? Or, maybe a company isn't breaking the law or isn't a threat to democracy just because it's massive, a monopoly, and providing a desired service for its customers.
Maybe it's just really good at what it does. Tim Wu joins us today. From 2021 to 2023, he served as special assistant to President Biden for technology and competition policy. He's a law professor at Columbia University, author of "The Curse of Bigness: Antitrust in the New Gilded Age." And he just published an opinion piece in the New York Times headlined, "The Google Trial is Going to Rewrite Our Future."
Professor Wu, welcome to On Point.
TIM WU: Thanks for having me on.
CHAKRABARTI: Rewrite our future. Why?
WU: It's a good question. I think in the history of the United States and its biggest tech companies the big antitrust cases have a tendency to shake things up and change and affect our technological future. Back in the 1980s we broke up AT&T, that in many ways jump started the Internet's start popularization.
In the '90s, we went after Microsoft, didn't quite break them up, became close. That gave a lot of fuel to companies like Google, and Facebook and Amazon. In fact, who were living and breathing on Amazon, sorry, on Microsoft's platform. These big tech cases have an ability to shake up markets, and that's why I think the Google case will rewrite our future.
CHAKRABARTI: So tell me a little bit more, though, because the way I read it, as folks like you and others have been analyzing the current, not just this current case, which we'll talk about in detail in a moment, but the other active and potential lawsuits in the works, that this feels like because of what big tech is in our lives today, controlling the flow of information, being the primary platform for commerce for millions, if not billions of people, connecting folks for good or for bad, that determining what constitutes a undesirable monopoly is going to have an impact on everyone's lives, let alone the markets that these companies exist in.
WU: Yeah, I think that's true. I think there's a particular valence to these cases, just because they are so influential, have so much power over us, know so much about it. Are the main lines of commerce, the ways we do business, but also how we communicate and what we know.
So, I'd say yes, these are cases was much broader implications than your average antitrust case against a ball bearing company.
CHAKRABARTI: A ball bearing company. Okay. So antitrust cases are meant to solve a particular problem presented by the alleged monopolist. What's the problem here that the federal government is trying to crack with its prosecutions against Google?
WU: I want to say that antitrust cases work on two levels. There's the precise legal theory, which I think we're going to get to in a moment. But there's also this long-standing American suspicion of unaccountable power, and whether that is private power or public power, we've always felt we need some kind of mechanism to deal with it.
These are extraordinarily powerful companies. You know, it's not really clear, the stock market provides a public discipline on them, so antitrust has been in the American tradition for over 100 years. One of the ways that we, I guess, examine or limit or sometimes break private power. So I just want to make that point first. On the sort of more on the question of what they've done, most of these cases are about what we call monopoly maintenance, which is a fancy way to saying that they got there, we think, with a better product, but that they have since then used their various means which are illegal to stay in power.
And I think that is the key thing to understand in these cases. They're not saying these are bad companies. They're not saying they have terrible products. In fact, they have great products. That's how they got to where they are.
But since then, they have restrained competition in ways that are illegal, at least that's what the complaint says.
CHAKRABARTI: Okay. Now, in fact, you, speaking of the greatness of the product itself, I think you said that at Google's founding and in the first several years of the company, it was, you thought it was a terrific product or one of the best to come along.
WU: It was extraordinary. I think it was an order of magnitude better than anything that existed at the time. I think Google gained its market share pretty much fair and square. People saw it, they thought it was great, and it was a giant jump. At that point, it was operating more like a non-profit than a for-profit company.
It lost money at the beginning, and it had almost no ads in the early days and really did serve this idea of putting the users first. So that's not, I have no quarrel with Google up until, let's say, the year 2010 or 2012 or something. I think it's what happened after that when you, what's the metaphor, jumped the shark, a little bit.
The company started to jump the shark a little bit.
CHAKRABARTI: Okay, so that's what we're going to talk about in the next segment about, in detail, what it's alleged that Google has done to maintain, let's say, that enormous grip it has on search and advertising online. But the reason why I'm very interested in this trial, Professor Wu, is something that you write about in your opinion piece in the New York Times, that what happens in this case will set the template not just for online companies, but for tech. Like tech companies in general as we plow headlong into a future where we're more and more dependent on technologies that get ever more sophisticated.
So can you tell me a little bit about how the Google trial might end up having an impact on, as you say, rules that govern tech and competition over, say, things like artificial intelligence in the future?
WU: Yeah, that's a good a good question, a good point, Meghna. The, I think, importance of the Google trial is almost less for the past.
In fact, is less for the past than what it means for the future. Companies like Google are starting to come under increasing, some kind of increasing pressure as AI becomes more powerful. Offers potentially a different way to get information or process information, or it's just new.
And the Google trial, I think, is setting the ground rules. Now this gets a little bit into the conduct. But Google's main method of insulating itself against competition has been spending money and also using its control of the browser and of the Android operating system to point things in its direction. I can understand why a company wants to do that, but That has meant that it's very hard for any kind of competitor to Google to get a real foothold.
And, as you notice there, unlike in many markets, even light beer, there's two or three light beers. There's just one search engine that has real market share. I think that's been a practice. And so what they're trying to do with this case is set rules. You can't spend money in ways to block out all your competitors.
CHAKRABARTI: Okay. So when we come back, we're going to talk in detail what the government is alleging, or that Google did or how it spent its money to block out other competitors. I'm keenly interested in hearing more about that, especially as a member of the meager army of DuckDuckGo users out there. But Tim Wu, stand by for just a moment.
CHAKRABARTI: Today, we're talking about the ongoing trial of U.S. v. Google that's happening in Washington right now. It's one of the biggest antitrust cases since the 1990s, and it's really taking big tech to account for its power and how it uses it. I'm joined today by Tim Wu.
He's professor of law at Columbia University, and from 2021 to 2023, He served as special assistant to the president for technology and competition policy. So he served under the Biden White House. He's also author of "The Curse of Bigness: Antitrust in the New Gilded Age." Professor Wu, hang on for just a second because I want to bring Leah Nylen into the conversation.
She is the antitrust reporter for Bloomberg News and has been attending the Google trial. Very graciously stepped out of the trial today to join us. So Leah, welcome to you.
LEAH NYLEN: Thanks so much for having me.
CHAKRBARTI: Okay. First of all, just as simply and directly as you can you summarize what the government is accusing Google of having done to maintain that 90% monopoly in search?
NYLEN: Sure. So the government alleges that Google has used contracts with browser manufacturers and smartphone makers to ensure that it is always the default search engine whenever you access a computer or a phone. And what that just means is that it is the pre-installed option. So if you don't do anything else, whenever you go and do a search, it's going to be happening on Google.
And Google pays billions of dollars for this privilege. We don't know exactly how much money, because Google has asked for that to be confidential, but we're talking probably about $10 billion or more they pay each year to companies like Apple, companies like Samsung, and all the various other people who make either browsers or phones.
CHAKRABARTI: Okay, so this is so interesting. So in the phone department, we have Apple, Samsung, etc. In the browser department, we have Apple with Safari. We've got Firefox. I don't know, does Netscape even exist anymore? But we also have Explorer, right? Or whatever Microsoft Explorer is called now. Which is so fascinating to me, because it was Microsoft that is the last big landmark in antitrust litigation.
And we're going to talk about the relationship between those two cases in a second. But that, is that why we saw Microsoft CEO Satya Nadella in court, just a couple of days ago?
NYLEN: It was definitely part of it. Microsoft has its own search engine, Bing, which you guys mentioned earlier. And as you mentioned, it is the pre-installed search engine when you access a Microsoft browser.
That's Internet Explorer or Edge is what they call it now. And that one comes pre-installed on pretty much every PC that you buy in the United States. But it's pretty easy to change, lots of people can do that. The problem is on a mobile phone, it's actually a little bit harder to change.
You have to go into the settings, and a lot of people don't even know that it's possible to do that, or that's one of the allegations that the Justice Department makes. Okay just in a kind of nuts-and-bolts way of thinking. Let's presume for a moment that Google is found guilty of the allegations against it.
Its motivation would be what? The more search that's done through it means more ad revenue for Google?
NYLEN: Yeah, so the more searches that happen on Google, the more chances it has to serve you ads, which is its primary way of making money. It makes about $100 billion a year from this particular type of ad, which is the search ads, the text, or maybe like pictures of products that you see at the top of a search results page.
And the more searches that happen on its search engine, the better it is able to tweak the algorithms that provide you results. They have billions or trillions of searches that happen each day, and they use those to improve the results that you get with new information, or if you misspell something in a new and interesting way, they use that to improve the results that they are giving all of the users.
So it's a virtuous cycle or a vicious cycle, as Satya Nadella called it, because the more people use your product, the better it gets. And for a product like Bing, which doesn't have as many users, it can't improve its product as much because it's not getting the same sort of traffic that Google has.
CHAKRABARTI: Okay, Leah, hold on here for a second, because I'm going to want to hear from you some more details of the evidence that the government has brought to this trial.
But Tim Wu, let me turn back to you here, because Leah's exactly right. Ostensibly, the more data that a company like Google gets through the searches, that happen on its platform, the better results it's supposed to be able to return to you when you search, because of algorithmic improvements.
I, however, over the past few years have found Google search to be verging on kind of useless. Because it's so full of barely labeled sponsored ads or sponsored websites and the quality of the information or the sites returned in the search is just not as scintillating, let's put it, as it once used to be.
So what I want to know from you, Tim, is can we connect this sort of market propelled reasoning for Google to want to retain a dominance in search to the health of a democracy? Can we connect the two? Because if we're talking about a platform that is the No. 1 place where people go for online information.
And it's returning results based on its need to maintain market share. Are those, aren't those two things in opposition to each other?
WU: Yes, I think they are. And I think it's a good point. This goes a little bit back to the jump the shark problem I was talking about earlier. I think that competition improves products, improves accuracy, and the fact that Google has been able to, in some sense, defend itself by buying market share, I think has insulated from real competitive pressure, including from better privacy. I'd also add just one or two points to the description of the case against Google.
We don't know the number. I've seen estimates as high as $18 billion, although it is confidential. And what's being bought is not only the default, which I think has been shown to be pretty important, there's also evidence that Apple has stayed out of search. Apple, a natural competitor to Google in many ways.
Has, when pushed, or demanded by Google, stayed out. Samsung, which, very important platform, has taken actions to downgrade some of Google's potential competitors. So it's buying, first of all, the default, most obviously. But also using $18 billion, or whatever it is, between $10 and $18 billion a year.
Is more than most companies dream of ever making and it's for Apple, a pretty major, even for Apple, a very rich country, a rich company, still a sizable line of money. They're buying something there, part of it is at least the allegations are staying out of the market.
CHAKRABARTI: Okay, so Leah, can you tell us about some of what seems to be the strongest evidence so far? And we'll talk about Google's defense, of course, in just a few minutes, but what some of the strongest evidence so far that you've seen that the government has brought to this trial?
NYLEN: Yeah, so far the government has brought three different search engines to the stand to talk about how Google's contracts have impacted them.
The first one that we saw was actually the CEO of DuckDuckGo, that's Gabe Weinberg. And he was talking about the fact that Google has these essentially avenues for search engines locked up has meant that they can't put themselves in front of users, especially like the type of users that they think would be interested in their search engines.
So DuckDuckGo is one that focuses a lot on privacy. They don't show very many ads, they don't track users, and there are certainly a lot of consumers who would be interested in using that kind of a search engine. But because of the way that Google's contracts works, they just haven't been able to even make themselves an option for a lot of consumers.
The second one we saw was from Satya Nadella, who, in addition to being Microsoft's CEO, spent a long time at Microsoft working on the search engine Bing before he became CEO. So he had a pretty detailed knowledge of Microsoft's moves in this area over the past decade. And then the third one we saw yesterday was very interesting.
It was a company called Neeva. The CEO of that was a man named Sridhar Ramaswamy. And he actually spent 17 years at Google. He helped build the ad platform that Google uses today to make its money. And after a while, he and some of the other people at Google felt that the advertising had distorted the way that Google offers search results to people.
So they had gone out and created a new search engine. That was subscription based. So no advertising whatsoever. That search engine launched in 2020 and it ended up going out of business earlier this year. And they ended up selling themselves to another company. It no longer exists as a consumer search engine.
And what Mr. Ramaswamy said was I think pretty powerful. And one of the things he told the judge is the money that this, that Google is giving to all these other companies, makes them unwilling to change the ecosystem. They have this incentive to keep it exactly the way it is. Because as Tim was saying, this is a lot of money, even a company like Apple, by not doing anything, they are making billions of dollars.
So he said the payments that are made to various entities, whether it's Apple or the mobile carriers or browsers, provides an incredibly strong incentive for the ecosystem to not do anything, for nothing to ever change.
CHAKRABARTI: So the big picture implications are becoming clearer as both you and Tim described them.
But Leah, being in the courtroom, I'm wondering if you can give us some more detail about what's it been like and some of the more surprising things that have happened. Because first of all, there's an unprecedented amount of secrecy around this case. I think Google, some, what, two thirds of the pretrial motions that it filed, if I have this right, were in attempts to keep stuff out of the public eye as the trial goes on?
NYLEN: Yeah, it's been a little bit difficult to cover this trial. Antitrust cases, just by their nature, they're about corporate conduct. A lot of companies are pretty nervous about their trade secrets or corporate information being made public. The problem is with an antitrust case, the actual conduct is these emails and the PowerPoint presentations and things, that is the conduct that is at issue in the case.
So in order to have any idea of what the allegation is, you really do need to be able to see that. And we still don't even have a witness list made public of who is going to be testifying in the trial, and we're at week four.
Normally, that's the sort of thing that is made publicly available beforehand. We had a problem during week two, where Google complained about some of the exhibits being made public, and the Justice Department ended up taking down every single thing that it had already made public during the trial.
And that led to objections from myself and other members of the press. Because you really do need to be able to see the documents in order to understand some of the testimony. Some of what we're talking about is very complicated. We've had people up there describing how exactly Google's ad auction works or its search engine, and without being able to see these emails or presentations, it's very difficult to understand.
And this case is taking place in person. You no longer have access to phone lines like we did during COVID. So if you wanted to follow along. The only way to do that is essentially to go in person, and this is going to be a 10-week trial. Most people do not have 10 weeks in their schedule to come and sit in court and listen to this kind of testimony.
By having removed the public access online, I think it really did hamper what people were able to follow who are not there in the courtroom.
CHAKRABARTI: Okay, Leah, I want to, again, just since you are one of the few people who has been able to sit in the trial and get access to whatever trial exhibits have been released to the public.
Some of the emails and PowerPoints have revealed some interesting stuff, like you reported a story just a couple of days ago that said I think some of the evidence presented in trial included a senior Google executive, in an email, I think, or presentation calling Google's search engine one of the world's greatest business models ever created.
And it's like selling drugs.
NYLEN: (LAUGHS) Yes, this was a very controversial one. Google really did not want this one made public. And so it was a very senior financial executive at Google. He was asked to give a presentation during a class that Google was a training, on public speaking. And he decided to give a presentation on why Google's business model is great.
And he said, "It's like selling cigarettes or drugs, because you will always have demand. So you only really have to focus on the supply, and that allows Google to just focus on the advertising side, serving ads to consumers. They never have to worry that consumers won't be there."
CHAKRABARTI: Wow. Okay, so I'm seeing your story here, and it's Michael Roszak, who's vice president for finance at Alphabet. That's Google's parent company now. These are notes from a 2017 training that you said. And you have a quote here from him, from his notes. "Search advertising is one of the world's greatest business models ever created," he wrote.
Adding that there were only, quote, "Illicit businesses and cigarettes or drugs that could rival these economics." Is that kind of hubris shot through other pieces of evidence that have been brought to trial?
NYLEN: I think you definitely do see some of this in the internal emails from Google. There have been discussions about whether they're going to allow Samsung or other carriers to do certain things with the phones that they create.
These are obviously products that Google has some say in because it does own the Android operating system, but there has been some discussion about whether they were intentionally making it difficult for Samsung or other companies to add sort of alternative tools to the phone that would make it easier for consumers to search things.
For example, searching the types of apps that they could download on the phone, searching through things already on your phone, which is not even a product that Google offers. There has definitely been some of that in these internal emails.
CHAKRABARTI: And so just in the last minute that we have before, or less than a minute that we have before we have to take a quick break, Leah, what's the atmosphere been like in the courtroom?
NYLEN: There are a lot of reporters who are covering it. The New York Times, CNN, AP, Reuters. But some of this stuff, I will admit, gets very dull. (LAUGHS) We are talking sometimes about the intricacies of how the search engine works, how their monetization method works, and that can be a little bit of a head scratcher.
But there, as I mentioned, there have been some very fascinating witnesses like Satya Nadella, Sridhar Ramaswamy, Gabe Weinberg, who really, I think, have done a good job of explaining why this is important to the public at large.
CHAKRABARTI: Yeah. See, I think you're undermining the importance of your reporting, Leah, here. Because to me, as just a regular old user, the search platforms, the engines that we use are the windows, they are literally our windows to the entire universe of information that humanity is creating. And if there's a company that's limiting which window we can look at, and the kind of information that comes through, we need your reporting to help us understand what's going on.
CHAKRABARTI: Now, I know that there is a very important civil fraud trial going on in New York right now that has a lot to do with the future of the health of American democracy. But today we want to draw your attention to another trial that's going on in Washington that I would argue also has a lot to do with the future health of American democracy.
And that trial is U.S. v. Google. It is the biggest antitrust trial we've seen in about a quarter century, and it could be a reckoning for how big tech operates, how the markets they operate in and the kind of information they present to you. I'm joined today by Tim Wu. He's a professor at Columbia. Law school. He was special assistant to the president for technology and competition policy from 2021 to 2023 and one of the most prolific authors on antitrust in the era of big tech.
I just want to take a quick moment to hear from another voice about whether or not just being big makes you a company that breaks antitrust laws.
This is Michael Cusumano. He teaches management at MIT's Sloan School of Management, and he says you have to understand there's an interesting distinction about monopolies.
MICHAEL CUSUMANO: There is nothing illegal about having a monopoly. What is illegal is to abuse a monopoly position. In other words, to behave as a monopolist.
Lots of companies have very large market shares. 70%, 80%, 90%. And again, if they use that position to restrain competition in some meaningful way, then they are violating antitrust law.
CHAKRABARTI: Joining us now is Matt Schruers. He's president of the Computer and Communications Industry Association. It's a trade association that includes Google as one of its members.
Matt, thank you for your patience and welcome to the show.
MATT SCHRUERS: Thanks for having me.
CHAKRABARTI: You don't think that just because Google is big, that makes it bad. What do you see in Google's behavior that you would say shows that it's not behaving in an anti-competitive manner?
SCHRUERS: We have to take a step back and look at what antitrust law is for. I run an organization that fought the IBM, the AT&T, the Microsoft monopolies.
So we know antitrust law can do good. But the question is, what's its objective? Is it protecting consumers? Or is it doing what I think Tim was suggesting, is that government should decide when companies are too big and break up companies, even if consumers love them. And if we decide that antitrust can become a general-purpose tool for democracy, that's a blank check.
And we've seen politicized antitrust before. Nixon extorting ITT, Trump's ill-fated AT&T case, right? We don't want antitrust law to become a general-purpose tool. We need objective standards, and that's things like price and quality and innovation.
CHAKRABARTI: Earlier in the show, we played a clip from Vanita Gupta, who is Associate Attorney General at the Justice Department.
And I think one of the standards that she laid out, though not in exclusively legal terms, but in terms of how the Biden administration is looking at this, is that antitrust law should protect not only competitive marketplaces, but, as she said, "Free and fair competition is essential to economic freedom and without that, it threatens innovation."
Now, Google is alleged to have basically done a pay to play kind of situation to keep other search engines, out of browsers as the default search. Does that not produce an anti-competitive environment, Matt?
SCHRUERS: So when we walk into the grocery store, you can see a big display, often right in the front, of perhaps one of the most prominent brands of soda or beer or chips. And that may well be the product that you're going to buy anyway, but that brand is paying for that visibility. And we accept that in the physical world. And yet the government's taking the position that in the digital space, that's unacceptable. And that doesn't really seem to jive.
These are companies that the administration is pursuing that are among America's most favored institutions. They love these products. They're free. And so we have to apply the traditional yardsticks for measuring consumers welfare. What are prices doing? What's happening with quality? What's happening with innovation? And Google is a product that's free to consumers and even their competitors.
The government's witness is on the stand saying, "We can't keep up with Google because it continually improves its search results." That's a government witness. And that's how competition is supposed to work.
CHAKRABARTI: It's interesting when you mentioned the grocery store aisle analogy. I just put my mind in the cereal aisle for a second.
And yeah, we do see a lot of brands, but I would offer the counterargument that a lot of those brands are just owned by a very small number of actual food companies. So it's actually a pretty narrow marketplace when it comes to the companies that dominate those shelves. But this grocery store analogy is actually one that Michael Cusumano from MIT was also thinking about.
And when we talked to him, he gave us a different conclusion, and here it is.
CUSUMANO: Paying for space in supermarket shelves, there's hundreds, thousands of products, many vendors. None of them has a market share over a couple of percent, usually in those markets. But here, we're talking about companies that essentially control the entire market.
Two companies, colluding with each other for essentially a way to share the profits. And that's what they're doing.
CHAKRABARTI: So just to be clear, the companies that Cusumano are talking about are Google with its 90 percent search market share and Microsoft. Bing has what, 5%, 6% or 7%. But you want to respond to that, Matt?
SCHRUERS: It's working on this somewhat 20th century perception that the only way to get information is search engines, and certainly they're a powerful tool. But increasingly we're seeing people turning to voice assistants, to AI, to vertical products for getting particular information. If you want a restaurant recommendation, or if you want to travel or stay somewhere, you may not be searching on a search engine, you're searching on a particular app.
And so consumers have lots of options for getting information, the market for answers is enormous, but let me return to your cereal example. Because I think it's a great point that we're actually seeing a lot of consolidation across the U. S. economy, and consumers are worried about rising prices on essentials, on gas and health care and drugs and DOJ is focusing on persecuting a free product.
Where the competition is literally four clicks away. It just doesn't seem to jive.
CHAKRABARTI: I don't know about that free. Yeah, it's free to use, but the cost is eventually paid. I'm thinking about Shoshana Zuboff's very powerful thesis about surveillance capitalism. But hold on for a second Matt.
Tim Wu, I know you want to jump back in here. Go ahead.
WU: Yeah, sure. This is a very small thing, but I think Michael was referring to two companies splitting the market, being Apple and Google.
CHAKRABARTI: Apple and Google. Okay.
WU: In other words, yeah, sorry, that they have cut a deal, somewhere between $10 and $20 billion a year to divide the proceeds of search, which is very lucrative markets.
I just wanted to, sorry, make that clear. I think the, I think the grocery, I think for reasons said, the grocery store metaphor is not really that helpful. As there was a monopoly grocery store and there was one product or something. Frankly, it would be anti-competitive, and I think the Justice Department should be prosecuting that grocery store.
When the conditions are right, there's no sort of iron law that says that grocery stores are exempt from the antitrust law. So it's just a metaphor and not even a particularly good one. I agree with Matt somewhat about traditional values, antitrust law has been around for a hundred years. And its traditional values and the traditions of it are opposition to monopoly abuse, whether it's Standard Oil, AT&T, IBM, you name it, some of the stuff he's talking about, consumer welfare, these are more recent trends.
Began in the Reagan administration, and I think they're coming to be, I think there is a return to a more traditional antitrust, which has some of the interests we're talking about. I could say more, but I think the return is to American tradition, which is different than what he's talking about.
CHAKRABARTI: We're going to talk about that in a second, but the consumer welfare standard having come about from Robert Bork, right?
And then now it looks like the Biden administration is moving towards more of a democracy or citizen welfare standard. But Matt, I wanted to give you a little bit of more space here. What is your, what do you see the arguments that Google's bringing to the trial that could potentially be convincing that it might be big, but it's not behaving in a monopolistic manor.
You talked about the other options that folks had, the four clicks, might even be less. Like I could just go to my Search browser right now and put in Bing.com, right? But in terms of what might can be convincing to overwhelm the pay to play evidence that seems to be coming to trial. What would that be?
SCHRUERS: So Google's argument, obviously, is that consumers choose it because it provides the best results. And there's strong evidence of that. Even Bing is, its top search result is Google, and Nadella acknowledged this in the case.
It is the fact that consumers prefer that. And while many consumers don't change the defaults for Google products in Microsoft, a overwhelming majority of consumers actually change the default, which on Microsoft products is Bing, to Google because it provides them better results.
And so we're seeing pretty clear evidence of consumers making choices in the marketplace. This is pretty clearly an example of the government picking winners and losers. And we've got Bing's CEO saying our product isn't as good.
And yet the government is trying to drive consumers towards that product and away from one that their preferences reveal they prefer, and it should worry us if the government is saying, "We're going to engage in structural relief." Which is basically a euphemism for breaking up big companies.
Because we are concerned about their size. We've long said big isn't bad. It's about bad behavior.
CHAKRABARTI: Matt Schruers, president of the Computer and Communications Industry Association. It's an association that includes Google as one of its members. Thank you so much for joining us.
SCHRUERS: My pleasure.
CHAKRABARTI: Tim, Matt brings up a really interesting point.
Let me paraphrase it this way. Right now, do you see the government as going after a company that it doesn't like, but consumers love, and could that potentially be an abuse of antitrust statutes?
WU: No, I don't think it's that way at all. I don't think they have any particular animus against Google.
I just think they feel some duty to take a very close look at the most powerful private monopolies in existence and figure out whether or not they're breaking the law. It wasn't even our administration that brought this case. It was the last administration. And what they found, I think, most strikingly, was this deal with Apple.
Keep saying between $10 and $18 billion dollars, apparently, to split the market. It's actually a pretty straightforward case. And we can talk about this, and fair competition, one click away, but what is Google getting for $18 billion if it is the best product in the world? Why is it paying everybody to use it?
That is a huge fact that I don't think they have a really good answer for. I think this is a very, a simple case, a market division case. Michael said it, you put this money on the table, let's take this market. And that's, it's very important to keep people up, out.
And the antitrust laws have always been about promoting competition and this is anti-competitive.
CHAKRABARTI: Yeah. So what I want to do for the last few minutes of the show, Tim, is talk about what you were mentioning before. And that is, you're right, this case was initially begun under the previous administration, but the folks that President Biden has appointed to key positions at the FTC, he brought you on for a little while to be a special assistant on technology and competition policy. It does seem as if there's quite a big philosophical shift that's taken place in the Biden administration around the dangers of monopolies, right?
Moving away from that consumer welfare standard to, I'd say, a democracy welfare standard. Which echoes back to, as you know very well, probably better than anyone, the era of Louis Brandeis and trustbusting, is that right?
WU: Yeah, I think that's exactly right. I think that the president felt very strongly that things had gotten out of whack. That we had been too tolerant of wealth inequality, a raw deal for labor. And big companies accumulating massive amounts of wealth, and antitrust is one of the traditional tools for scrutinizing private power.
The role model for the president, I think, was both FDR and Theodore Roosevelt, who were from different parties, but both had a very strong sense that in a democracy you have to hold monopolies to account. Theodore Roosevelt was actually the clearest on this. He said, "If we don't do something about the kind of power being wielded by the trust monopolies, the people are going to revolt.
They think the government needs to be on their side."
So you know, the president broadly said, we need to, he didn't say, "Bring this case, bring that." He doesn't do that. He didn't say, "I have a theory about Section 7." He said, "We need to take the people's side here against private power."
And that led to an enormous reinvigoration of the antitrust laws, including this campaign. These cases, a tough, tougher scrutiny of big tech, which I think is something that people want, frankly.
CHAKRABARTI: And I would also say that I think in the world we live in and are heading towards, the power, the potential monopolistic power of these technology companies is even greater than the oil or railroad companies of the 19th and 20th century, because ultimately, we as individuals are the product.
That's how these tech companies work. Again, I'm just going to mention "Surveillance Capitalism" by Shoshana Zuboff and saying, "Nothing is free." So if a very small number, tiny number, we're talking about two, three companies, literally have control of the world's information that humanity is pouring into digital spaces.
That makes then ostensibly more powerful than nation states, does it not? Is that one of the reasons why the Biden administration feels that it's maybe time to step in and reassess how much power these companies should have?
WU: I think the answer is clearly yes, and I think it comes right from the president.
One of the reasons the president decided to run was he felt that things had gotten out of control in American discourse and democracy was under threat. And one of the main reasons is because people are being fed the stuff that makes them angry, crazy, and polarized. And that's not directly necessarily related to antitrust, but it is related to private power.
You keep making the point, which I think is right. Is that these biggest tech companies, especially the ones that deal on information, have an enormous impact on speech, and they know almost everything about us. That's one reason it's crazy the trial's so closed, because they know everything about us.
We don't get to know anything about them. And I think the time has come for a reckoning, and frankly, this is the democratic process working. This is the people saying we need more scrutiny of private power.
This program aired on October 4, 2023.