More than a year ago, America’s antitrust police appeared to have finally gained the upper hand in their long-running campaign to rein in the nation’s tech giants.
Within nine months, the Justice Department and a group of states had won back-to-back lawsuits against Google over allegations the company created illegal monopolies in internet search and online advertising technology. And a Federal Trade Commission suit accusing Meta of illegally thwarting nascent competition when it bought Instagram and WhatsApp years earlier had just gone to trial.
In all three cases, the threat of harsh, business-wrenching penalties loomed. That included court-ordered breakups.
But on Wednesday, a federal judge decided against a breakup of Google’s ad tech business, leaving the company largely unscathed. Another judge ruled similarly in the search case a year ago, citing the fast-moving nature of technology. And in November, a federal judge ruled in favor of Meta, deciding that time and technology had passed the case by.
The decisions show the wariness of courts to demand major business changes, even after finding clear-cut antitrust violations, as technology races ahead. They also reflect how deciding whether violations have occurred is an examination of the past, while determining what to do about them requires a look into the future.
Exhibit A? The rapid ascent and disruptive impact of artificial intelligence.
“Dynamic markets pose a real challenge for the courts and have been seen as reason for caution,” said William Kovacic, a law professor at George Washington University and a former chair of the F.T.C.
The Justice Department filed its search suit against Google in 2020, during the waning months of the first Trump administration. And the Biden administration took an aggressive approach to antitrust enforcement, filing suits that seek to curb the market power of the tech giants.
Two more major court tests lie ahead. The F.T.C. and a group of states have sued Amazon, claiming it squeezed sellers in its online marketplace and favored its own offerings. (The F.T.C. sued Amazon again on Monday, claiming the e-commerce giant secretly made advertising more expensive on its website for more than a million companies.) And the Justice Department and states have accused Apple of using its dominance in the smartphone market to thwart competition. That case and the first Amazon lawsuit are both planned for trial in the coming years.
But recent history suggests that relying on the courts to decree harsh sanctions will continue to be an uphill struggle.
In an antitrust case accusing Microsoft of illegally stifling competition in personal computer software more than a quarter-century ago, a federal appeals court found a breakup unwarranted. Even the landmark split-up of AT&T in 1984 over allegations that it illegally monopolized the telecommunications market was the result of a settlement, not a court order.
The courts have been overly cautious when it comes to Big Tech, some legal experts said.
“We’re seeing the inability of the courts to fix the competition problems they have found in these complaints,” said Fiona Scott Morton, an economics professor at the Yale University School of Management and a former Justice Department antitrust official.
In both the Google search and ad tech cases, the judges held separate hearings on proposed fix-it steps, known as remedies. But devising an effective remedy is a tricky undertaking, since the tech industry can change quickly and unpredictably.
Antitrust laws are designed to protect and promote competition to the benefit of consumers and new innovators.
The tech giants have played the long game, supported by armies of highly paid lawyers. Time works to their advantage. The meteoric rise of A.I. has shown how new competitors like Anthropic and OpenAI can thrive. So, the companies argue, judicial caution is the prudent path.
In the Google search case, which produced the first major remedies ruling of the modern internet era, Judge Amit P. Mehta of U.S. District Court for the District of Columbia embraced that view. He ordered Google to share some data with rival companies and put some restrictions on its payments to ensure that its search engine gets prime placement in web browsers and on smartphones.
But he swept aside the government’s proposal for a forced sale of Google’s Chrome browser as too extreme. Courts have great discretion in choosing sanctions, but they “must approach the task of crafting remedies with a healthy dose of humility,” Judge Mehta wrote. “This court has done so.”
Jonathan Kanter, chief of the Justice Department’s antitrust division during the Biden administration, oversaw the government’s court battle against Google in that case. In an interview, he called the few changes in Google’s contracts and data-sharing practices that Judge Mehta ordered a “huge missed opportunity.”
In February, the Justice Department and a group of states said they would appeal the remedies ruling, while Google is challenging the original court decision that it violated antitrust laws.
On Wednesday, Judge Leonie M. Brinkema of U.S. District Court for the Eastern District of Virginia issued a sealed decision that was previewed in a short order posted by the court. Without providing specifics or her reasoning, she said she had ordered Google to change its business practices to benefit competitors.
Some antitrust experts said the ad technology case was a good candidate for a breakup order, since Google’s ad exchange is a separate business and the economic risk of inadvertently causing harm would far less than in Google’s giant search business.
While Mr. Kanter finds the court-ordered sanctions to be disappointingly light-touch, he insists that the antitrust challenge to big tech companies has been worth the pursuit.
The string of suits signaled that antitrust had been reinvigorated, after a two-decade lapse since the Microsoft case in the 1990s, he said. Winning the search and ad tech cases against Google, he said, proved that antitrust law was “alive and well,” setting a precedent and encouraging private litigants.
But to some antitrust experts, the wave of government cases showed the limits of taming the excesses of these corporate superpowers.
“I’m worried that we may be exactly where we would have been had none of these suits been brought,” said Nancy Rose, a professor at the Massachusetts Institute of Technology and a former chief economist in the Justice Department’s antitrust division.
The post Why the Courts Struggle to Tame Big Tech appeared first on New York Times.
