The Future of the US Internet is Enforced Interoperability
In DOJ v. Google last week, the DOJ submitted their proposed ‘remedies’ for the Google monopolization finding by the Federal District Court back in August. Having found Google held a monopoly on general search and in some parts of Ads markets, the question is now what to do about it. Questions about whether it will hold up on the (years) of appeals aside, in the months since the ruling it has become clear that there were stronger and weaker parts of the overall case.
Questions around Google’s declining search market share and ease of consumer choice in the Search marketplace may derail the DOJs case, but what will be harder for Google and tech companies to shake are the enforced lock-in of large commercial deals and/or contract terms that reduce the chance of competitors to arise.
You see this in the monopoly case around Google’s $20 billion annual payment to Apple to retain default search status as well as in the other DOJ case around header bidding and using a ‘first look’ feature to effectively stave off non-Google ad server competition. You see this dynamic with Apple taking 30% off the top of any in-app transaction, and 27% on external payment platforms on in-app purchases, leading to a huge legal clash and semi-loss to Epic Games over these enforced payments. You see this with the FTC’s suit against Amazon for using its market power to “stifle competition on price, product selection, quality” essentially through a process of forcing retailers to rely on Amazon for profitability and scale, then turning around and using that data to create systems that reduce their ability to compete with Amazon products directly.
It makes sense that our legal system is bent towards this point of view over other concerns, following historical cases like US v. Microsoft in the 90s and US v. IBM in the late 60s focused on enforced product bundling and market monopolization respectively, with DOJ success in the former and failure in the latter case. In the IBM case market share and market capitalization were not enough to prove monopolistic malfeasance, but when combined with enforced bundling of other products and services to the detriment of competition as in the Microsoft case, that turned out to be enough to win.
The same is true today. The FTC has lost cases repeatedly when trying to make the big-picture case, with Amazon prevailing twice in cases due overly broad critiques that were tossed due to “lack of factual details in the complaint.” Similarly, with the FTC case against Meta was dismissed in 2021 due to being ‘legally insufficient’ to show harm, with the summary line saying that the FTC “had provided no proof for its assertion that Facebook held a monopoly position in social networking, but, instead, seemed to assume that everyone simply saw it that way.”
America’s legal system has effectively been shouting the same thing for the last half century regarding technology monopolies that rise and fall in each era of advancement – it’s not the size that matters, it’s how you use it.
In DOJs proposed remedies for general search monopolization last week, ideas ranged from banning default deals, to promoting rival services, to sharing user data, to spinning off Android and Chrome entirely. This laundry list gives the court options, and in the EU they have chosen to enforce a more user-choice-centric set of remedies than the US will likely choose. Looking at our own case law and history, it’s more likely that the court will take up remedies related to prohibiting defaults, enforcing ease of interoperability across systems, and reducing the use of AI and other automated means of influencing user choice towards your preferred set of tools.
While the EU has forced Google to remove Maps from the Search page, it’s more likely for the US to force Google to either agree with some combination of DOJs recommendations around sharing (privacy-safe) “indexes, data, feeds, and models used for Google search” in order to increase competition, lower the barriers to do so, and let the market create what it can. Similarly, Apple is being targeted by the DOJ in a large case explicitly for the lack of interoperability with the iPhone and App Store following a DOJ policy shift to look at these questions more directly.
A few weeks ago I talked about how the global internet was splitting into four different experiences – the internet of the US, of the EU, of China, and the mobile-first internet of SE Asia, India, and parts of Africa. The question was really what the US would do in the face of the choices that led to the development of the other three – in the command-based digital economy of China, in the enforced dampening of digital primacy in the EU, or in the mobile-primacy of SE Asia – It seems that that answer is our own, one that harbors competition and ‘level playing field’ logic over any strategic direction. Rather than tightly regulating new AI or old platforms, the US is likely comfortable with playing referee to the digital economy. Instead of active participation like China or the parent/guardian posture like the EU, the US takes more of SE Asia’s approach to respecting innovation while having a lighter touch on nation-wide content restrictions. To the contrary, recent online gambling legalization in many states has widely expanded the aperture of ethically questionable digital commerce in the US.
As AI enters the equation this position is worth calling out and defending explicitly. There are open questions of how to effectively compensate people when every available datapoint is just another input into an AI system. Tackling the hard question of desiring high interoperability while respecting intellectual content will be one of the central legal and bureaucratic issues of our age. However we feel about this dynamic, it’s clear that our legal system is set up to desire technical interoperability and user choice as the core means of keeping monopolistic control in check, and so we have no choice but to figure out how to adapt. More on that next post.