A Welcome Shift in the Antitrust Climate for Digital Industries
September 13, 2024
The antitrust climate has been shifting for digital industries, and a weather report is in order.
Well into the 2010s, competition (and tax) regulators in the United States and Europe took an essentially hands-off approach to burgeoning digital companies in search, social media, and e-marketing. This passivity helped companies like Google, Meta, and Apple grow unchecked, both organically and by acquiring potential smaller competitors. As a result, a handful of gigantic businesses referred to collectively as Silicon Valley achieved the sort of dominance associated with turn-of-the-twentieth-century monopolists in the U.S. railroad and oil industries.
Consumers had few options; would-be upstart rivals that might have offered better, or at least different, services couldn’t gain traction. In the social media sector, dominant companies promised but didn’t deliver effective self-regulation of hateful, violent, and dangerously false expression — the side effects of business models that promoted sensational content which generated clicks, likes, and shares in the interest of attracting advertising revenue.
The regulatory atmosphere gradually began to shift in 2016, as officials in the European Union ran out of patience with the largely U.S.-based digital behemoths. The E.U. launched tax and competition investigations, which proceeded slowly, as the target companies resisted, tooth and nail. But the Europeans persisted, and eventually their American counterparts mobilized as well. Lately, these efforts have borne fruit.
The New York Times summarized these developments in a recent dispatch:
The European Union’s highest court delivered the 27-nation bloc a major victory on Tuesday in its yearslong campaign to regulate the technology industry, ruling against Apple and Google in two landmark legal cases.
The decisions, issued by the Court of Justice of the European Union, were seen as an important test of efforts in Europe to clamp down on the world’s largest technology companies. Apple and Google have been frequent targets for E.U. regulators, and the companies have battled the cases with appeals.
In the Apple case, the E.U. court sided with a European Union order from 2016 for Ireland to collect 13 billion euros ($14.4 billion today) in unpaid taxes from the company. Regulators determined that Apple had struck illegal deals with the Irish government that allowed it to pay almost nothing in taxes on its European business for years.
In the Google case, the E.U. court agreed with an earlier decision by the European Commission to fine the company €2.4 billion for giving preferential treatment in Google search results to its own shopping service over those of rivals.
Meanwhile, in the United States, Apple and Google are facing separate regulatory scrutiny. Again, from the Times:
Apple and Google are facing additional legal scrutiny on both sides of the Atlantic. This week, Google landed in U.S. federal court on antitrust charges brought by the Justice Department, which accused the company of abusing its dominance in the digital advertising sector. Last month, a federal judge ruled in a separate case that Google was a monopolist in internet search because it had rigged the search engine market. In December, a federal jury said Google’s management of the Google Play app store had also broken antitrust laws.
Apple also faces a Justice Department antitrust lawsuit over its iPhone policies.
These developments reflect a significant shift in attitudes about antitrust law after decades in which government efforts to restrict monopolists and promote competition were viewed with deep skepticism by legal authorities, especially in the U.S. Recent events also reflect the sheer size and power achieved by Silicon Valley’s titans and the companies’ aggressiveness in taking advantage of their dominance. A lack of self-restraint reached the proverbial tipping point.
Whatever the explanation, the renewed vigilance of regulatory authorities augers well for consumer interests and overall economic health on both sides of the Atlantic.
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