antitrust Archives

Lawfaring

Fining companies who have spare billions down the backs of their couches is pointless, but what about threatening their executives with prosecution? In a scathing ruling (PDF), US District Judge Yvonne Gonzales Rogers finds that Apple’s vice-president of finance, Alex Roman, “lied outright under oath” and that CEO Tim Cook “chose poorly” in failing to follow her injunction in Epic Games v. Apple. She asks the US Attorney for the Northern District of California to investigate whether criminal contempt proceedings are appropriate. “This is an injunction, not a negotiation.”

As noted here last week, last year Google lost the similar Epic Games v. Google. In both cases, Epic Games complained that the punishing commissions both companies require of the makers of apps downloaded from their app stores were anti-competitive. This is the same issue that last week led the European Commission to announce fines and restrictions against Apple under the Digital Markets Act. These rulings could, as Matt Stoller suggests, change the entire app economy.

Apple has said it strongly disagrees with the decision and will appeal – but it is complying.

At TechRadar, Lance Ulanoff sounds concerned about the impact on privacy and security as Apple is forced to open up its app store. This argument reminds of a Bell Telephone engineer who confiscated a 30-foot cord from Woolworth’s that I’d plugged in, saying it endangered the telephone network. Apple certainly has the right to market its app store with promises of better service. But it doesn’t have the right to defy the court to extend its monopoly, as Mike Masnick spells out at Techdirt.

Masnick notes the absurdity of the whole thing. Apple had mostly won the case, and could have made the few small changes the ruling ordered and gone about its business. Instead, its executives lied and obfuscated for a few years of profits, and here we are. Although: Apple would still have lost in Europe.

A Perplexity search for the last S&P 500 CEO to be jailed for criminal contempt finds Kevin Trudeau. Trudeau used late-night infomercials and books to sell what Wikipedia calls “unsubstantiated health, diet, and financial advice”. He was sentenced to ten years in prison in 2013, and served eight. Trudeau and the Federal Trade Commission formally settled the fines and remaining restrictions in 2024.

The last time the CEO of a major US company was sent to prison for criminal contempt? It appears, never. The rare CEOs who have gone to prison, it’s typically been for financial fraud or insider trading. Think Worldcom’s Bernie Ebbers. Not sure this is the kind of innovation Apple wants to be known for.

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Reuters reports that 23andMe has, after pressure from many US states, agreed to allow a court-appointed consumer protection ombudsman to ensure that customers’ genetic data is protected. In March, it filed for bankrupcy protection, fulfilling last September’s predictions that it would soon run out of money.

The issue is that the DNA 23andMe has collected from its 15 million customers is its only real asset. Also relevant: the October 2023 cyberattack, which, Cambridge Analytica-like, leveraged hacking into 14,000 accounts to access ancestry data relating to approximately 6.9 million customers. The breach sparked a class action suit accusing the company of inadequate security under the Health Insurance Portability and Accountability Act (1996). It was settled last year for $30 million – a settlement whose value is now uncertain.

Case after case has shown us that no matter what promises buyers and sellers make at the time of a sale, they generally don’t stick afterwards. In this case, every user’s account of necessity exposes information about all their relatives. And who knows where it will end up and for how long the new owner can be blocked from exploiting it?

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There’s no particular relationship between the 23andMe bankruptcy and the US government. But they make each other scarier: at 404 Media, Joseph Cox reported two weeks ago that Palantir is merging data from a wide variety of US departments and agencies to create a “master database” to help US Immigration and Customs Enforcement target and locate prospective deportees. The sources include the Internal Revenue Service, Health and Human Services, the Department of Labor, and Housing and Urban Development; the “ATrac” tool being built already has data from the Social Security Administration and US Citizenship and Immigration Services, as well as law enforcement agencies such as the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the U.S. Marshals Service.

As the software engineer and essayist Ellen Ullman wrote in 1996 in her book Close to the Machine, databases “infect” their owners with the desire to link them together and find out things they never previously felt they needed to know. The information in these government databases was largely given out of necessity to obtain services we all pay for. In countries with data protection laws, the change of use Cox outlines would require new consent. The US has no such privacy laws, and even if it did it’s not clear this government would care.

“Never volunteer information,” used to be a commonly heard-mantra, typically in relation to law enforcement and immigration authorities. No one lives that way now.

Illustrations: DNA strands (via Wikimedia).

Wendy M. Grossman is the 2013 winner of the Enigma Award. Her Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series. She is a contributing editor for the Plutopia News Network podcast. Follow on Mastodon or Bluesky.

Three times a monopolist

It’s multiply official: Google is a monopoly.

The latest such ruling is a decision handed down on April 17 by Judge Leonie Brinkema in United States of America v. Google LLC, a 2023 case that focuses on Google’s control over both the software publishers use to manage online ads and the exchanges where those same ads are bought and sold. In August 2024, Judge Amit P. Mehta also ruled Google was a monopoly; that United States of America v. Google LLC, filed in 2020, focused on Google’s payments to mobile phone companies, wireless carriers, and browser companies to promote its search engine. Before *that*, in 2023 a jury found in Epic Games v. Google that Google violated antitrust laws with respect to the Play Store and Judge James Donato ordered it to allow alternative app stores on Android devices by November 1, 2024. Appeals are proceeding.

Google has more trouble to look forward to. At The Overspill, veteran journalist Charles Arthur is a member of a class representative bringing a UK case against Google. The AdTechClaim case seeks £13.6 billion in damages, claiming that Google’s adtech system has diverted revenues that otherwise would have accrued to UK-based website and app publishers. Reuters reported last week on the filing of a second UK challenge, a £5 billion suit representing thousands of businesses who claim Google manipulated the search ecosystem to block out rivals and force advertisers to rely on its platform. Finally, the Competition and Markets Authority is conducting its own investigation into the company’s search and advertising practices.

It is hard to believe that all of this will go away leaving Google intact, despite the company’s resistance to each one. We know from past experience that fines change nothing; only structural remedies will

The US findings against Google seem to have taken some commentators by surprise, perhaps assuming that the Trump administration would have a dampening effect. Trump, however, seems more exercised about the EU’s and UK’s mounting regulatory actions. Just this week the European Commission fined Apple €500 million and Meta €200 million, the first under the Digital Markets Act, and ordered them to open up user choice within 60 days. The White House has called some of these recent fines a new form of economic blackmail.

I’ve observed before that antitrust cases are often well behind the times, partly because these cases take so long to litigate. It wasn’t until 2024 that Google lost its 2017 appeal to the European Court of Justice in the Foundem search case and was ordered to pay a €2.4 billion fine. That case was first brought in 2009.

In 2014, I imagined that Google’s recently-concluded purchase of Nest smart thermostats might form the basis of an antitrust suit in 2024. Obviously, that didn’t happen; I wish instead the UK government had blocked Google’s acquisition of DeepMind. Partly, because perhaps the pre-monopolization of AI could have been avoided. And partly because I’ve been reading Angus Hanton’s recent book, Vassal State, and keeping it would have hugely benefited Britain.

Unfortunately, forcing Google to divest DeepMind is not on anyone’s post-trial list of possible remedies. In October, the Department of Justice filed papers listing a series of possibilities for the search engine case. The most-discussed of these was ordering Google to divest Chrome. In a sensible world, however, one must hope remedies will be found that address the differing problems these cases were brought to address.

At Big, Matt Stoller suggests that the latest judgment increases the likelihood that Google will be broken up, the first such order since AT&T in 1984. The DoJ, now under Trump’s control, could withdraw, but, Stoller points out, the list of plaintiffs includes several state attorneys general, and the DoJ can’t dictate what they do.

Trying to figure out what remedies would make real change is a difficult game, as the folks at the the April 20 This Week In Tech podcast say. This is unlike the issue around Google’s and Apple’s app stores that the European Commission fines cover, where it’s comparatively straightforward to link opening up their systems to alternatives and changing their revenue structure to ensuring that app makers and publishers get a fairer percentage.

Breaking up the company to separate Chrome, search, adtech, and Android would disable the company’s ability to use those segments as levers. In such a situation Google and/or its parent, Alphabet, could not, as now, use them in combination to maintain its ongoing data collection and build a durable advantage in training sophisticated models to underpin automated services. But would forcing the company to divest those segments create competition in any of them? Each would likely remain dominant in its field.

Yet something must be done. Even though Microsoft was not in the end broken up in 2001 when the incoming Bush administration settled the case, the experience of being investigated and found guilty of monopolistic behavior changed the company. None of today’s technology companies are likely to follow suit unless they’re forced; these companies are too big, too powerful, too rich, and too arrogant. If Google is not forced to change its structure or its business model, all of them will be emboldened to behave in even worse ways. As unimaginable as that seems.

Illustrations: “The kind of anti-trust legislation we need”, by J. S. Pughe (via Wikimedia.

Lost futures

In early December, the Biden administration’s Department of Justice filed its desired remedies, having won its case that Google is a monopoly. Many foresaw a repeat of 2001, when the incoming Bush administration dropped the Clinton DoJ’s plan to break up Microsoft.

Maybe not this time. In its first filing, Trump’s DoJ still wants Google to divest itself of the Chrome browser and intends to bar it from releasing other browsers. The DoJ also wants to impose some restrictions on Android and Google’s AI investments.

At The Register, Thomas Claburn reports that Mozilla is objecting to the DoJ’s desire to bar Google from paying other companies to promote its search engine by default. Those payments, Mozilla president Mark Surman admits to Claburn, keep small independent browsers afloat.

Despite Mozilla’s market shrinkage and current user complaints, it and its fellow minority browsers remain important in keeping the web open and out of full corporate control. It’s definitely counter-productive if the court, in trying to rein in Google’s monopoly, takes away what viability these small players have left. They are us.

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On the other hand, it’s certainly not healthy for those small independents to depend for their survival on the good will of companies like Google. The Trump administration’s defunding of – among so many things – scientific research is showing just how dangerous it can be.

Within the US itself, the government has announced cuts to indirect funding, which researchers tell me are crippling to universities; $800 million cut in grants to Johns Hopkins, $400 at Columbia University, and so many more.

But it doesn’t stop in the US or with the cuts to USAID, which have disrupted many types of projects around the world, some of them scientific or medical research. The Trump administration is using its threats to scientific funding across the world to control speech and impose its, um, values. This morning, numerous news sources report that Australian university researchers have been sent questionnaires they must fill out to justify their US-funded grants. Among the questions: their links to China and their compliance with Trump’s gender agenda.

To be fair, using grants and foreign aid to control speech is not a new thing for US administrations. For example, Republican presidents going back to Reagan have denied funding to international groups that advocated abortion rights or provided abortions, limiting what clinicians could say to pregnant patients. (I don’t know if there are Democratic comparables.)

Science is always political to some extent: think the for stating that the earth was not the center of the universe. Or take intelligence: in his 1981 book The Mismeasure of Man, Stephen Jay Gould documented a century or more of research by white, male scientists finding that white, male scientists were the smartest things on the planet. Or say it inBig Tobacco and Big Oil, which spent decades covering up research showing that their products were poisoning us and our planet.

The Trump administration’s effort is, however, a vastly expanded attempt that appears to want to squash anything that disagrees with policy, and it shows the dangers of allowing any one nation to amass too much “soft power”. The consequences can come quickly and stay long. It reminds me of what happened in the UK in the immediate post-EU referendum period, when Britain-based researchers found themselves being dropped from cross-EU projects because they were “too risky”, and many left for jobs in other countries where they could do their work in peace.

The writer Prashant Vaze sometimes imagines a future in which India has become the world’s leading scientific and technical superpower. This imagined future seems more credible by the day.

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It’s strange to read that the 35-year-old domestic robots pioneer, iRobot, may be dead in a year. It seemed like a sure thing; early robotics researchers say that people were begging for robot vacuum cleaners even in the 1960s, perhaps inspired by Rosie, The Jetsons‘ robot maid.

Many people may have forgotten (or not known) the excitement that attended the first Roombas in 2002. Owners gave them names, took them on vacation, and posted videos. It looked like the start of a huge wave.

I bought a Roomba in 2003, reviewing it so enthusiastically that an email complained that I should have said I had been given it by a PR person. For a few happy months it wandered around cleaning.

Then one day it stopped moving and I discovered that long hair paralyzed it. I gave it away and went back to living with moths.

The Roomba now has many competitors, some highly sophisticated, run by apps, and able to map rooms, identify untouched areas, scrub stains, and clean in corners. Even so, domestic robots have not proliferated as imagined 20 – or 12 – years ago. I visit people’s houses, and while I sometimes encounter Alexas or Google Assistants, robot vacuums seem rare.

So much else of smart homes as imagined by companies like Microsoft and IBM remain dormant. It does seem like – perhaps a reflection on my social circle – the “smart home” is just a series of remote-control apps and outsourced services. Meh.

Illustrations: Rosie, the Jetsons‘ XB-500 robot maid, circa 1962.

Playing monopoly

If you were going to carve up today’s technology giants to create a more competitive landscape, how would you do it? This time the game’s for real. In August, US District Judge Amit Mehta ruled that, “Google is a monopolist and has acted as one to maintain its monopoly.” A few weeks ago, the Department of Justice filed preliminary proposals (PDF) for remedies. These may change before the parties reassemble in court next April.

Antitrust law traditionally aimed to ensure competition in order to create both a healthy business ecosystem and better serve consumers. “Free” – that is, pay-with-data – online services have been resistant to antitrust analysis through decades of focusing on lowered prices to judge success.

It’s always tempting to think of breaking monopolists up into business units. For example, a key moment in Meta’s march to huge was its purchase of WhatsApp (2014) and Instagram (2012), turning baby competitors into giant subsidiaries. In the EU, that permission was based on a promise, which Meta later broke, not to merge the three companies’ databases. Separating them back out again to create three giant privacy-invading behemoths in place of one is more like the sorceror’s apprentice than a win.

In the late 1990s case against Microsoft, which ended in settlement, many speculated about breaking it up into Baby Bills. The key question: create clones or divide up the Windows and office software?

In 2013, at ComputerWorld Gregg Keizer asked experts to imagine the post-Microsoft-breakup world. Maybe the office software company ported its products onto the iPad. Maybe the clones eventually diverged and one would have dominated search. Keizer’s experts generally agree, though, that the antitrust suit itself had its effects, slowing the company’s forward progress by making it fear provoking further suits, like IBM before it.

In Google’s case, the key turning point was likely the 2007-2008 acquisition of online advertising pioneer DoubleClick. Google was then ten years old and had been a public company for almost four years. At its IPO Wall Street pundits were dismissive, saying it had no customer lock-in and no business model.

Reading Google’s 2008 annual report is an exercise in nostalgia. Amid an explanation of contextual advertising, Google says it has never spent much on marketing because the quality of its products generated word of mouth momentum worldwide. This was all true – then.

At the time, privacy advocates opposed the DoubleClick merger. Both FTC and EU regulators raised concerns, but let it go ahead to become the heart of the advertising business Susan Wojcicki and Sheryl Sandberg built for Google. Despite growing revenues from its cloud services business, most of Google’s revenues still come from advertising.

Since then, Mehta ruled, Google cemented its dominance by paying companies like Apple, Samsung, and Verizon to make its search engine the default on the devices they make and/or sell. Further, Google’s dominance – 90% of search – allows it to charge premium rates for search ads, which in turn enhances its financial advantage. OK, one of those complaining competitors is Microsoft, but others are relative minnows like 15-year-old DuckDuckGo, which competes on privacy, buys TV ads, and hasn’t cracked 1% of the search market. Even Microsoft’s Bing, at number two, has less than 4%. Google can insist that it’s just that good, but complaints that its search results are degrading are everywhere.

Three aspects of the DoJ’s proposals seized the most attention: forcing Google to divest itself of the Chrome browser; second, if that’s not enough, to divest the Android mobile operating system; and third a block on paying other companies to make Google search the default. The latter risks crippling Mozilla and Firefox, and would dent Apple’s revenues, but not really harm Google. Saving $26.3 billion (2021 number) can’t be *all* bad.

At The Verge, Lauren Feiner summarizes the DoJ’s proposals. At the Guardian, Dan Milmo notes that the DoJ also wants Google to be barred from buying or investing in search rivals, query-based AI, or adtech – no more DoubleClicks.

At Google’s blog, chief legal officer Kent Walker calls the proposals “a radical interventionist agenda”. He adds that it would chill Google’s investment in AI like this is a bad thing, when – hello! – a goal is ensuring a competitive market in future technologies. (It could even be a good thing generally.)

Finally, Walker claims divesting Chrome and/or Android would endanger users’ security and privacy and frets that it would expose Americans’ personal search queries to “unknown foreign and domestic companies”. Adapting a line from the 1980 movie Hopscotch, “You mean, Google’s methods of tracking are more humane than the others?” While relaying DuckDuckGo’s senior vice-president’s similar reaction, Ars Technica’s Ashley Belanger dubs the proposals “Google’s nightmare”.

At Techdirt, Mike Masnick favors DuckDuckGo’s idea of forcing Google to provide access to its search results via an API so competitors can build services on top, as his company does with Bing. Masnick wants users to become custodians and exploiters of their own search histories. Finally, at Pluralistic, Cory Doctorow likes spinning out – not selling – Chrome. End adtech surveillance, he writes, don’t democratize it.

It’s too early to know what the DoJ will finally recommend. If nothing is done, however, Google will be too rich to fear future lawsuits.

Illustration: Mickey Mouse as the sorceror’s apprentice in (1940).

Wendy M. Grossman is the 2013 winner of the Enigma Award. Her Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series. She is a contributing editor for the Plutopia News Network podcast. Follow on Mastodon or Bluesky.

Game of carrots

The big news of the week has been the result of the Epic Games v. Google antitrust trial. A California jury took four hours to agree with Epic that Google had illegally tied together its Play Store and billing service, so that app makers could only use the Play Store to distribute their apps if they also used Google’s service for billing, giving Google a 30% commission. Sort of like, I own half the roads in this town, and if you want to sell anything to my road users you have to have a store in my mall and pay me a third of your sales revenue, and if you don’t like it, tough, because you can’t reach my road users any other way. Meanwhile, the owner of the other half of the town’s roads is doing exactly the same thing, so you can’t win.

At his BIG Substack, antitrust specialist Matt Stoller, who has been following the trial closely, gloats, “the breakup of Big Tech begins”. Maybe not so fast: Epic lost its similar case against Apple. Both of these cases are subject to appeal. Stoller suggests, however, that the latest judgment will carry more weight because it came from a jury of ordinary citizens rather than, as in the Apple case, a single judge. Stoller believes the precedent set by a jury trial is harder to ignore in future cases.

At The Verge, Sean Hollister, who has been covering the trial in detail, offers a summary of 20 key points he felt the trial established. Written before the verdict, Hollister’s assessment of Epic’s chances proved correct.

Even if the judgment is upheld in the higher courts, it will be a while before users see any effects. But: even if the judgment is overturned in the higher courts, my guess is that the technology companies will begin to change their behavior at least a bit, in self-defense. The real question is, what changes will benefit us, the people whose lives are increasingly dominated by these phones?

I personally would like it to be much easier to use an Android phone without ever creating a Google account, and to be confident that the phone isn’t sending masses of tracking data to either Google or the phone’s manufacturer.

But…I would still like to be able to download the apps I want from a source I can trust. I care less about who provides the source than I do about what data they collect about me and the cost.

I want that source to be easy to access, easy to use, and well-stocked, defining “well-stocked” as “has the apps I want” (which, granted, is a short list). The nearest analogy that springs to mind is TV channels. You don’t really care what channel the show you want to watch is on; you just want to be able to watch the show without too much hassle. If there weren’t so many rights holders running their own streaming services, the most sensible business logic would be for every show to be on every service. Then instead of competing on their catalogues, the services would be competing on privacy, or interface design, or price. Why shouldn’t we have independent app stores like that?

Mobile phones have always been more tightly controlled than the world of desktop computing, largely because they grew out of the tightly controlled telecommunications world. Desktop computing, like the Internet, served first the needs of the military and academic research, and they remain largely open even when they’re made by the same companies who make mobile phone operating systems. Desktop systems also developed at a time when American antitrust law still sought to increase competition.

It did not stay that way. As current FTC chair Lina Khan made her name pointing out in 2017, antitrust thinking for the last several decades has been limited to measuring consumer prices. The last big US antitrust case to focus on market effects was Microsoft, back in 1995. In the years since, it’s been left to the EU to act as the world’s antitrust enforcer. Against Google, the EU has filed three cases since 2010: over Shopping (Google was found guilty in 2017 and fined €2.4 billion, upheld on appeal in 2021); Android, over Google apps and the Play Store (Google was found guilty in 2018 and fined €4.3 billion and required to change some of its practices); and AdSense (fined €1.49 billion in 2019). But fines – even if the billions eventually add up to real money – don’t matter enough to companies with revenues the size of Google’s. Being ordered to restructure its app store might.

At the New York Times, Steve Lohr compares the Microsoft and Epic v Google cases. Microsoft used its contracts with PC makers to prevent them from preinstalling its main web browser rival, Netscape, in order to own users’ path into the accelerating digital economy. Google’s contracts instead paid Apple, Samsung, Mozilla, and others to favor it on their systems – “carrots instead of sticks,” NYU law professor Harry First told Lohr.

The best thing about all this is that the Epic jury was not dazzled by the incomprehensibility effect of new technology. Principles are coming back into focus. Tying – leveraging your control over one market in order to dominate another – is no different if you say it in app stores than if you say it in gas stations or movie theaters.

Illustrations: “The kind of anti-trust legislation that is needed”, by J.S. Pughe (via Library of Congress).