Regulatory authorities around the world have been deeply troubled by the concentration of economic power in private hands. They are uncertain about how influence peddling arising out of gigantic pools of wealth impacts policy-making in countries. The United States of America — the so-called land of opportunity and incredible wealth creation — has, on occasion, played the role of an iconoclast by breaking up giant corporations that garnered so much wealth and power that they stifled potential rivals and posed a threat to the spirit of free enterprise. The latest move by the US department of justice to file a lawsuit against Google for illegally using its marketing muscle to hobble rivals has raised the prospect of a possible break-up of the technology giant worth $1 trillion. It is still too early to say whether the lawsuit will succeed but it marks the first major crackdown on a big technology company since the unsuccessful attempt to carve up Microsoft back in 1998. Google accounts for nearly 90 per cent of all general search engine queries in the US. The justice department’s lawsuit contends that no one can realistically challenge Google’s dominance in search and search advertising. The question is whether that dominance is justification enough for breaking up the corporation.
The US justice department is going down a very slippery course. It must be said that American regulators have achieved some success in the past when they sought to limit the power of corporations. In 1911, John D. Rockefeller’s Standard Oil was accused of using predatory pricing on the strength of its monopoly in the oil business. The oil behemoth was eventually broken up into 34 entities. But the irony is that two of the largest parts of the old Rockefeller empire — Exxon and Mobil — eventually merged in November 1999 and became one of the largest oil companies in the world. Similarly, Bell System was broken into seven regional companies — called Baby Bells — in 1982 after it agreed to a consent decree to settle a lawsuit that charged it with predatory behaviour.
Google has been locked in a range of lawsuits around the world for anti-competitive practices and has had to fork out billions of dollars in penalties. The European Union fined Google $1.7 billion in 2019 for stopping websites from using Google’s rivals to find advertisers. There is one interesting development that comes out of the Google lawsuit. Reports suggest that Apple has started to show its own website search results when iPhone users tap queries on their home screen when using iOS 14. Google is the default search on an iPhone. If the lawsuit against Google blows up into something big, Apple may be ready to pick up the pieces from a fragmented, but hugely lucrative, search engine market.