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October 9, 2023: Antitrust lawsuits against Google and Amazon

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Why we should pay more attention to Google – not just the fraud trial of Sam Bankman-Fried.

Why we should pay more attention to Google – not just the fraud trial of Sam Bankman-Fried.

Today: Antitrust lawsuits against Google and Amazon

Two Big Tech monopolies - Google and Amazon - are in a heap of trouble, each facing their own antitrust lawsuit from the U.S. government. Today: a review of what’s going on, and why it’s more important than ever to “abandon Amazon” and “get off Google.”

Get Off Google

• Context. From Insider (Oct 2020) about the DOJ’s antitrust suit against Microsoft: “The court ruled in April 2000 that Microsoft had violated the Sherman Act, and later ordered that Microsoft be broken up into two separate companies.” Microsoft won its appeal in June 2021, but the company allowed the web to thrive...

• From Axios (Sep 1, 2023), a summary of the Dept of Justice's antitrust lawsuit against Google:

At its core, the case now is about two key questions:

  - Whether Google’s exclusive deals with web browsers like Mozilla and its practice of preloading Google on Android as the default search engine are anticompetitive.
  - Whether Google’s Search Ad 360 product discriminates against ad features used by other search engines, like Bing, through slower development of ad tools for non-Google products.

• . . . or as David McCabe and Cecilia Kang put it in the NYT (Sep 6, 2023):

The case centers on whether Google illegally cemented its dominance and squashed competition by paying Apple and other companies to make its internet search engine the default on the iPhone as well as on other devices and platforms.

. . . The Justice Department has accused Google of destroying employees’ instant messages that could have contained relevant information for the case.

• Jason Kint (Sep 5, 2023): "Google is attempting to shield public access . . . This includes remarkable sealing of evidence. It’s what you do when you have extraordinary power beyond governments. The public should be outraged."

• Past guest Gabriel Weinberg, CEO of Duck Duck Go, testified:

Weinberg described the difficulty users face in switching their default to DuckDuckGo away from Google, which he said is “way harder than it needs to be.” He added: “If you switch some of these defaults eventually you’re just going to be switched back to Google if you do nothing.”

• The Tragedy of Google Search (Charlie Warzel in the Atlantic, Sep 22, 2023):

Unlike its streamlined, efficient former self, Google Search is now bloated and overmonetized. It’s harder now to find answers that feel authoritative or uncompromised; a search for healthy toddler snacks is overloaded with sponsored product placement, prompts to engage with “more questions” . . . and endless, keyword-engorged content. Using Google once felt like magic, and now it’s more like rifling through junk mail, dodging scams and generic mailers.

At the heart of the case against Google is a simple question: Does the company command 90 percent of the U.S. search-engine market because its technology is superior and users genuinely prefer it, or because it paid massive sums to companies like Apple to be used as a default service over competitors such as Bing?

• We Finally Have Proof That the Internet Is Worse (Charlie Warzel in the Atlantic, Oct 7, 2023): “Search’s devolution is a familiar story in an economy that demands untenable growth. The trajectory always looks like this: Invent a world-changing technology, scale it up, monetize it, print money, and take it public. . . . with every success, there is more pressure to scale further . . .”

• From Tim Wu in the New York Times (Sep 18, 2023), The Google Trial Is Going to Rewrite Our Future:

Loosening the grip of a controlling monopolist may not always solve the problem at hand (here, an online search monopoly). But it can open up closed markets, shake up the industry and spark innovation in unexpected areas. . . .

Consider the antitrust lawsuit that led to the breakup of AT&T’s telephone monopoly in 1984. At the time, prosecutors were focused on lowering the pricing of long-distance telephone calls and giving consumers greater choice. But more important and less anticipated, the breakup helped to jump-start the internet revolution of the 1990s, in part by making it easier for companies to conduct business over phone lines and for customers to connect modems to them.

• See in the NYT, Google Says Switching Away From Its Search Engine Is Easy. It’s Not. (Sep 20, 2023)

• From “How Google Alters Search Queries to Get at Your Wallet,” a Wired article Oct 2, 2023 that has been removed entirely since publication, says that Google actually changes people’s search queries before handing it over to the results engine:

When you enter a query, you might expect a search engine to incorporate synonyms into the algorithm as well as text phrase pairings in natural language processing. But this overhaul went further, actually altering queries to generate more commercial results.

There have long been suspicions that the search giant manipulates ad prices, and now it’s clear that Google treats consumers with the same disdain. The “10 blue links,” or organic results, which Google has always claimed to be sacrosanct, are just another vector for Google greediness, camouflaged in the company’s kindergarten colors.

. . . Say you search for “children’s clothing.” Google converts it, without your knowledge, to a search for “NIKOLAI-brand kidswear,” making a behind-the-scenes substitution of your actual query with a different query that just happens to generate more money for the company, and will generate results you weren’t searching for at all. It’s not possible for you to opt out of the substitution. If you don’t get the results you want, and you try to refine your query, you are wasting your time. This is a twisted shopping mall you can’t escape.

. . . This system reduces search engine quality for users and drives up advertiser expenses. Google can get away with it because these manipulations are imperceptible to the user and advertiser, and the company has effectively captured more than 90 percent market share.

. . . The next time you Google, remember that you’re getting search results that have been skewed—not to help you find what you’re looking for, but to boost the company’s profits.

Abandon Amazon

• The FTC Sues to Break Up Amazon Over an Economy-Wide “Hidden Tax” (BIG by Matt Stoller, Sep 27, 2023): “The Federal Trade Commission and 17 states [have] filed an antitrust suit against Amazon, one of the biggest companies in the world, for monopolization and unfair methods of competition.”

• From past guest Pat Garofalo in Boondoggle (Oct 3, 2023), You Paid to Build Amazon's Monopoly Power:

Last week, the Federal Trade Commission and 17 state attorneys general filed a high-profile and long-promised lawsuit against Amazon, alleging that the corporate giant uses a host of illegal, anti-competitive tactics to maintain its dominance over online retailing.

The whole complaint is worth reading, but at the heart of the case is the allegation that Amazon imposes a “hidden tax” on consumers and sellers that use its platform, raising prices as a way to mask that the “free shipping” promised to Amazon Prime subscribers is not really free at all.

. . . Crucially, sellers are not allowed to sell their wares for lower elsewhere on the web, including on their own websites, lest they get buried in the Amazon listing, essentially disappearing them from the most important retail site on the internet. For instance, see this recent case of an Amazon seller getting dinged for lowering their cost by five cents on a non-Amazon website.

This all leads to Amazon collecting nearly half of what sellers on its platform make from a sale. And since sellers have to hand over all that to Amazon, without lowering prices on other websites, you ultimately pay more than you would otherwise, not just on Amazon, but across the internet.

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