Simone Del Rosario: Pressure is building on Big Tech after a federal court ruled Google is a monopoly. And Google isn’t the only one the government’s going after. Apple, Meta and Amazon are actively fighting lawsuits. 

For what the Google ruling means to them, I’m joined by Bill Kovacic, former FTC chair and commissioner. 

Does this serve as a bit of a flashing red light for other big tech firms?

Bill Kovacic:

It does indeed. They’ve seen the light flashing yellow to be sure now for several years because not only in the United States but around the world we find competition authorities and individual jurisdictions beginning new investigations, initiating cases. And in the case of the European Union adopting new regulatory frameworks, there’s called the Digital Markets Act. So the big tech sector has seen gathering storm clouds now for a number of years going back to, I’d say, the middle of the previous decade. But we’re now seeing the delivery of policy measures that foreshadowed ever more significant forms of intervention. And this is an indication not only that the government can win, that it can marshal the resources to do this kind of work well, it can bring the cases to a successful conclusion at the trial.

But also it means that there will be more to come and there are other significant matters in the pipeline. Another Department of Justice case involving Google involving ad serving. A case by the FTC challenging meta for its acquisitions of Instagram and Facebook 10 years ago. An FTC case against Amazon, a Department of Justice case against Apple. State government cases attacking a number of these large enterprises.

I think for the business community, especially for the tech community, it’s an indication of things to come and that the successful defense of their position is not going to be something they can take for granted.

Simone Del Rosario:

How does this measure up, given how the government has ruled on it, how the courts have ruled on it, How does this measure up to the Amazon situation where they’re being accused of, you know, having a self preference for their own products?

Bill Kovacic:

This involves, I think in some ways, a harder case for the Federal Trade Commission. That is, the FTC is arguing that you’ve given your own products, your own services a better display compared to others, that you’re favoring them. I think the FTC is going to have a somewhat harder time dealing with the argument we just addressed, which is, I’m a successful firm. Don’t I have the freedom to offer consumers not only the better

But to put my product first, to say, look at my product, why should I have to display the products of my rivals in a better light? Here again, Amazon would not have unlimited freedom to make certain choices that are going to be the subject of the case. But Amazon’s case is arguably more with Amazon’s arguments are arguably more.

within the framework of Supreme Court jurisprudence that has been encouraging of the ability of dominant firms to decide who they’ll deal with and how they’ll deal. And a concern about judges on the part of judges that they shouldn’t be involved in making technical decisions about how companies operate, determining who they can deal with, the terms on which they can deal with other parties. So I think the FTC in some ways faces a somewhat harder challenge in the light of this existing jurisprudence.

But from Amazon’s point of view, watching the outcome in this first important Microsoft case, it’s a warning that the government can prevail. The government can make well -founded arguments. They can present them capably. That they’re probably going to be found to be a dominant enterprise. And the real question will be, is their behavior, is this self -preferencing behavior acceptable? I think

all leading firms learn from the experience we’ve just observed is you can take absolutely nothing for granted in this process. And it’s an environment in which judges might well be persuaded that you made an incorrect judgment about where the line of illegality is and you stepped over it. So that this is a, at a very basic level, this is an important caution that says you can lose these cases if you’re a defendant.

Simone Del Rosario:

We’re talking about this Google case for a lot of reasons, but part of it is that it is rare to have this finding in the court level. This case started in 2020, though. I’m curious what your take is on the types of cases against Big Tech that the current FTC Chair Lina Khan, has been taking. What do you make of her strategy when it comes to going after Big Tech.

Bill Kovacic:

I she has put in motion one significant case on her own watch. That’s the Amazon case we mentioned before. The other case, major case that she has, she inherited from the Trump administration. That’s the challenge to Meta for its acquisitions of Instagram and Facebook. But the Amazon case is a very ambitious case.

It again is trying to define a new conception of what dominant firms can do, especially dominant firms that act as the owners of a platform on which products are sold, but their own products and the products of other parties that operate on the same platform.

to identify what a dominant firm can do by way of featuring its own products and perhaps treating the products of third parties on its platform, its competitors, differently. That would be a significant development in the jurisprudence. I guess to put it in a very general way, it is a riskier case.

than the case that the DOJ is running against Google, the case it’s running against Apple, the other case it’s running against Google. And this is consistent, I think, with the chair’s philosophy that a major role of the FTC should be to take on cases that involve more ambiguity, to take on cases that aren’t squarely within a framework where liability has been routinely found, but to move the frontiers outward.

So there’s a greater risk appetite at work there. The DOJ cases are very ambitious as well, but I’d say a signature element of the Chair’s own program is to be willing to push the frontiers and to accept the risk that there will be judicial resistance and to accept the risk that there’ll be judicial rejection. But for the sake of provoking the conversation with the courts,

and bringing these issues to the courts on a repeated basis. There’s a willingness, not simply in the area of big tech, but in other areas of the commission’s jurisdiction to try to move the frontiers of enforcement outward and to acknowledge and accept the risk that these are hard cases to win. And we do not expect to prevail every time, but the very fact of bringing the cases, continuing the conversation with the courts will have real value.