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36 States Sue Google Over Aggressive Terms As Big Tech Remains In Focus
by Daniel Newman | July 20, 2021
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This summer has seen a wave of antitrust lawsuits and proposed bills targeting big tech — and there are no signs of slowing. Just this past week, 36 states and the District of Columbia sued Google over claims that it monopolized the distribution of apps on mobile devices that run Google-owned Android OS, and block competition through several avenues. This forces developers to go through the Google Play Store to distribute their apps, and then Google collects a 15-30% commission fee. The impact of this bipartisan suit could be huge, especially since it’s targeting Google—or Alphabet directly—and not Apple, which uses similar practices in its App Store. But do these claims actually have merit?

As an industry analyst, I believe it is vital to examine these issues in terms of how they benefit both the public and technological advancement overall. After all, antitrust laws are meant to protect consumers from monopolies that might overtake the marketplace, pushing prices up or stifling entry for new competitive offerings. While the antitrust bills currently being debated by the Senate are entirely separate from this recent filing against Google, there is increasing coordinated effort among regulators and lawmakers to pursue legal action against Big Tech. As I’ve already documented, I believe the newest wave of antitrust bills lacks the teeth to improve the consumer experience or the industry overall. However, the recent suit against Alphabet does have some merit and, while the target here is Google’s Play Store, there could be significant implications for Apple.

Why Google Rather Than Apple?

In the recent antitrust bills, we see a significant amount of energy going toward targeting platform companies. The likes of Facebook, Apple, Amazon and Google can be found at the top of the list. The efforts to reform the law tend to focus on areas where a single platform tends to have near-complete control over access to the platform and pricing for that access.

In the mobile space, Google’s Android and Apple’s iOS control almost the entire market domestically and globally. Google Play Store is more open and charges the same or less than the Apple App Store.

I continue to wonder why this is the fourth antitrust suit targeting Google in the last year. Perhaps it’s an easier target since Alphabet is already fighting battles over search and ad practices? In the court system, precedence is everything, so if these 36 state attorneys general can prove anti-competitive behavior, which I don’t think they will, Apple will need to tread lightly. Especially with the likes of Spotify and Epic Games already putting its close ecosystem control and pricing practices into the spotlight. If this domino falls, it could set a new precedent to enable lawmakers to go after Apple and other Big Tech companies.

Alleged Samsung “Buy Off”

There were also inclusions in the suit about an alleged attempt by Google to “buy off” Samsung Electronics Co., one of the global leaders in the manufacturing and sale of Android-based smartphones. Samsung has its app ecosystem built around the Galaxy app store, which competes with Google Play. The suits suggest that Google offered to compensate Samsung if the company would “give up its direct commercial relationships in-app distribution with consumers and developers.”

In my opinion, the Samsung-related allegations are more damning than the anti-competitive allegations around the fee structure and in-app payment methods of Android.

But Lawmakers Don’t Entirely Get It

While I don’t think many of these bills and suits will be fruitful, I believe that their attempt to formulate some new bills like the “Ending Platform Monopolies Act” and “Platform Monopoly Act” comes from a good place. They do want to protect consumer interests. They do want to make sure that users aren’t being taken advantage of when it comes to the extraction of third-party data, etc., and they do want to make sure consumers aren’t being force-fed certain products based on which platform may own them. Still, the bills as they currently stand don’t do any of those things.

For one thing, even their names are misleading. With bills like the “Platform Monopolies Act,” you’d think there were, in fact, monopolies in the market. Yet, the bills focus on companies—plural—with a stock valuation of over $600 billion. A monopoly that is not. Second, the way they are written, they won’t stop companies like Amazon from giving preferential treatment to their own products or Google from giving preferential treatment to their own apps. And honestly, I’m not sure why they should. In 2020, Google’s parent company Alphabet became the fourth U.S. company to reach a $1 trillion market valuation. Again, it’s not a platform’s job to prop up its competitors. If a competitor wants to market its own products solely, it is welcome—in a free market—to start its own platform.

What seems to be lacking in all of these efforts to regulate Big Tech is a balance between rewarding innovation and punishing anti-competitive behavior. More specifically, how can innovative companies profit from their investments in R&D and development of market adopted solutions, but not take their market powers too far by intentionally harming competition by making the barriers to entry too significant or eliminating competition by acquiring new entrants to the market? It’s a delicate balance, but one that must be reached through laws that require a burden of proof, not merely based upon the intent or, even worse, the assumption of intent.

Consumers Aren’t Stupid

Most of us know that when we purchase an Android phone, we will be stuck either downloading apps from the Android store or going to individual software developer sites to download them one by one. Most of us choose to use the Play Store because it’s simply more convenient. We pay for convenience. And so do developers. They know that putting their app on the app store will to more downloads—and more profit—than if they were marketing their apps on their own. This applies to all types of platforms, from search to e-commerce. Consider how much easier it is now to reach a target market or set up a successful online store than it was 10 or 20 years ago. What is that worth to a small business owner or an app developer? It certainly shouldn’t be free. When we choose to buy into the system, the system keeps rolling—that’s how the free market works.

The Road Forward For Google and Big Tech

Now, am I saying there is nothing wrong with Big Tech? Am I saying that companies like Apple and Google aren’t trying to make the most they can in the most markets they can to maintain relevance and market share? Of course not. These are the things that happen in a free market. But the fact that companies become successful enough to make competition difficult isn’t evidence that they intentionally make it impossible for other players to jump in the game. That’s where these bills and lawsuits lose traction for me.

Truly, what we need to consider, as a society, is whether technology—especially accessibility—is a right rather than a want. If it is, it may be time to consider whether certain aspects of technology—such as search platforms or app libraries—need to be managed as public entities rather than private ones. If so, then it may be time to peel certain aspects of technology away from the private sphere. This may sound like a good idea in concept yet, in reality, it would be unsustainable because the technology and innovation required to maintain and expand these ecosystems isn’t something I believe could be handled by the public sector.

In the end, the real question that lawmakers and regulators need to be asking is whether or not the big tech companies in question here, in this case, Alphabet, are looking to create monopolies. Or, have the services they provide have become so inextricably linked to the human experience that we can’t live without them? Therefore, can we work to modify antitrust law and regulatory practices to encourage competition AND satisfy our thirst as a society for seamless platforms that deliver great experiences? That should be where any modification to antitrust law to manage big tech should be focused. Otherwise, we are punishing the consumer to potentially protect competition while possibly stifling innovation—certainly not a better outcome.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

The original version of this article was first published on Forbes.

About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio