Antitrust: US pulls out big gun in fight against Facebook and Google

The US government wants to break Facebook up and haul Google over the coals for its global monopoly on search. Along with 40 state attorneys-general, the Federal Trade Council (FTC) filed an antitrust case against Facebook on Wednesday, shortly after the Department of Justice filed another one against Google in October. Where has this come from – and what is US antitrust law anyway? Has it ever managed to change things?

Two decades ago, Facebook didn’t exist yet and nobody cared who Mark Zuckerberg was. Google was a dinky little student project run out of Stanford University called BackRub. Nobody imagined these two would one day become global giants, let alone the targets of landmark antitrust suits.

Back then Microsoft was the behemoth that controlled our digital lives. No other company could touch it. Unfortunately, it started behaving exactly as you’d expect a global monopoly to behave: it made business decisions to hinder real or potential rivals, and it ate up smaller competitors like plates full of whitebait. Sounds familiar, doesn’t it?

The US government had to pull out the biggest gun it has for controlling monopolistic companies: antitrust. Antitrust laws are designed from the ground up to limit the market power of aggressive corporations – often by forcing them to break apart or relinquish acquisitions. The pointy end of this law is used sparingly. Data privacy, licensing or copyright issues are much easier guns to draw, but these actions can only go so far; ultimately companies receive a slap on the wrist and a fine by regulators like the ACCC or FTC.

In our era we’ve seen an endless conga line of lawsuits and legislation by government regulators aimed at Facebook and Google. Our own ACCC has just successfully argued that Facebook and Google must negotiate payment for news content with media outlets here; the legislation was passed last week. Both platforms resisted this code but ultimately it won’t dent their duco, despite their very public threats and tantrums. Facebook and Google are often fined or made to pay a price for smaller issues – but they change their global behaviour exactly zero per cent. Only US antitrust law can literally cleave an American company in two.

/University Public Release. View in full here.