Judge Amit Mehta’s decision in the remedies phase of the Google search antitrust trial disappointed those looking to break up or otherwise severely punish the nation’s largest technology companies. A year after ruling against Google in the trial’s liability phase, Mehta banned certain exclusivity provisions in Google’s contracts with mobile phone operators and web browsers but rejected several harsher remedies proposed by the Department of Justice (DOJ).
Former Assistant Attorney General Jonathan Kanter, the case’s lead prosecutor under President Biden, lamented remedies that “fell short” in a New York Times op-ed titled “Why Google Got Off Easy.” In a revealing analogy, he attributed the lightness of the remedies to a lack of boldness from the judge:
“There’s a saying in hockey: You miss 100 percent of the shots you don’t take. On Tuesday a federal court in Washington had a wide-open shot to hold Google accountable for sweeping antitrust violations. Instead of taking the shot, the court banked the puck off the boards, hoping for a lucky bounce.”
Kanter expressed puzzlement at Mehta’s rejection of proposals that would force Google to sell its Chrome and Android businesses, along with an outright ban on payments for default status the search giant makes to firms like Apple. Mehta’s decision, however, makes his reasoning quite clear. In each case, he considered the likely positive and negative market impacts of implementing the DOJ’s proposal and decided that the costs outweigh the benefits. The judge’s reliance on this type of common-sense analysis and reasoning, not directly mentioned by Kanter, may be a bad sign for supporters of populist antitrust reform and big-tech breakups.
Along with Biden-era FTC Chair Lina Khan, Kanter is considered a leader of the Neo-Brandeisian movement in antitrust, which favors more interventionist competition policy than has been the consensus since the late 1970s. They seek a return to antitrust policy that views large firm size and high concentration as inherent reasons to intervene. In the 1980s, courts increasingly adopted the consumer welfare standard, which saw reasons for intervention only when a firm’s size led to harmful market impacts.
Frequently mischaracterized or misunderstood by Neo-Brandeisians as a myopic focus on low prices, the consumer welfare standard, in practical terms, is a flexible framework to analyze both the benefits and costs of antitrust actions. The recognition that antitrust actions have costs alongside benefits is the most important feature of the shift in antitrust doctrine that took place in the 1980s. For example, a firm that has grown very large and driven competitors out of the market might have done so through illegal monopolization practices. But it also may have reached its position by being the most efficient and low-cost provider of a product or by innovating and creating a better one.
Prior to the 1980s, courts relied heavily on structural guidelines that looked only at the fact of a firm’s size. By instead expressing the economic costs and benefits of a firm’s size and possible actions to reduce it in terms of consumer welfare, competition authorities and courts developed a systematic method to determine not only when to intervene, but when not to do so.
Neo-Brandeisians like Kanter and Khan argue that the consumer welfare standard ignores negative effects of firm size that may fall on parties other than end consumers. Large firms may be monopsonists in labor markets, able to pay workers who have no other opportunities lower wages. Large online platforms may have the power to mistreat small businesses to attract more consumers on the other side. And firms that have grown extremely large may have an outsized influence in our democratic system. Opponents, meanwhile, have questioned the size and importance of these effects along with the suitability of antitrust policy to address them.
Entirely missing from antitrust as practiced by Kanter and Khan is any consideration of the other side of the equation. They do not simply minimize potential positive effects of firm size but fail to consider them at all. Equally importantly, they take no account of the massive distortions or unintended consequences that might arise from heroic top-down interventions. They dismiss consumer welfare as an effective means to express the positive and negative impacts of interventions but propose no alternative.
In a world where firm size has only negative consequences and antitrust actions only positive ones, what determines the priorities of competition policy? Alongside agency resources, the answer must be the discretion and preferences of the authorities themselves. This appears to be exactly what happened during the Biden presidency. Initial data suggests that, despite trumpeting the need for greater antitrust action across the board, there was no increase in overall enforcement under Kanter and Khan. Instead, they used their agencies’ resources to pursue actions matching the political and policy agendas of their choosing.
Taken together, Mehta’s decisions in the liability and remedies phases represent mixed results for both Google and the DOJ. But the judge’s analysis and reasoning in the latter make clear the invalidity of any framework failing to consider both costs and benefits of the proposed list of remedies. He rejected each of the DOJ’s three most severe proposals—the forced sales of Chrome and Android and the ban on payments to firms like Apple for default search engine status—because he found that the costs would outweigh the benefits.
Mehta acknowledged the possible market benefits of each rejected remedy. He considered the logic in favor of the divestitures “straightforward,” because Google makes itself the default search engine in such vertically integrated operations. In the case of the payment ban, he considered possible pro-competitive effects in some detail. These include potentially new competitors entering the market and greater incentives among Google’s contracting partners to appeal more directly to consumers.
In each case, Mehta rejected the proposed remedy after deciding that its costs would likely outweigh its benefits. A court-ordered Chrome divestiture “would be incredibly messy and risky,” leading to “substantial product degradation and a loss of consumer welfare.” Regarding the ban on payments for default search engine status, Mehta found potential for a host of negative market-wide effects, including small browsers like Firefox forced to shut down, a less robust Android ecosystem, and more expensive mobile phones.
Kanter’s op-ed covered familiar Neo-Brandeisian territory, where the benefits of harsher remedies are clear. He sees the firm as a bad-faith actor in both the marketplace and courtroom, deserving greater penalties as a matter of justice and accountability. Kanter is also concerned about deterrence, both of Google directly and other firms by example. “If companies can flout the rules, reap trillions of dollars and face only modest constraints,” he wrote, “the deterrent effect evaporates. The message to other companies is plain: It pays to break the law.”
Kanter also sees value in the political statement that harsher penalties would have made. “At a time when authoritarian power is on the rise, we must not forget that plutocracy is also its own kind of dictatorship,” wrote Kanter. (Whether Kanter truly believes that the fight against Google is a front in the war against the “authoritarianism” of President Donald Trump, whose administrations handed him the case and took it back without any major disagreements, is impossible to say.)
Apart from his metaphor about an overly finessed hockey shot, Kanter does not engage with the judge’s cost-benefit reasoning on the rejected remedies. One might normally attribute this lack of care for the costs of harsher penalties to the zeal of a frustrated former lead prosecutor. But not caring about the cost of market interventions is a pillar of Neo-Brandeisian antitrust. Mehta’s decision should be viewed with cautious optimism by those who favor antitrust policy based on thorough analysis and clear standards over the whims of populist enforcers.