The New York Times
Yesterday, the Justice Department asked a federal judge to break up Google. The judge had already declared that the company has a monopoly in online search, and the government argues that the solution is to take apart one of the biggest corporations in the world.
The government’s position reflects its increasingly aggressive approach toward Big Tech. In a separate case on Thursday, a federal judge ruled that Google had acted illegally to maintain a monopoly in online advertising. And a federal trial against Meta, the owner of Facebook and Instagram, began last week. Mark Zuckerberg and Sheryl Sandberg took the stand to defend the company, and more executives are expected to testify in the coming months.
Not so long ago, Washington was smitten with Silicon Valley. But then tech companies consolidated power, and lawmakers grew skeptical. Over time, members of both parties decided they had to dismantle what they felt were monopolies.
Now Big Tech faces two important issues in these cases: a broader policy debate over monopolies, and President Trump’s personal feelings toward the companies. Today’s newsletter explains both.
Bigger business
First, the policy debate. The federal lawsuits argue that tech companies use their size to stifle competition. (My colleague David McCabe broke down the major cases here.)
Exhibit A: Google’s handling of online search. The company has made itself the default search option on its products, such as the Chrome web browser and the Android operating system. It also pays Apple and others to use its search engine as the default on their phones.
Similarly, Meta has bought competitors, like Instagram and the messaging app WhatsApp, to consolidate its power. Meta says that it still faces plenty of competition, including from newer apps like TikTok.
My colleague Mike Isaac pointed to a telling line from Zuckerberg’s testimony last week in which he quoted a former Intel executive: “Only the paranoid survive.” That remark acts as a sort of Rorschach test for both sides.
“For the government, it means Zuckerberg and his lieutenants were constantly monitoring the competitive landscape and were willing to quickly snuff out even the faintest threat to his business,” Mike said. “For Zuckerberg, it means that his position as king of the social media hill is always tenuous. One day you’re on top, like Myspace. The next you’re in the gutter — like Myspace.”
All of this reflects a broader trend, one that isn’t unique to the tech industry. Over the past several decades, big business has become bigger. The largest companies have gobbled up more of their industries, as this chart by my colleague Ashley Wu shows:
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For everyday Americans, less competition can mean lower wages, higher prices and worse products. The classic example is internet service. Across much of the country, people have only one or two options for internet. Providers get away with higher prices, spotty coverage and bad customer service because they know their users don’t have better alternatives.
Corporate consolidation across all industries costs the typical American household more than $5,000 a year, one economist estimated.
Trump’s choice
The most important factor in these cases, though, might be Trump. Yes, his administration and his supporters have advanced the antitrust cause. But Trump sometimes puts his personal opinions over policy interests. He could do the same here — and get his administration to drop the cases against Google, Meta and others.
Knowing this, tech giants have tried to gain Trump’s favor. The companies’ leaders appeared at Trump’s inauguration, smiling and clapping as the president delivered his speech. Zuckerberg stopped fact-checking at Facebook and Instagram, agreeing with Trump and other critics that it was biased against conservatives and calling it “something out of ‘1984.’” Google’s chief executive, Sundar Pichai, met recently with Senator Ted Cruz of Texas to hear about Republicans’ concerns, Politico reported.
So far, the overtures haven’t persuaded Trump to drop the lawsuits or settle them. But the cases still have weeks or months left — maybe more with appeals. The tech giants hope they can change Trump’s mind by then.