By Trey Price, American Consumer Institute
In the latest government lawsuit against Big Tech, the Department of Justice (DOJ) is suing Google on the grounds that Google is a monopoly in digital advertising technologies and engaging in anticompetitive conduct. Google has pushed back, arguing that the DOJ fabricated a market to make the company look much more dominant than it is. This is not the first time that a regulator has attempted this tactic and is part of a larger trend of dishonest framing by antitrust regulators.
Relevant market definitions are key to antitrust enforcement and serve as the foundation for other relevant factors such as market concentration and power. These definitions typically include products and services that can be substituted for one another and are therefore in competition.
The goal for regulators should be to define the market in a way that mirrors actual market conditions. Failing to properly define a market can throw off enforcement. For instance, a too narrow definition may result in a market looking more concentrated than it is, while defining it too loosely may result in the opposite problem.
Google argues that the DOJ purposefully exaggerates the extent of its market power, ignoring the fact that Google faces significant competition from other online advertising providers such as social media platforms and Amazon. The DOJ’s lawsuit focuses primarily on open web advertising and Google contends that the advertising on mobile apps should be included in the market of online advertising.
Narrow market definitions have been a reoccurring theme for regulatory agencies. Meta is currently the target of a Federal Trade Commission (FTC) lawsuit regarding its alleged monopoly over the personal social media market. Meta believes that the Commission has intentionally defined the social media market narrowly to exclude relevant competition.
Other examples include the FTC’s recent lawsuit against Microsoft for its acquisition of Activision, defining the market of high-performance gaming consoles so as to exclude commonly used alternatives, as well as the DOJ’s lawsuit against Apple for its alleged monopoly over the “performance smartphone” market. In each case, the government utilized market definitions to exclude competitors these businesses face, often by understating interchangeability between products.
This turn toward flawed market definitions coincides with a recent change in how antitrust regulators approach cases. Increasingly, regulators are taking a more adversarial approach that relies less on consumer welfare and more on novel legal theories of harm. Unfortunately for agencies, this approach has led to less success in the courtroom. In their push to go after large companies, antitrust regulators have missed the mark.
Market definitions are foundational to any antitrust case, and these should be made as accurate as possible. When antitrust regulators manipulate market definitions to make their case, it undermines their credibility. Therefore, it is in everyone’s best interest that regulators define markets accurately the first time.
Trey Price is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.