Alden Abbott Reacts to Google Being Labeled a Monopoly

District Judge Amit Mehta’s holding that Google maintained its monopoly in two product markets in the United States—general search services and general text advertising—through its exclusive distribution agreements is problematic. If Google so desires, the ruling merits an appeal.

As my Mercatus colleague Greg Werden has explained, Google’s partnerships are not classic exclusive dealings. Even if they were characterized as such, was Google engaging in competition on the merits? As Werden has pointed out, the argument that Google did not compete on the merits is dubious, given Google’s specific actions and justifications for them. Although, as Werden writes, “a firm does not compete on the merits when it acts to impair its rivals’ product or distribution rather than improve its own product or distribution,”  the judge’s discussion of this limitation is open to attack. 

The judge’s finding that Google, through exclusives, had denied competitors’ ability to achieve efficient scale seems to assume that it had a duty to do so, for example. Nevertheless, the judge carefully analyzed the factual record, market definition, and competitive harm, denying a finding of such harm in all but two markets. Thus, in short, it is difficult to predict the likelihood of success of any appeal.

Finally, Judge Mehta did not address a potential remedy in his decision, leaving open a fair degree of uncertainty that would have to be resolved. Judge Mehta’s prior summary judgment opinion in this case did not square with the DC Circuit’s U.S. v. Microsoft opinion as a whole. The DC Circuit set out general principles for Section 2 cases, one of which was that “harm to one or more competitors will not suffice” to prove the requisite harm to competition. But, foreclosure of a substantial share of the market, without more, proves only harm to competitors.