Over the last several years, antitrust regulators have launched aggressive competition enforcement actions against some of America’s most successful and innovative companies. These include the Federal Trade Commission’s (FTC) bid to break Amazon Prime and the Department of Justice’s (DOJ) high-profile lawsuits that would harm popular digital products and services, including Google Search, as well as app store privacy and security protections. Based on novel theories of harm, these cases veer sharply away from competition policy grounded in established jurisprudence, which is meant to protect consumers and dynamic markets, and instead represent the government picking winners and losers in the economy.
While these actions are often packaged as consumer protection efforts, these lawsuits risk undermining the competition and innovation that define highly dynamic digital markets. If successful, the claims brought by the DOJ and FTC against leading American tech businesses would rewrite the rules of digital markets to favor a handful of businesses at the expense of others. These cases would result in a regulatory burden for successful companies, and a windfall for other businesses, some of which have failed to compete on the merits. Companies, including app developers that want looser privacy safeguards in order to harvest more user data, and AI businesses pushing for cheaper access to proprietary platforms, would directly benefit from remedies that would weaken the quality and security of services that millions of consumers use and rely on.
The DOJ’s ongoing lawsuit against Google Search is the most recent example of this phenomenon. The judge overseeing the case noted that Google earned its success by building a superior product, and even the Justice Department’s witnesses admitted Google Search is the premier search engine on the market today because of the quality of its service. Despite this fact, the DOJ has argued for remedies that would dismantle the services that millions of consumers rate as being the best in the market.
The DOJ’s proposal also includes giving Google’s competitors, including leading AI companies, access to broad swathes of consumers’ web query data and personally identifiable information, putting user privacy at risk. Another requirement would force Google to divest Chrome, going beyond the remits of the case. When concerns were raised that Chrome would wither without the integrated security, privacy, and other features Google provides to the service, the DOJ suggested it could be sold to a leading AI company, ironically consolidating power in online markets and potentially reducing consumer choices as a result. The government has argued these changes are necessary to boost AI competition, despite having previously argued that Google Search does not compete with large language models. The court correctly identified this tension, with the judge presiding over the case pointedly asking the DOJ’s lawyers:
“We spent a lot of time in this remedies phase talking about A.I. If it’s not part of the search market, how is it associated with the legal framework, with the remedies that you’re asking for?”
These contradictory arguments point to the fact that the DOJ’s remedies put Google’s competitors first, not consumers or competition. At a time when AI-powered search represents a pivotal moment in the dynamic online search market, such proposed remedies, which go beyond the scope of the issues at trial, would likely result in reduced innovation and competition, harming consumer welfare.
The DOJ has also taken steps to put its thumb on the scale in a bid to break the current app store ecosystem. The DOJ’s remedies proposal threatens to force secure software platforms to host unverified software and payment systems, potentially increasing risks to consumers from fraud, malware, and privacy violations. While these ideas have been criticized by consumer watchdog groups and small app developers who fear the DOJ’s lawsuit would rewrite the rules for app store marketplaces to favor larger incumbents, these proposals have been embraced by a handful of app makers that would benefit from the government rewriting the rules in their favor. By forcing app stores to host unsecure software and payment systems, app developers can more easily gain access to sensitive user data, which could result in data being resold to unknown third parties in order to maximize their profits.. In effect, the government’s case amounts to a mandate that potentially reduces consumer choice and threatens privacy and security, ultimately benefiting a few app developers at the expense of others.
The FTC has also filed lawsuits, like the agency’s case against Amazon, that focus heavily on alleged disadvantages faced by competing retailers and third-party sellers, rather than focusing on product quality and prices that consumers pay. Amazon’s Prime service has delivered immense value to customers through fast, reliable shipping and integrated benefits. The FTC’s case against Amazon represents the government prioritizing business competitors’ welfare over that of consumers. This includes large retailers, including foreign online megastores, that stand to gain from government intervention in the marketplace. The result of the FTC’s case would be a less dynamic and innovative market that favors corporate interests over consumers, potentially resulting in higher costs and fewer choices.
These actions, while styled as pro-consumer, reflect a fundamental misunderstanding of the purpose of competition law: protecting competition, not competitors. Rather than encouraging better products and more innovation, such cases threaten to punish businesses for being too successful in an effort to prop up their competitors. In the process, they threaten to make the digital services Americans love and use less affordable, less secure, and less reliable.