According to multiple reports last week, the Department of Justice, as well as multiple state attorneys general, is considering bringing antitrust charges against Google as soon as this summer — close to a year after a regulatory probe was first announced last June. Cases from both authorities would address Google’s grip on the online-advertising market: Right now, the company pulls in around a third of every dollar spent on internet advertising. While that fact may make Google a worthy target of antitrust action, the other companies in tech’s Big Four — Amazon, Apple, and Facebook — are just as worthy of the DOJ’s attention, Pivot’s Kara Swisher and Scott Galloway argue. On the most recent episode of the podcast, they tried to figure out why Google is first on the government’s list and whether the investigation is a doomed enterprise.
Kara Swisher: So if this lawsuit happens, it will be the biggest antitrust suit the government has pursued since its settlement with Microsoft in the late 1990s and the first major move to break up the Big Four. Scott, what do you think about this? It’s interesting you could do this without also targeting Facebook.
Scott Galloway: That’s the interesting thing here: The order of going after Google first intimates or somehow communicates that Google is the worst offender.
Swisher: Well, it’s the longest-time offender.
Galloway: I think the timing around who goes first is actually important. The analogy here is obviously the DOJ’s case against Microsoft in the ’90s.
Swisher: But that didn’t actually result in anything, right? If you ever want to go see a really terrible deposition, go look at Bill Gates’s in this trial. Netscape was involved, people from AOL were involved — all kinds of people. But in the end, all it did was slow Microsoft down.
And so why attempt to break up one if you’re not going to look at the whole system of these things? Does it undercut the case?
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Galloway: I think if you were to really try and tackle this, you’re right, you need to understand the ecosystem. A lot of this just comes down to resources. The DOJ and the FTC decided to divide and conquer. They kind of split up the floor and said, “All right, you take these guys, we’ll take these guys,” because it’s a resource issue. This is kind of the flare across the bow of the battleship, saying, “All right, we’re about to enter a ten-year shooting war,” because this could take ten years and we’re talking about hundreds, if not thousands, of lawyers on either side.
Swisher: The ten years is a problem, by the way. Things change so quickly.
Galloway: And also, to be fair, typically when the government kicks off a DOJ trial, it’s usually the high-water mark for the power of that company. About the time they start calling IBM in front of Congress is when IBM’s power begins to wane. But I don’t think that’s the case here.
To your point, though, it seems as if 20 to 30 percent of the research that you would do around competitive dynamics or anti-competitive behavior would overlap with Facebook’s anti-competitive behavior. And I agree with you. It seems to me like the initial 50 percent of their diligence and research should be focused on the market that is 70 percent Facebook and Google, as opposed to just Google. It seems to me that they would go after both. I also think it’s just strange and diminishes the threat that Facebook, Amazon, and, to a lesser extent, Apple represent by announcing that they’re going after Google first. I think that’s just unusual. Maybe there’s a reason for it, but it definitely says to the public that Google is the biggest offender when you go after them first. It says that this is the menace that we’re most frightened of.
Swisher: This is the one they may be able to prove better — I think that’s the issue. I think it will be around the online-advertising business, and Google is the dominant player in this regard. But then you also have Amazon in there. I think Google will make that defense: There are other big players.
What’s difficult to gauge is how many resources Bill Barr has committed to this. And with the Trump administration, there’s always the question of “What else is going on here?” Bill Barr is so tainted right now from a political point of view, it’s hard to imagine there won’t be some attacks in that direction towards him. And deservedly.
And it will probably take the DOJ too long: Google and others have worn down these regulators. So I think the advantage is still to the tech companies.
Galloway: One of the things that first struck me about just how naïve I was to the question of government resources in this fight was when Senator Mark Warner invited me down to speak to him about Big Tech. His staff asked me, “Well, what would you do right away?” I’m like, “Mandate identity and take away these liability shields.”
Both of these legislative aides practically started having seizures. They said, “There’s just no way we could take on those two things.” I mean, they looked as if they had been working 18 hours a day at this, and they said, “Senator, there’s no way we can even put out a press release saying we’re looking at that.” Because they knew that if they even got anywhere near those two issues, they’d be overwhelmed that there would be a shock-and-awe response from the entities controlled by Google. They just look so kind of intimidated. Like, “Okay, you really want to poke the bear, here?”
Swisher: Well, they should be intimidated. Guess what? The bears have got a lot of lobbying money. I have talked to high-ranking DOJ people, and they’re like, “Oh God.” And again, they’re further stressed by the coronavirus. It’ll degenerate, and that’s to Google’s and Facebook’s and Amazon’s advantage.
Pivot is produced by Rebecca Sananes. Erica Anderson is the executive producer. It is also now on YouTube.
This transcript has been edited for length and clarity.
