Ben Thompson: The U.S. antitrust case against Google is strong

Thompson invokes -- and re-explains -- his aggregation theory to support the Justice Department's suit against Apple's search partner.

From "United States v. Google" posted Wednesday on Stratechery.

I think the conventional wisdom about the specifics of this lawsuit are mistaken: I believe the particulars of the Justice Department’s complaint have been foreshadowed for a long time, and make for a case stronger than most of Europe’s; if the lawsuit fails in court — as it very well may — it also points to where Congress should act to restrain the largest companies in the world...

Cue the Aggregation Theory backgrounder...

apple google thompson antitrust aggregation

Click to enlarge. 

Aggregators already have massive structural advantages in their value chains; to that end, there should be significantly more attention paid to market restrictions that are enforced by contracts.

Go back to Microsoft: in my estimation the most egregious antitrust violations committed by Microsoft were the restrictions placed on OEMs, both to ensure the installation of Internet Explorer as well as to suppress alternative operating systems. These were not violations rooted in market dominance, at least not directly, but rather contracts that OEMs could not afford to say ‘No’ to...

This is an area ripe for enhanced antitrust enforcement: these large tech companies have enough advantages, most of them earned through delivering what customers want, and abetted by the fundamental nature of zero marginal costs. Seeking to augment those advantages through contracts that suppliers can’t say ‘No’ to should be viewed with extreme skepticism.

My take: Because he quotes himself so much, Thompson uses a lot of words to explain a core insight into the internet economy that isn't as complicated as he makes it sound.

Apple can obviously afford to say no to Google, but that doesn't make it any easier to say no to 15% to 20% of your company's annual profits.

See also: Apple search deal is at center of U.S. antitrust case against Google

One Comment

  1. David Emery said:
    It’s worth recognizing the distinction Thompson makes between “Monopoly Law as currently written” vs “Monopoly Law as it could be revised.”

    October 21, 2020

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