It is often said that America innovates, but it is the one that regulates. At times, however, the opposite can happen. The US Authorities to protect competition are seriously considering the possibility of imposing forced corporate disintegration procedures that the country has been seeing since the time of the Standard Oil John Rockefeller.
In the vortex of the cyclone are the – ‘Too big to fail’, According to the well -known Anglo -Saxon saying – modern technological giants. And the symbolism could not be more impressive. Two of the largest and most active companies in American history, with a market value exceeding 3 trillion. Dollars, are in different docks of the same judicial mansion, facing charges based on antitrust legislation.
O ‘vicious circle’
Towards the end of his introductory speech at the Washington Court of First Instance last week, David Dalcistlawyer of the US Ministry of Justice, showed a revealing transparency depicting what he calls himself ‘Its a vicious circle’: The technology company pays huge amounts to ensure that it is the default search engine in a range of web devices and travelers. In this way she receives more search requests from her competitors.
As a result, it gets more and better data, which means that it can improve more easily over time the results of the search services it offers. But most of all, it can provide more effective and targeted advertising, increasing its profits, which in turn makes it easier to conclude new contracts for the definition of its search engine as an exclusive default.
The main source from which Google (as well as other technology companies) draw its revenue has been analyzed in a unique way by Harvard Honorary Professor Socana Zumbov In her iconic work The era of spying capitalism (Kastaniotis editions). As is well known, the use of search engines is free. The technology company, however, uses the data it collects from users’ searches to formulate personalized ‘Predictions/Behavioral Predictions’ For them, which they then sell to aspiring advertisers.
The remedies
Last August, the court ruled that the “vicious cycle” described by Dalcist is a monopoly practice in the search engine market. The judicial proceedings currently underway concerns the second phase of the so -called Remedies, that is, the repair. The US Department of Justice is calling for drastic measures, such as the sale of Chrome, the interruption of exclusive default contracts, and the disclosure of data from the company’s online searches to its competitors. There is even a possible separation from the operating system, which Google bought in 2005. For its part, the company and its lawyers state that the above are disproportionately heavy measures and that, in any case, a business cannot be punished because it does its job well.
Two weeks ago, in another case, a US Court of Virginia ruled that in the digital advertising market because it has a monopoly on the tools used by online publishers to host advertising space, as well as in software that facilitates transactions between advertisers. The second phase of the trial for rehabilitation measures is set for September.
‘Bought or bury’
At a time when Dalcist made his introductory speech, a few floors below, in the same courthouse but in a different room, the trial of another technological colossus began ,.
According to the Federal Committee of Trade Mark Zuckerberg It illegally acquired the monopoly on the market for personal social networking services, implementing a “buy or bury” strategy to eliminate its key competitors. In the startup world, competition is often regarded as a driving force for progress and innovation. The logic of “buy or bury”, however, starts from a completely different starting point. It aims to acquire a business in its first steps and to “bury” its products or integrate them into the services of the buyer so that they do not have the opportunity to threaten the latter’s dominant position in the market.
The Federal Committee of Commerce to acquire Instagram in 2012 and Whatsapp in 2014 with the aim of neutralizing them before these applications are threatening Facebook’s primacy. In fact, for the support of the accusations, the Commission cites, inter alia, an internal document considering the possibility of selling Instagram in 2018 due to concerns about competition rules.
It seeks to drive META to the forced sale of the two applications. For its part, the company argues that acquisitions have reinforced competition, as billions have been investing to improve the above applications, which has finally proved to be consumer. He adds that the Commission herself examined the acquisitions and approved them without any asterisk.
The artificial intelligence
It may sound great, but according to many analysts, the outcome of these two is expected to largely determine the form that the Internet market will take in the coming decades. Especially if one considers its issue. The latter parameter is now a key peak of the US Ministry of Justice in the Google case.
According to Dalkwist, the company’s monopoly on search engines gives it a competitive advantage in the race for sovereignty in artificial intelligence. The counter -argument of the company is that the rapid growth of Openai and Chatgpt proves precisely that the market for artificial intelligence is sufficiently competitive. Small but extremely interesting “detail”: During the trial, Openai’s header, Nicolas Terlisaid that if the outcome of the case eventually leads to the forced sale of Chrome, Open AI would seriously consider buying it. In short, the game just started …
