Why Google and Meta's antitrust ruptures could be difficult

The last time the courts seriously weigh the wisdom of breaking a giant technology company was a quarter of a century ago, after it was discovered that Microsoft had illegally stifled competition in personal computer software.

A Judge of the Federal District Court said yes to force Microsoft to separate into two, separating its monopoly windows operating system from its productivity products from the office and other software. But an appeal court expelled the order, qualifying the breakdown option “a remedy that is imposed only with great caution, partly because its long -term effectiveness is rarely safe.”

In a couple of historical procedures this month in two courts of Washington, the problem of breaking a large technology company will be at the judicial table again.

In an antitrust trial that began on Monday, the Federal Commerce Commission argued that Meta maintained an illegal monopoly on social networks through its instagram and WhatsApp acquisitions. The agency seeks to force the goal to uninverted both. Next week in a separate procedure, a federal judge will listen to arguments from the Department of Justice on why the court should break Google to remedy the company's monopoly in the search for the Internet.

“Disversion can be a completely acceptable remedy, depending on the seriousness of the damage,” said William Kovacic, a law professor at George Washington University and former president of the FTC “but it can be risky surgery.”

During generations, the courts have faced the dilemma of which action to take in the main antitrust cases once it has been found that a dominant company has dedicated itself to anti -competitive behavior. In a ruling of the 1947 Supreme Court, Judge Robert H. Jackson memorably wrote that if the solution of a court did not open the market to the competition, the government would have “won a lawsuit and lost a cause.”

But while the ruling of a court is based on examining the facts in the past, its remedy seems towards the future. The objective is to release markets instead of breaking them, and creating a competitive environment that results in more ideas, new companies, more innovation and lower prices.

The challenge is to assume a new importance as regulators make a great boost to control technological giants in a series of antitrust cases that oppose the power they have about communications, trade and information.

In a different lawsuit against Google, the Department of Justice awaits a judge's decision on the domain of the company in advertising technology. The department has also sued Apple for its tactics to protect its lucrative iPhone franchise. The FTC has sued amazon, saying that the company illegally protected its monopoly in the online retail sale of the competition.

It is likely that this wave of antitrust litigation, including appeals, lasts years. And if the government wins any of its cases, a judge could order a break, the worst result for companies.

The story shows that these orders can be effective, antitrust experts said. But the results in the improvement of competition have mixed.

The standard oil, an energy giant founded by John D. Rockefeller in 1870, was the defining case of the progressive and trustworthy era of the nineteenth and early twentieth centuries. The company was divided by the Supreme Court In 1911, it was divided into 34 entities that had formed the original Standard Oil Trust, which controlled the production, refining, distribution and prices of the oil industry. While that initially helped competition, over time, the descendants of trust became their own oil giants, including Exxon Mobil, Chevron and Conocophillips.

The breakdown of AT&T, in an agreement in 1982, followed a long antimonopoly demand of the Department of Justice, which accused the company of illegally monopolizing the telecommunications market in the United States. The local telephone business was divided into seven regional companies of “Baby Bell”, and the order opened the markets of long -distance telephone and telephone equipment, increasing competition and lowering prices.

In antitrust jargon, a “structural” solution as this generally means rupture. But there is Steps below a massive forced sale That can shape the markets and stimulate competition, antitrust experts said.

In 1969, under the pressure of an antitrust demand of the government that accused him of monopolizing the computer market of his time, IBM disaggregated his software hardware, treating them as separate businesses, sold and with an independent price. The software would no longer be “free”, included in the price of a computer. That helped light the emergence of the commercial software industry, with Microsoft as the largest winner.

Microsoft avoided a break, but its eventual agreement in 2001 contained a prohibition of contracts that had essentially used their Windows monopoly as a club by restricting that personal computers manufacturers distribute the opponents of opponents. That restriction kept the door open to a new competition in the software and the browser search. Google was the main beneficiary.

“Those were strong remedies without a break that created more competition,” said Fiona Scott Morton, professor of Economics at the Faculty of Administration at Yale University.

The next powerful technological companies to face the Court's scrutiny are Meta and Google.

On Monday, the FTC and Meta, previously facebook, presented their opening statements at the United States District Court for the Columbia district. Mark Zuckerberg, executive director of the company, took the stand. The essence of the government's case is that facebook was paid in excess more than a decade for instagram and WhatsApp, to kill them to protect a lucrative monopoly on social networks.

Meta replied that instagram and WhatsApp had grown and flourished under their property. And, the company argued, there is a lot of competition in the social media market, including Tiktok's meteoric ascent.

If the Government won the goal, the probable corrective step, said antiponopoly experts would be a court order to sell instagram and WhatsApp.

Next week in the same Washington Court, Google faces the resource stage in the demand of the Department of Justice and a group of states about its Internet search monopoly. In August, Judge Amit P. Mehta discovered that Google illegally maintained a search monopoly.

To restore the competition, the Government asked the court to order Google to sell Chrome, its popular web browser, and turn of Android, its operating system of smartphones, or they are prohibited to make their services mandatory on Android phones. Chrome and Android are powerful distribution channels for the search for Google.

Google has described the government list as a “savagely proposal forboard” that “goes to miles beyond the decision of the court” and that would damage consumers by offering them lower products. The company has also said that it will attract.

Tim Wu, Professor of Law at Columbia University, who was an advisor to the White House in technology and competition policy in the Biden administration, supports the ruptures in the cases of Google and Meta.

“If you want to stir the pot, structural solutions are clean and essentially self -stimatory, you separate it and move away,” he said. (Mr. Wu writes for the New York Times opinion section).

But any rupture order would be appealed, and today's superior courts seem echo the skepticism of the Microsoft era.

In a rare unanimous decision in 2021, the Supreme Court ruled that the National Collegiate Athletics Association could not use its market power to stop payments to athletes. It was essentially a case of salary pricing, completely decided for the plaintiffs.

However, Judge Neil M. Gorsuch, writing for the court, deviated to make a broader point on judicial restriction in antitrust affairs.

“In summary,” he wrote, “the judges make the poor 'central planners' and should never aspire to paper.”