The subcommittee report accuses Google of unfairly using its dominance in search to give its other business offerings—like Froogle, now known as Google Shopping—an advantage over competitors who rely on Google search to reach customers. In this internal email, from 2009, a Google employee acknowledges that Froogle, which the company was featuring at the top of search results, would not earn that position if it had to play by Google’s general search rules.
Shortly after releasing Chrome, Google began promoting the browser in the top corner of the Google.com homepage.… At the time, several Google employees expressed concerns internally that this promotion strategy was unfairly harnessing Google’s search dominance to boost Chrome. In an email among Chrome employees in 2009, one employee wrote, “I find the very, very high-profile promotion of Google Chrome on Google.com quite frankly, startling.”
Another theme of the report is Google’s use of its position in search to build “interlocking monopolies” in other areas. Apparently some employees had concerns about the tactic more than a decade ago.
In light of the extensive attention already given to this issue, a comprehensive examination of the digital advertising market is beyond the scope of this Report.
If you find it hard to keep track of how many markets Google dominates, well, so does the antitrust subcommittee. Apart from search, Google also controls up to 90 percent of various parts of the online advertising industry. Apparently we’ll have to wait to hear what Congress thinks about that.
Phillip Shoemaker, former director of app review for the App Store, similarly told Subcommittee staff that during his time at Apple an app developer proposed an innovative way to wirelessly sync the iPhone and Mac. The app did not violate any of Apple’s Guidelines, but it was rejected from the App Store nonetheless. Apple then appropriated the rejected app’s feature for its own offerings.
The subcommittee has no problems with the overwhelming success of Apple’s iPhone. Rather, it accuses Apple of exploiting its control over the App Store—the only place where app developers can reach roughly 55 percent of the American mobile market—to benefit itself at the expense of developers. Asked at the July hearing whether Apple reserves the right to use developers’ confidential information to compete against them, CEO Tim Cook said, “We would never steal somebody’s IP.”
“I’d like Apple to have a deeper relationship with Baidu,” Cook wrote, noting that “some of” the Baidu executive’s requests were “great starts.” In response to the Baidu executive’s request for “APP Review Fast Track,” Mr. Cook wrote “We can set up a process where Baidu could send us a beta app for review and this can often speed up the process.”
Asked at the July hearing whether Apple gave Chinese search giant Baidu special treatment, Cook insisted that “we treat every developer the same.” These internal emails from 2014 suggest otherwise. Following the hearing, Cook told the subcommittee that all developers are equally free to submit formal expedited review requests.
The Big Picture
In addition to these specific reforms, the Subcommittee recommends that Congress consider reasserting the original intent and broad goals of the antitrust laws, by clarifying that they are designed to protect not just consumers, but also workers, entrepreneurs, independent businesses, open markets, a fair economy, and democratic ideals.
This might sound boring, but it could actually be the most important line in the report. You don’t hear about antitrust cases very often because it’s really hard for the government to win them. A key reason: in the 1970s, the Supreme Court decided to interpret the federal antitrust statutes as being designed exclusively to promote “consumer welfare.” That allows monopolists to keep monopolizing as long as prices stay low—even if that causes damage that doesn’t show up on retail receipts. Here, the subcommittee is suggesting that Congress pass a new law to override the Supreme Court’s precedents and kill the consumer welfare standard. That would have big implications across the whole economy, not just in tech.
Lauren Goode, Steven Levy, Eve Sneider, and Nicholas Thompson contributed to this story.
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