An unprecedented lawsuit against Google has echoes of past efforts to rein in tech giants like Microsoft and Apple. Attempts to enforce antitrust laws have left some players in the dust, while others are fighting back.
Image: Eibner Europa/imago
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The antitrust lawsuit brought this week by the US Department of Justice (DOJ) against Alphabet Inc.'s Google is an unprecedented challenge to the dominance of global technology giants.
The suit — which alleges the firm has gained a monopoly by unlawfully paying phone manufacturers to make Google Chrome the default browser on mobile phones — is likely just the beginning. Earlier this month, a report from the US House Judiciary Committee called for vast changes to US antitrust law after concluding that Google and fellow US tech giants Apple, Amazon, and Facebook were abusing their market dominance. More suits against Google are also expected.
The tech crackdown has gained momentum in Europe as well. On Wednesday, the European Parliament overwhelmingly backed plans to develop the "Digital Services Act," legislation that seeks to significantly rein in tech giant's power in the EU.
The landmark lawsuit against Google is the latest in years of mounting government attempts to enforce antitrust laws against digital firms that once were scrappy start-ups but have rapidly developed into global powers with the potential to stifle competition and innovation.
What is a monopolist?
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DOJ vs. Microsoft
In this groundbreaking 1998 case, the DOJ accused computer and software firm Microsoft of making it difficult for PC manufacturers and users to use web browsers other than Microsoft's Internet Explorer, which came pre-installed on all Microsoft computers. The DOJ argued that Microsoft's "bundling" of its web browser software with its operating system was the source of the company's wild success — and that the move amounted to an unlawful monopolization, according to US antitrust law established in 1890.
Microsoft said that the two products belonged together. The company went on to win an appeal on the ruling, which would have required Microsoft to break up its business into two separate entities, one for software and one for operating systems.
In the end, the DOJ opted for a settlement with Microsoft that kept the company intact, with the tech company instead agreeing to share details of its computing interfaces with competitors.
Following the lawsuit, Microsoft ultimately fell behind other tech companies, fumbling the transition to mobile and losing to Google in the race for web browser dominance. The DOJ's new case against Google draws directly from the Microsoft case, but with a narrower focus that could have a better chance of winning against appeal.
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EU vs. Microsoft
The EU followed through with a Microsoft lawsuit of its own in 2004, fining the American firm nearly half a billion euros for abusing its "near monopoly" status to crush the competition in markets for digital media players and low-end servers.
Microsoft was ordered to make several changes, including offering a version of Windows without its digital media player. The EU antitrust authority also required Microsoft to share its interface code with rival companies, so that competitors could ensure "full interoperability" with the Windows operating system.
EU: the great antitrust busters
Don't be evil? The EU seems to agree, particularly going by the manner in which it fines the big US software companies when they fall foul of the bloc's laws. Since 2004, penalties for transgressions have risen markedly.
Image: picture alliance/dpa/C. Dernbach
Microsoft tread the Windows ledge
In 2004, the European Commission finished a five-year investigation into Microsoft and concluded that the US tech giant had exploited a monopoly on PC operating systems. The fine was €497 million ($579 million). Within 90 days, Microsoft was obliged to offer a Windows product without its 'Mediaplayer' product.
Image: Imago/H. Rudel
Another blow for Bill and Co
In 2007, the European Commission went for Microsoft again, this time imposing a fine of €900 million. The reason was that they reckoned Microsoft had charged competitors unjustifably high license fees to avail of technical information. This violated previously agreed EU requirements.
Image: picture-alliance/AP Photo/T.S. Warren
Intel Inside Job
In 2009, a record fine was issued with the breaking of the €1 billion barrier. This time, it was the chipmaker Intel, fined €1.06 billion in what was part of a near-decade long dispute over cartel activity. The EU said that Intel had abused its market position by obliging clients such as Saturn and Media Markt to sell PCs made with Intel chips.
Image: Imago/Xinhua
Just browsing, and just one browser...
In 2013, Microsoft had to dole out another €561 million to the EU. This time, the company was accused of failing to offer an adequate choice of browser to its customers, as it had promised it would a few years earlier. The Commission said that from May 2011 to July 2012, Microsoft had failed to do this.
Image: picture-alliance/dpa/M. Balk
To Infineon - €100 million - and beyond!
In 2014, the European Commission slapped a fine of €138 million on four different chip manufacturers, including the Munich-based company Infineon, which had to pay the vast majority of the total amount. Their sin was that between September 2003 and September 2005, they had engaged in price controlling activity with the likes of Philips and Samsung.
Image: picture-alliance/dpa/J. Büttner
Ok Google, stop manipulating search results
In 2017, Google was ordered to pay a whopping €2.42 billion fine into the EU coffers, with the Commission accusing the search kingpin of manipulating online shopping searches, abusing its market position as a result. The specific transgression was that Google had prioritised its own services' price comparisons in search results ahead of its competitors.
Image: picture alliance/dpa/S. Hoppe
Qualcomm eats the forbidden Apple
In 2017, Qualcomm, a chip supplier of US behemoth Apple, had to pay €997 million to the EU. The accusation was that the US company had been paying a fortune to Apple in order to thwart its own competitors. It meant that Qualcomm had abused an already dominant position to exclude other LTE chipset makers from the market.
In July 2020, Apple successfully appealed a 2016 antitrust ruling from the European Commission that had ordered Apple to reimburse Ireland for €13 billion ($15 billion) in back taxes. The Commission had argued that the attractive tax rate offered to Apple by Ireland, the iPhone maker's European base, amounted to illegal state aid, in the form of a "sweetheart deal" that gave Apple preferential treatment. The case centered on Irish tax legislation that the Commission argued had artificially reduced Apple's tax rate, at times as low as 0.005%, for over two decades.
"The Commission was wrong to declare" that Apple "had been granted a selective economic advantage," the General Court of the European Union said in the appeal verdict.
EU antitrust chief Margrethe Vestager filed a cross-appeal in September 2020, saying the Luxembourg-based court had "made a number of errors of law" in its decision. The Danish politician said the ongoing case is important for closing tax loopholes for multinational companies and ensuring transparency.
Apple becomes first to reach $3 trillion market capitalization
Shares in the iPhone maker have been on a tear over the past two years as consumers grab its devices to keep in touch during the coronavirus pandemic. Apple's tech peers Microsoft, Alphabet and Amazon are not far behind.
Image: APPLE INC/REUTERS
Trailblazer
Less than 18 months after becoming the first US company to breach the $2 trillion market cap, Apple has scaled yet another summit; the company has become the first to touch a market valuation of $3 trillion. Apple shares have soared during the pandemic as consumers buy its devices to stay connected and as investors bet on its new offerings such as electric cars and virtual reality headsets.
Image: picture-alliance/AP Photo/K. Kataoka
On the heels
Apple's American tech peers Microsoft, Google parent Alphabet and Amazon, which too have seen their shares climb during the pandemic, are not far behind. Microsoft is worth about $2.5 trillion, Alphabet is valued at around $2 trillion and Amazon has a market cap of nearly $1.75 trillion.
Image: Getty Images/J. Moon
New billionaire on the block
Apple's surge has catapulted Tim Cook, the company's CEO, into the billionaires' club. The $3 trillion valuation will be a moment of vindication for Cook, who took charge in 2011 when the company was valued around $350 billion amid doubts whether he could take forward his predecessor's zeal for innovation. Cook has pledged to give most of his wealth away to charity.
Image: picture-alliance/T. Avelar
Birth of garage startup legend
Apple was founded by Steve Jobs and his high school classmate Steve Wozniak in 1976 in Jobs' family garage. It was the first successful personal computer firm. Apple went public four years later in the biggest public offering since Ford Motor's debut in 1956. By the end of 1980, the computer maker was more valuable than the iconic carmaker at nearly $2 billion.
Image: picture-alliance/dpa/Apple
Back from the brink
Apple's next breakthrough came in the form of Macintosh, a computer with a graphical user interface. But the initial tepid response to the Mac, panned for insufficient memory and for being toylike, led to the ouster of Jobs in 1985. Jobs returned in 1997 to rescue the company from the brink of bankruptcy. Apple never looked back thanks to a succession of hit products like the iPod and the iPhone.
Image: imago/UPI Photo
The iPhone moment
Apple's most groundbreaking product remains the iPhone, the first phone to pack a music player, a web browser, and email capabilities in a single device. The iPhone, which started a smartphone revolution in 2007 and pushed competitors like Motorola and Blackberry on the brink, still is Apple's money-spinner and is at the core of the company's plans to grow its services business.
Image: picture alliance/AP Images/P. Sakuma
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EU vs. Google
The DOJ isn't the first to take on the world's most popular search engine. The EU has ruled against the internet giant for breaching antitrust rules three times since 2017. The European Commission has fined Google a combined €8.25 billion: for illegally boosting its comparison shopping service over competitors, for imposing illegal restrictions that ensured the use of the Google search engine on Android devices and, most recently, for illegal agreements with third-party websites that prevented Google rivals from placing their search advertisements there.
Google has appealed all three rulings. A verdict is expected next year.
The EU is also mulling over whether Google's plan to buy fitness tracker Fitbit would violate antitrust law. Critics have raised concerns the deal would jeopardize competition as well as data privacy, providing Google with access to mountains of health and wellness data. A ruling is expected in January 2021.
