Big Tech companies are no strangers to investigations and litigation. What started in 1998 with Microsoft and the browser wars, continued in 2011 with Google and its ads, and picked up in this decade. However, regulation has not been successful in ensuring that these companies engage with the market without using their disproportionate power. With digitalization becoming the sine qua non of the day, Big Tech has come to hold material power, especially around policy and rulemaking for their own sector.
Is 2023 the year when litigation against Big Tech reaches a turning point? In the last few years, many reports – like this series by Vox, or this extensive list by the Quartz – have covered the host of litigations that Big Tech is engaged in. It also comes at a time when Big Tech has seen a slowdown in its rapid expansion and growth and is trying to find newer avenues to generate a profit, including through artificial intelligence (AI). The convergence of litigation and regulation offers an important moment in the discussion around Big Tech accountability.
A Shifting Perspective on Big Tech Litigation?
The rise in judicial action against Big Tech, particularly the United States v. Google LLC, 2023 (‘Google Trial’), is reminiscent of the late 1990s Browser Wars coming to a head in 1998. The Browser Wars refer to the competition between Microsoft’s Internet Explorer and Netscape’s Mosaic. Microsoft began bundling the Internet Explorer with Windows, which invited litigation. The US Justice Department filed a suit against Microsoft for abusing their dominance, in violation of the Sherman Act, 1890. The ruling introduced ‘structural separation’ in the context of Big Tech for the first time. Put simply, structural separation “targets the source of the power” and attempts to do away with the incentives and opportunities to abuse market power. The 1998 litigation is a useful starting point to evaluate the journey of litigation against Big Tech.
At first mention of the Microsoft trial, one recalls an otherwise collected Bill Gates, floundering during his deposition. This, and other many noteworthy moments from the trial are popular today because the proceedings were made public. Today, the veil of secrecy around the Google Trial allows us to gain no such insight. US District Judge Amit Mehta, who will rule on a part of this trial, has expressly stated that he will defer to Google to determine which information is commercially sensitive. The Court is a useful ally in such litigation. With support from the Court to protect their business, Google provides a pre-brief of their arguments to journalists and then promptly files a petition to keep evidence and testimonies private.
However, a glaring similarity between these proceedings is that the central arguments of Google and Microsoft relied on the States’ limited understanding of how the technology and markets worked. Big Tech’s central argument relies on the traditional antitrust principle that permits dominance in a market, but prohibits the abuse of dominance. They argue that they are the enablers of innovation and boost competition. All evidence, however, points to the contrary. Companies are unable to escape Big Tech’s shadow. Enterprises cannot meaningfully compete with Big Tech and must resort to relying on Big Tech infrastructure (for example, cloud services) to survive. Big Tech companies also are known for killer acquisitions which restrict new entrants in the market and takeover innovation. In fact, ChatGPT’s creator, OpenAI, is a classic example, where it started as a non-profit and subsequently vested a 49% stake with Microsoft. The concentration of power and the use of digital intelligence as a market tool has allowed platforms (specifically Big Tech-led platforms) to be characterized as infrastructure.
In September 2023, the Federal Trade Commission (FTC), along with 17 state Attorneys General, filed a complaint against Amazon for using anti-competitive means to maintain its monopoly. In particular, the complaint focuses on Amazon’s marketplace, where it doesn’t allow sellers to offer prices lower than itself.
The Google Trial is a useful starting point to understand economic power today – how it is acquired, maintained, and exercised, along with its far-reaching implications. However, the case-to-case nature of judicial proceedings and variations in decisions (because of a variety of factors like jurisdiction, nature of arguments made, judges appointed, etc.), makes litigation an ineffective way to curb Big Tech’s power in a holistic manner. It is important, therefore, that regulation reflects the responsibility that Big Tech and the State have in levelling the playing field. The Digital Markets Act in the European Union, for instance, designates gatekeepers broadly on the basis of their entrenched and durable position in the market, and a significant user base. The dominance of Big Tech companies in the market and across different sectors, therefore, is becoming a focus of regulation now. The Act provides for specific gatekeeper obligations that imposes the additional responsibility of maintaining competition. This is reflected in obligations that prohibit the bundling of core services for the purpose of personal data collection.
Since the Browser Wars, litigation against Big Tech has gone beyond the Chicago School notions of competition, i.e., access to low prices would render dominance irrelevant. A neo-Brandeisian movement, however, is emerging in antitrust litigation. The focus has shifted to the structural underpinnings of the market and competition within it – especially, dominance in and of itself must be regulated. This is not to say that Big Tech companies have not pushed against being regulated in this manner – the recent case filed by Meta and TikTok challenging their gatekeeper status is one such example.
What is also becoming clear, especially with the rapid scaling and innovation associated with Big Tech, is that allied but critical issues around the exploitation of labor, environmental challenges, sustainability, etc. – cross-cutting concerns that have been discussed in other sectors – are now being brought to the forefront. Additionally, the permeation of digital intelligence across sectors has raised concerns around the skewed distribution of economic and social value accruing from data-related activities. The tendency, so far, has been to relegate the Global South as data providers, and systemically ensure they cannot move up the data value chain. However, this is slowly changing to also focus on certain rights-based litigation as well.
Litigation around the World
It is potentially one of the first times that nearly 20 different cases (that we know of) are concurrently running across jurisdictions with regard to the so-called Big Five Big Tech – and these are simply the various regulators looking at the impact of these companies on the markets. This does not include the labor-related cases being filed in different jurisdictions – by drivers and delivery workers in the EU, Australia, and content moderators in Kenya, for instance.
The following section looks at the companies and some of the bigger cases they’re involved with.
United States of America
As the largest Big Tech firms are based in the US, movement on investigations and litigations in this jurisdiction can become significant at the global scale. While there was a lot of promise in 2021-2022 with important bipartisan legislations like the American Innovation and Choice Online Act or the Open App Markets Act being tabled, they have been stalled through active and powerful lobbying. In fact, the fate of these laws now remains shrouded under a cloak of uncertainty, especially as the US moves into its presidential election cycle. In that light, investigation and litigation is important.
In September 2023, the Federal Trade Commission (FTC), along with 17 state Attorneys General, filed a complaint against Amazon for using anti-competitive means to maintain its monopoly. In particular, the complaint focuses on Amazon’s marketplace, where it doesn’t allow sellers to offer prices lower than itself. This is done by putting these sellers very low on the search which significantly impacts their visibility. There are other considerations of self-preferencing, or fees imposed on sellers to use Amazon’s marketplace.
Another significant development is the conclusion of the evidentiary stage of the Google trial, which sought to prove that Google abused its monopoly power by making payments to phone manufacturers to be the main search engine. Google has opposed this case by claiming that its superior services are the reason for its dominance and large market share.
The EU has witnessed some significant cases against several Big Tech companies. The EU has filed cases against Meta, including a hefty fine of 1.2-billion Euro (USD 1.27 billion), for violating sharing the data of its users; against Microsoft for the bundled chat services in relation to Teams and Office services; against Apple for offering restrictive terms for non-Apple apps on their devices; and against Google for terms that privilege its own search engine and browser. It is also worth noting that a lot of these fines remain unpaid.
In India in October 2022, Alphabet (Google) received a significant antitrust ruling against it by the Competition Commission of India (CCI), the central antitrust regulator, for abusing its dominant position for making its payment system mandatory on its app store, which is used on android phones, similar in some ways to the US case. It enabled a vertical integration of its products. What was in particular critical was the penalty imposed – INR 1,337.76 crore, or USD 160.59 million. Google appealed this decision both at the Appellate Forum (the National Company Law Appellate Tribunal), where it lost, and again at the Indian Supreme Court, where it is currently pending.
What is significant is that the government authorities read this finding of the CCI as a shot in the arm for specific regulation. It aligns with India’s proposed Digital Competition law, much along the lines of the Digital Markets Act, for ex ante regulation of the platform economy. These regulations are under consideration by the central government at present.
The Brazilian competition authority is investigating Apple for restricting developers and users and requiring them to use its own payment systems and in-app purchases, along similar lines as the Google cases in other jurisdictions.
The cases are indicative of the direction of thinking with regard to digital markets and the platform economy in the last two years. The impact, in case of an anti-Big Tech decision, is expected to be significant.
In India in October 2022, Alphabet (Google) received a significant antitrust ruling against it by the Competition Commission of India (CCI), the central antitrust regulator, for abusing its dominant position for making its payment system mandatory on its app store
The Chinese Big Tech companies have faced censure from the country’s competition regulator for anti-competitive behavior over the last few years. The State Administration for Market Regulation (SAMR) has imposed large fines on shopping platforms such as Alibaba (USD 2.8 billion) and Meituan (USD 530 million) for violating competition laws.
The regulatory framework for China’s Big Tech has undergone a sea change, especially last year with antitrust law amendments aimed at companies being prevented from excluding or limiting competition “by abusing data, algorithms, technology, capital advantages as well as platform rules”. This understanding reflects an enhanced view of Big Tech power and a step in the right direction for platform regulation.
Foreseeable Knock-on Effects for the Future
Verdicts in litigation against Big Tech in the US and EU will shape regulation around Big Tech in the immediate future. Dubbed the Brussels Effect, evidence has shown that the EU exerts considerable influence in the shaping of regulation, particularly with regards to ‘data privacy, consumer health and safety, environmental protection, antitrust, and online hate speech’. Rulings in favor of Big Tech, particularly in the US and EU, will likely legitimize the entrenchment of Big Tech in our social, economic, and political lives.
Regardless of the verdict of these landmark cases, Big Tech has a visible PR strategy to underplay their losses and celebrate their wins. In the immediate aftermath of the litigation, therefore, we may witness a largely positive response from Big Tech. Reportedly, Google attempted to quash a suit filed by the Texas Attorney General regarding Google’s monopolization of the advertising market. The judge permitted dismissal on a single cause of action, with the rest of the trial proceeding on remaining counts. However, this was, in Google’s eyes, a significant “win” and was celebrated. An impact assessment now, or when most suits come to a head, will require a critical consideration of Google’s responses.
Verdicts against Big Tech will also have to be coupled with distribution of economic and social value, regulations relating to economic and collective rights around data, and efforts towards building knowledge commons.
The knock-on effect of checking Big Tech’s practices will be felt in AI markets in the first instance. A notable shift in these markets is that the US and China have become frontrunners with the EU being left behind. Verdicts against Big Tech will also have to be coupled with distribution of economic and social value, regulations relating to economic and collective rights around data, and efforts towards building knowledge commons.
The throughline in litigation against Big Tech, particularly the 1998 Microsoft trial and the Google trial today, is that the State does not understand Big Tech – the technology or its markets. On occasion, this also wins them the favor of the court. For instance, Washington D.C. deferred to Google’s judgement on determining which evidence should remain private so as to protect commercially sensitive information. While State capacity may not extend to nuances of technology, the knowledge gap is reducing. There is a clear understanding of Big Tech’s acquisition of power, which includes the impact of vertical and horizontal integration, the role of network efforts and the impact of an investment climate that divested focus from profits to bigness. This knowledge capacity is buttressed by an understanding of the problem of bigness, which paves the way for practices such as self-preferencing and the importance of data.
The response to the State’s limited capacity must be two-fold. As a first measure, the knowledge gap must be bridged with increased reliance on experts in the field, especially on matters of regulation and governance, tied together with a focus on technology. A notable effort in this regard was the appointment of Lina Khan as the chairperson of the FTC in the US. Big Tech’s domination has an impact on the political economy at large. Relying on experts may broaden the scope of regulation to check the political problem of domination. Secondly, the scope of regulation must be widened to include critical issues around data, labor, and creative expression among others – some of which is already happening as seen in platform labor regulation or prohibition of self-preferencing, for instance. Regulation must be designed to be agile and must rethink, at a fundamental level, the understanding of structural separation. Lina Khan argues that structural separation must systematically remove the incentives to abuse one’s dominant position in the market. This would require strict ex ante regulation that understands the role of digital intelligence. Separation, then, must take place across the data value chain i.e., data collection, cloud-based processing, and digital intelligence and application to real-world systems. Appropriate structural remedies could then pave the way for standardized practices.