I’m sure no one was surprised by the DOJ’s antitrust lawsuit against Google.  Someone who handles over 80% of domestic internet queries is definitely a monopoly, right?!  Even better, Chrome controls about 70% of global browser traffic, 85% of the world’s smartphones run on Android, and Google receives 63% of search engine ad revenue in the US!  Coming in at number 2, Bing** only controls about 13% of searches run on desktops.  It is safe to say that Google could wield some monopoly power in the market.  However, the ability to wield monopoly power is not illegal; wielding monopoly power is illegal.  Essentially, the DOJ will need to prove that Google used its monopoly power to win through non-competitive means and harm consumers.  This fight is far from over because the House anti-trust subcommittee said earlier this month that action needed to be taken against Apple, Alphabet*, Microsoft, and Amazon.  If you like anti-trust drama, the next few months might be a bi-partisan anti-tech marathon. 

As much as I’d like to speculate about the case, I’m not a lawmaker or lawyer, so I’m not sure what will happen, but I would like to kick off a discussion about the economic and political realities behind anti-trust law.  If you’re feeling bold, quickly run a Bing search*** and take a look at a monopoly graph.  You’ll see that because marginal revenue does not equal demand, monopolists can charge a higher price than in a competitive market (where marginal revenue = demand) to create a higher profit level.  The problem here is that the overall surplus is lower than a competitive market as displayed on the graph.  Graphically, we can see that a monopoly produces less surplus overall than pure competition.  Obviously, we like surplus, so all of the consumers prefer competition to monopoly. 

In steps in the government to help the consumers by promoting competition.  Anti-trust laws are drawn up and all seems right with the world.  These laws were written to make sure that businesses could not take advantage of consumers.  Sadly, this does not always work out so well.  Businesses will send lobbyists to Washington D.C and state capitals to push their agendas and keep their companies away from government scrutiny.  Additionally, companies and their well-paid leaders are free to give campaign donations to candidates and parties they believe will protect them.  Why would companies spend so much money on politicians and lobbyists?  Shouldn’t they be spending that money on improving products or cutting prices for consumers? 

They spend all of this money because they believe that governments will grant them some kind of monopoly power.  Politicians see the opportunity to gain support and keep their power, and they are happy to seize the day. Here we see Crony Capitalism at work.  This process is known as rent seeking, and every company is theoretically willing to spend up to what they believe they’d gain from monopoly power.  Governments create monopolies all the time by inventing barriers to entry.  Tariffs protect local companies from foreign competition.  Special licenses and permits protect exiting businesses from startups. ****  Patents and copyrights protect new inventions or ideas from being replicated more cheaply.  Subsidies allow existing companies to produce goods cheaper than competitors could.  Like it or not, these activities push some companies closer to monopoly power, and they leave some companies out in the cold.*****

Contrary to Gordon Gekko and Bernard Mandeville, greed is not good.  Greed is the real problem on display here isn’t it?  Companies want to use their power to engage in shady practices to beef up their profit margins.  Similarly, politicians want to use their power to engage in shady practices to stay in office longer and expand their influence.  Just this morning I read 1 Kings 8:46 where Solomon asks God for mercy when the people sin, because everyone sins.  He knows the people will not behave well because we all fall into sin.  The scriptures remind us of this reality all the time.  Knowledge of this simple fact changes everything.  Ultimately, we cannot guarantee companies and governments will behave unless they are sinless.  That’s why everyone needs to know the Lord, so faith in Christ can lead to renewed hearts and minds.  Only He can take away the sins of the world (John 1:29).  Without Christ we are hopeless.  Even those who are redeemed still sin though, because Christ has not yet come again to make all things new.  The sinful confines of our existence make our institutions so important. 

In the U.S., we have a good system, but it can be abused.  The US government has checks and balances to make sure no one’s greed gets out of control, and the free market forces people to work for the good of others to receive a benefit.  I don’t know if Google’s power is leading to consumer abuses, but hopefully the DOJ will figure that out.  However, the DOJ is also full of sinful people who make mistakes and sin to further their own agendas.  Anti-trust law can be enforced with the best intentions, but it can also be used to create a pay to play system.  I do not have all of the answers, so please comment below with ideas you have to increase accountability, so the system works properly.

*Alphabet owns Google.

**Before you feel bad for Bing, realize that Microsoft owns the company, so Bing will be just fine.

***Remember that even thought you might use Bing, you’re probably still using Google Chrome to access Bing.  Additionally, I could include the graph here, but I’ll force you to try Bing and see if it is better than Google.

****Taxi medallions are very expensive in big cities like New York, which is why taxi companies made so much noise about Uber and Lyft.  They broke the monopoly. 

***** These examples do not even dive into explicitly created government monopolies which I may dive into in another post if the anti-trust festivities continue.