The past two months have seen the crystallising of ambitious efforts to rein in Google’s commercial and technological dominance. Two major developments came one after the other. In July, James David Vance’s nomination as the vice-presidential candidate of the Republican Party in the upcoming elections in the United States of America brought forth a stream of stories in the US media on what this could mean for the media tech universe. It was a Little Tech versus Big Tech moment that was further compounded by a blow delivered to Google in August when a federal judge found the company guilty of violating the US anti-trust law which aims to check monopoly.
The New York Times and The Washington Post both reported in July that Vance’s nomination was the outcome of powerful lobbying by the start-up community in Silicon Valley. The Valley is divided: Little Tech and Middle Tech — as the thousands of venture capitalist-backed firms are known — were rallying their forces against Big Tech — as Google, Microsoft, Meta and Apple are collectively known. The effort to get a foothold in Washington had coalesced around the former venture capitalist, Vance.
The New York Times suggested that while Vance had spent less than five years in Silicon Valley’s tech industry as a junior venture capitalist and a biotech executive and had made little mark on the tech scene, his stint there became crucial for forging connections with billionaire executives and investors, including the investor, Peter Thiel, the entrepreneur, David Sacks, and Elon Musk, the owner of X. The paper added that they funded Vance’s political ambitions, raised his profile among other wealthy donors and on social media, and lobbied Donald Trump to choose him as a running mate. At a June fundraiser for Trump at Sacks’ mansion in San Francisco, a strong pitch was made on behalf of Vance when Trump informally polled the wealthy men around him as to who his vice-presidential pick should be. The paper also said that Musk separately encouraged Trump to choose Vance in recent private communications. In the 2022 elections, Thiel, one of whose venture capital firms Vance had worked for in 2016-17, financially backed his campaign for the Senate, as did Sacks.
What does all this mean for Google? Vance has apparently championed breaking up Google while advocating a hands-off approach to nascent technologies like cryptocurrency. He is widely seen within the tech world as one of the few politicians who understand that Silicon Valley does not lobby as a monolith. He has praised the Federal Trade Commission, which has brought anti-trust cases against tech’s biggest companies, and called for the breakup of Google because it is an “explicitly progressive technology company”. One analyst speaking to the Post said that Vance winning the vice-presidency would mean that “Little Tech and Medium Tech is going to have someone there.” If that ticket is elected in November that is.
Why does having influence in Washington D.C. suddenly matter so much to start-ups being incubated on the West Coast? The Little Tech vs Big Tech rivalry for influence has one major impetus today — Artificial Intelligence.
Politico’s profile of the venture capitalist, Garry Tan, gets to the nub of why this is such a crucial juncture for Little Tech. “With AI now poised to upend vast swathes of the U.S. economy — and with major tech lobbyists working to entrench their AI dominance through regulation — Tan said start-ups can no longer sit on the sidelines.” As the president and CEO of the influential tech start-up incubator, Y Combinator, he was trying to build a lobbying operation that fights on behalf of Little Tech, the thousands of venture capital-backed firms competing for a place in the emerging AI economy. The effort was to “tip the regulatory scales away from giants in the sector.”
In the meantime, in July, the Alphabet CEO, Sundar Pichai, was telling investors that his company would keep betting big on AI, “We are innovating at every layer of the AI stack.” However, shortly after that pronouncement, earlier this month, Google was found guilty of anti-trust violations in a case brought by the Department of Justice. The judge, Amit Mehta, ruled that “Google is a monopolist, and it has acted as one to maintain its monopoly.” Its agreement with Apple made its general search engine the default option since it came preloaded on iPhones. Alphabet paid Apple $20 billion in 2022 for Google to be the default search engine on the Safari browser, according to unsealed court documents in the anti-trust lawsuit. The judge described “Google’s monopoly in general search” as “remarkably durable”, writing that it increased from about 80% in 2009 to 90% by 2020. “The market reality is that Google is the only real choice as the default GSE.”
The Verge says that the judgment is the first in a wave of tech monopoly cases brought by the US government in recent years. After its case against Microsoft two decades ago, the monopoly case against Google was brought in 2020 and, now, Amazon, Apple and Meta each face monopolisation lawsuits from the US government. Two of these have been brought by the Federal Trade Commission. The Verge underscores the fact that when more trials take place, including a second one against Google over a separate challenge of its advertising technology business, Mehta’s decision in this case will be even more consequential for how other judges may consider applying the century-old anti-trust laws to modern digital markets.
Then comes the question, what next? A new trial phase which begins in September will take up the question of remedies. The judge will have to give a decision on how to restore competition which will be just as important as — if not more than — his finding that Google violated the anti-trust law. Television debates on business channels are living off discussions on why Google is too big to be split.
The anti-trust ruling is hardly the first time Google has faced a challenge to its market domination. It was ruled a monopolist in the European Union years ago, and the region imposed a choice screen in an attempt to create competition, asking device
users to select their default search engine. But the approach had little impact and Google remains overwhelmingly dominant.
Taking on Google successfully, then, could remain at the level of a fantasy, even if Vance makes it to the White House.
Sevanti Ninan is a media commentator. She also publishes the labour newsletter, Worker Web; https://workerweb.curated.co/issues
