Google has officially been deemed a monopoly, with a federal judge accusing the tech giant of illegally using its market power to harm rival search engines on Aug. 5. It's the first time a major internet platform has lost an antitrust case in more than two decades, raising questions about the business practices of some of Silicon Valley's most powerful companies.
Many experts speculate that this landmark ruling will make judges more receptive to antitrust action in other ongoing cases against big tech platforms, especially with regard to the burgeoning AI industry. Currently, the AI ecosystem is dominated by many of the companies the government is fighting in court, and these companies are using the same tactics to consolidate their power in the AI market.
Justice Amit Mehta's ruling in the Google case focused on the huge amounts of money the company paid to companies like Apple and Samsung to make its search engine the default on smartphones and browsers. These “exclusivity agreements” gave Google “access on a scale that rivals could not match” and placed other search engines “at a permanent competitive disadvantage,” Justice Mehta wrote. By effectively “freezing” the existing search ecosystem, the payments “diminished incentives to invest in and innovate in search.”
Similar agreements are now emerging in the AI space. Companies like Google, Amazon, and Microsoft have entered into numerous partnerships in which developers agree to use the companies' cloud services, sometimes exclusively, in exchange for cash, cloud credits, and other resources. Given the high cost of computing hardware and the constant demand from developers for this infrastructure, tech giants are often able to negotiate additional concessions like equity, technology licenses, and profit-sharing agreements. These cloud partnerships are structured differently from the deals at issue in the Google lawsuit, but they similarly serve to lock in revenue streams and exclude disruptive rivals from lucrative distribution channels.
Big tech companies are also using more traditional tactics to consolidate their power in the AI market. In a forthcoming report, my colleagues at Georgetown University’s Center for Security and Emerging Technology and I find that Apple, Microsoft, Google, Meta, and Amazon have collectively acquired at least 89 AI companies over the past decade, and that those acquisitions tend to target young startups. This suggests that tech giants may be targeting innovative AI companies before they become a competitive threat. As these companies integrate throughout the AI supply chain, it also creates opportunities for self-preferencing and other problematic behaviors that have allegedly been used in other digital markets.
If courts continue to rule against tech giants in ongoing antitrust cases, U.S. authorities will have a powerful weapon to use against companies in the AI industry. Effective enforcement could help foster a new generation of startups seeking to develop responsible, socially beneficial AI tools that would otherwise never reach the market.
But while the Google decision opens the door to much-needed antitrust scrutiny in the AI industry, even the most effective enforcement regime cannot foster a competitive AI sector on its own: Antitrust cases can take years to be heard in court, and even if judges find companies guilty of misconduct, it may be impossible to reverse the damage to competition and innovation.
Consider the timeline of the Google lawsuits: Google first signed a deal with Apple in 2005, and the Department of Justice only filed an antitrust lawsuit in 2020. Judge Mehta's ruling this summer didn't bring closure to the matter either; it could take years to determine remedies and complete the appeals process, and it's unclear whether any remedies would result in significant changes to internet search.
When it comes to the AI market, policymakers can't wait that long. Companies and governments are eager to deploy AI systems, but today it's virtually impossible to build and scale these tools without infrastructure controlled by the big tech companies. Giving the big tech companies time to tighten their grip on the industry could permanently stifle the success of AI startups and permanently undermine innovation.
If policymakers want to prevent the market for AI systems from becoming as stagnant and uncompetitive as the market for search engines, they will need to use other tools. This could include regulating cloud platforms like public utilities and building public infrastructure to offset developers' reliance on private companies. In addition to effective antitrust enforcement, such creative interventions would help preserve an open AI ecosystem that benefits us all, not just the business models of big tech companies.
It's impossible to say how much innovation has been squandered by Google's monopoly on internet search, but the right approach to competition policy can foster a healthier, more dynamic ecosystem for AI.
