Justice Department’s Google Decision Remedies Threaten America’s Entrepreneurs

In October of 2020, the Justice Department and a group of states filed one of the most consequential antitrust cases in decades, alleging that Google’s agreements with Apple, Samsung, and other mobile handset makers to make its search engine the default option for users amounted to “anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising.”

On August 5^th, Judge Amit P. Mehta of U.S. District Court for the District of Columbia issued a 277-paged ruling that concluded: “Google is a monopolist, and it has acted as one to maintain its monopoly.”  Judge Mehta’s decision did not include remedial actions required of Google.  Instead, the judge asked the Justice Department and the states to submit potential remedies by November 20th. In documents filed that afternoon, the Justice Department recommended a number of potential remedies, including forcing Google to divest certain aspects of its business – in other words, breaking up Google – or other punitive measure such as restricting distribution, or forcing data or model sharing with rivals.

We’re not lawyers, industrial economists, or antitrust experts and have no position on the legal merits of the government’s complaint.  But as entrepreneurs working hard to build new companies, find customers, and establish our own distribution agreements and businesses partnerships, we are alarmed by the practical implications of the recent decision.  We’re not sure who the government thinks it’s helping, but it’s definitely not us.

In his recent ruling, Judge Mehta explicitly acknowledges that Google has built “the industry’s highest quality search engine.”  If that’s true – and we strongly agree that it is – how exactly are customers like us being harmed by access to Google search?  Put differently, how will we not be harmed by whatever “remedy” Judge Mehta comes up with to rescue us from the best search service on the market?  It’s also not clear to us how a service like Google search that is provided to customers free of charge in a market crowded with alternatives can violate antitrust law.

More fundamentally, the government’s case does not reflect an accurate understanding of the operational realities and needs of technology-era new and small businesses.  Entrepreneurship has always been hard and risky – a third of new businesses fail by their second year, half by their fifth.  Our survival and growth depend on our ability to reach potential customers and for them to find us.  Increasingly, that business-customer connection process happens online.  The trend toward the digitalization of business has been underway for years, but Covid dramatically accelerated the shift.  According to a recent analysis by consulting firm McKinsey & Co., the pandemic compressed into months the adoption of e-commerce by customers that would have otherwise taken a decade or more, with three out of four Americans having tried a new shopping method due to Covid.

Given the digitalization of business, the search engine is a vital aspect of America’s commercial infrastructure.  Search engines allow customers – both households and businesses – to find businesses providing goods and services they want at no cost and in the comfort of their home or on their phone.  Search engines not only help customers and business connect, they also provide a wide range of additional information like maps, business locations, directions, hours of operation, delivery services, customer reviews, and links to similar products and services provided by alternative suppliers.

Luckily – and importantly – there are dozens of search engine alternatives that businesses and customers can choose, including Google, Bing, YouTube, Yahoo, DuckDuckGo, Ask.com, Startpage, and AOL.  In addition to these, other business-specific search engines like Amazon and Facebook are also extremely popular.  Indeed, half of all online shopping searches start on Amazon.  Each of these alternatives is easy to find, access, and use – there are no barriers or obstacles.

It is true that Google’s search engine remains by far the most popular – and there are many reasons why.  Google search is the fastest, returning a wealth of highly detailed results in a fraction of a second.  Google search also captures many more sites than other search engines; it picks up and adds new sites faster than other engines, meaning users can search the latest sites, latest news, and access the most up-to-date details.  Google’s search algorithm is also highly sophisticated and constantly updated and refined, delivering results most relevant to the specific search.  And the platform tools and analytics that come with Google search are unmatched.

For all these reasons, Google currently accounts for about 85 percent of online searches.  But as Judge Mehta noted in his August 2023 ruling, it is not illegal for Google to be the most popular search engine: “A company with monopoly power acts unlawfully only when its conduct stifles competition.”  The Justice Department seems to want to punish Google for being the best.  Where does that leave us as entrepreneurs?  Will we work and sacrifice for years to build the best company in our market, only to have a disapproving government destroy what we achieve?

Finally, distribution agreements and commercial partnerships are not evidence of stifling competition.  They can’t be, because every business – including ours – actively seeks such agreements and partnerships as a means of building our businesses and brands.  How many times have we all heard the phrase “the official beer” of some airline, or the official airline of a sports team or league?  We can attest that landing such agreements is very hard – because companies, like customers, have many choices.  They care about their business and their brands, and only enter into agreements with partners they believe will leverage their commercial value by offering customers the very best products or services.

Asked in 2018 why Apple had chosen Google as the default search engine on its devices, CEO Tim Cook replied: “I think their search engine is the best.”  Importantly, despite that view, Apple also makes it extremely easy for customers to change the default search engine.  If the government succeeds in punishing Google for building distribution agreements and other partnerships, who is next?

We fear the answer is us.

As entrepreneurs who risk everything to launch and build new businesses that take on the incumbent leaders in our industry sectors, we understand more viscerally than anyone the necessity of fair competition.  Our ability to compete is what makes the risk, sacrifices, and years of hard work worth it.  Competition is the prerequisite for the innovation and entrepreneurship that drives economic growth, job creation, wealth creation, and opportunity expansion.  In short, an authentically competitive marketplace is the very basis of all economic progress.

Our advice to Judge Mehta and the Justice Department – leave it to the competitive marketplace to discipline Google and everyone else.  Google is the best and most popular search engine and an important tool that new and small businesses rely on every day to connect with customers and grow – for now.  But competition is fierce, and customers and businesses are always looking for something better.

That’s the economic system that has made the United States the most innovative and productive economy in the world.  And that’s the economic system we believe in.

Luis Suarez in the founder and CEO of Sanarai, an online mental health platform for Spanish-speakers.  Joey Womack is the founder and CEO of Goodie Nation, a community for post-accelerator social entrepreneurs and diverse founders, investors, coaches, and companies in the innovation space.