History has shown that successful government antitrust activities have led to improved innovation and savings for consumers. If the Department of Justice succeeds in the biggest U.S. antitrust trial in a quarter century – a lawsuit against Google alleging that the internet giant illegally monopolizes digital advertising technologies, it is likely to lead to changes that will benefit consumers and smaller startups. A win for the DOJ will surely energize the regulators to move forward with a rumored DOJ antitrust case against Live Nation.
The DOJ filed a high-profile case against Microsoft in 1998, accusing the company of leveraging a monopoly to lock customers into its product and to crush small competition. It was the same year that Larry Page and Sergey Brin, two Microsoft critics, were launching their own company, Google.
Now Google is facing the same charges they made against Microsoft so many years ago.
“Back then, Google claimed Microsoft’s practices were anticompetitive, and yet, now, Google deploys the same playbook to sustain its own monopolies,” the DOJ wrote in its lawsuit filed in October 2020.
The government succeeds in protecting consumers
Back in the early 1980’s, government regulators forced AT&T to relinquish its monopolistic grip on telephone service. The phone system was opened to competition in long distance and cellular. The price of phone services collapsed. Long distance became essentially free. The kind of phones you could connect to the phone system became unregulated, which led to more innovative phone features being marketed and sold. The size, price, speed and availability of cellular phones transformed how we communicate. Once the cable companies saw how much money it was possible to make from internet services, they invested in the technology to deliver it through the cable system as well.
It was an unqualified success for the industry and the consumers.
Government regulators fail to protect consumers
However, the action against Microsoft has been met with mixed results. The presiding judge ruled in favor of the government and ordered a breakup of the company. However, after a year and a half of negotiating with Microsoft, the DOJ announced it was no longer seeking a breakup of the company and would instead seek a lesser penalty. The magazine Business & Economic Research argued that the watered-down government settlement actually had little effect on Microsoft’s behavior. The fines, restrictions, and monitoring imposed were not enough to prevent it from “abusing its monopolistic power and too little to prevent it from dominating the software and operating system industry.” They concluded that for that reason, Microsoft remained dominant and monopolistic after the trial, and it continued to stifle competitors and innovative technology.
The effect on the live entertainment industry
The 10-week Google trial is near its midway point, and some industry and legal experts are surprised that Google didn’t settle the case, but instead, chose to go to trial.
“I was a little surprised Google allowed this to go to court,” economist Shane Greenstein, Martin Marshall Professor of Business Administration at Harvard Business School, said in an interview with the Harvard Gazette. “These kinds of cases tend to bring to light many details about how business gets done.”
Shining a light on the details and exposing Google’s secrets could be a good thing for critics of Live Nation’s dominance in the industry.
It was just a few years ago that Google implemented a registration and certification program for ticket resellers advertising through AdWords. With the thousands of industries participating in the AdWords program, ticket resellers were singled-out for added scrutiny. This new program was launched right before Ticketmaster announced a new partnership with the Google-owned YouTube — connecting fans with concert tickets and tour information directly on artists’ YouTube video pages — and led Connecticut congressional members to ask the FTC to monitor Google’s new rules.
With added analysis of Google’s business practices, the information provided on these kinds of deals could help lift the veil on these shady business practices.
Additionally, a win for the government may provide the needed incentive for the DOJ to move forward with its rumored case against Live Nation.
Though the president and congress have lately been making a lot of noise about Live Nation’s monopoly, with the currently divided government and the nonfunctioning House, they clearly cannot or will not accomplish anything of substance this year. Actions by local governments like the cities of Irvine and San Jose, who refused to enter into lopsided agreements with Live Nation, and government regulators may actually be the heroes of the live entertainment consumers.