The antitrust suit filed against Google by the US Department of Justice this week contains echoes of the government’s case against Microsoft 22 years ago, but it will hinge on the ways in which the two cases are different.
Google’s defense will include its longstanding mantra that “competition is only a click away”—or, as the company said in a statement, “you can easily download your choice of apps or change your default settings in a matter of seconds—faster than you can walk to another aisle in the grocery store.”
Microsoft couldn’t say that. If the Windows operating system was driving you crazy, you couldn’t switch to the Mac OS, the top competitor at the time, without buying a new (and expensive) computer.
By contrast, Google’s far lower “switching costs” are a central reason why some experts reject the idea of Google as “the new Microsoft.”
But proving that competition is a click away is not the same thing as proving that a market is competitive.
For competition to work well, consumers need to be able and willing to switch to better products, and new competitors need to be able to enter the market.
It hardly matters how few clicks it takes to switch if there aren’t any decent options worth switching to. And in the market for search engines, data is a powerful barrier to entry.
Then there’s the fact that “one click away” is still quite a distance.
The US government’s case revolves around Google paying companies like Apple to be the default search engine in browsers and on smartphones, which raises the question of how much defaults matter.
Standard economic models assume that a user switches when it’s in their interest to do so, which simply isn’t the case.
In their book Nudge, Richard Thaler and Cass Sunstein call this the “yeah, whatever” heuristic: “If, for a given choice, there is a default option…then we can expect a large number of people to end up with that option, whether or not it is good for them,” they write.
The “yeah, whatever” heuristic and other findings from behavioral economics have made waves in social science, but unfortunately they haven’t had as much impact on antitrust.
US courts are unlikely to recognize the barrier that “a click away” truly represents. Google gets it, though, which is why it pays billions to be the default.
( Courtesy : Quartz)