Washington – As the Google Search antitrust trial moves into its remedy phase, Trevor Wagener, Chief Economist and Director of the Research Center at CCIA, has written an article discussing the potential costs of the remedies that may be proposed by the Department of Justice.
One remedy that could be proposed is restricting Google from engaging in distribution agreements with browser developers, device manufacturers, and wireless carriers. Wagener warns of the potential costs arising from such a remedy. The companies currently receiving payments under Google distribution agreements would likely pass some or all of those costs on to consumers, increasing prices in a time of elevated inflation: for example, up to $87 per device. Some free-to-use software providers that rely on such agreements to fund operations, such as Mozilla, would have to “either cease offering many of its free software services or reduce the quality of its offerings going forward. Consumers would face either fewer choices or reduced quality of offerings as a result.”
Another remedy the DOJ may advocate for is the structural separation of Google into at least two distinct companies. This would be an extreme remedy and a departure from decades of precedent in Section 2 cases, as the last “breakup” remedy awarded in a Section 2 case was in response to a case brought in 1974. Wagener warns that breaking up Google could increase operating costs by $64 to $80 per user in the United States and Canada, and large portions of such operating cost increases would likely ultimately be passed on to consumers.
The following can be attributed to CCIA Chief Economist & Research Center Director Trevor Wagener:
“Splitting Google services across a larger number of companies would make the operating cost increases worse while also reducing the potential for cross-subsidization of many currently free-to-use services. A ‘break Google into many pieces’ scenario would increase both the size of new costs and the expected share of those cost increases passed on to consumers, harming consumer welfare considerably.”
