Around a year ago, a breakup of Google seemed imminent. After prevailing in a major antitrust case, the Department of Justice (DOJ) called for the dissolution of Google’s search engine and a sell-off of its Chrome browser, arguing that the company had illegally monopolized the search market. The presiding judge, Amit Mehta, appeared to agree.
“Google is a monopolist, and it has acted as one to maintain its monopoly,” he wrote.
The DOJ’s case centered on Google’s multi-billion-dollar agreements with device makers and browser companies—such as Apple and Mozilla—to make Google the default search engine. These deals, the DOJ argued, locked up distribution channels and deprived rival search engines of scale and visibility.
But in a 226-page decision released this week, Mehta declined to break up the company. Instead, he ordered Google to share portions of its search data with competitors and refrain from striking exclusive deals with device makers. The ruling was widely seen as a slap on the wrist.
Big Tech skeptics are appalled. But Mehta may be correcting course.
A Shift in Antitrust Philosophy
Recent antitrust actions mark a departure from traditional enforcement, which focused on protecting consumers from higher prices, reduced choice, and stifled innovation. Under the longstanding consumer welfare standard, market dominance was not illegal unless it was attained or preserved through anti-competitive conduct that harmed consumers.
As former FTC Commissioner Christine Wilson explained, antitrust law distinguishes “growth or development as a consequence of a superior product, business acumen, or historic accident” from true monopolistic abuse. This distinction exists to preserve incentives to innovate and succeed: “the opportunity to charge monopoly prices – at least for a short period – is what attracts business acumen in the first place.”
But recent enforcement actions sidestep the issue of consumer harm. In the Google case, Americans have access to multiple free search engines. The link between Google’s dominance and consumer injury is tenuous. Rather than establish that link, Mehta concluded that “harm to the competitive process harms consumers.”
This reflects a broader shift: regulators are increasingly treating size and success as inherently suspect, even absent clear evidence of harm. Meanwhile, they downplay evidence that dominance may stem from superior products, innovation, or strategic acumen.
Mehta himself acknowledged: “Google has not achieved market dominance by happenstance. It has hired thousands of highly skilled engineers, innovated consistently, and made shrewd business decisions. The result is the industry’s highest quality search engine, which has earned Google the trust of hundreds of millions of daily users.”
Case Study: DOJ v. Apple
Another example of regulators targeting success is the DOJ’s 2024 lawsuit against Apple. The agency accused Apple of illegally maintaining a monopoly over the smartphone market by limiting interoperability with third-party platforms and products.
Globally, Apple accounts for around 20% of smartphone sales. In the U.S., its share is closer to 65%. To make its case, the DOJ defined a narrower market—the “performance smartphone” segment—where Apple’s share exceeds 70%. This segment includes phones with high-end features like advanced cameras, wireless charging, and biometric security. In other words, it largely consists of newer iPhones.
Critics note that this definition is almost tautological: “performance smartphones” largely means the latest iPhones (and some premium Samsung Galaxy models). So, of course Apple leads that segment. It’s unusual for antitrust enforcers to effectively say: “Apple isn’t a monopoly in overall smartphones, so we’ll define a smaller market where it is.” But that’s exactly the approach taken.
The DOJ cited several ways in which Apple “illegally” maintained a monopoly: iPhones communicate better with Apple watches and phones than third-party watches and phones; app developers can’t build their own tap-to-pay features; and Apple’s terms are not favorable to “super apps” and cloud-based gaming. In short, the government depicts Apple’s “walled garden” as an anticompetitive fortress. Apple’s strategy of tightly integrating hardware, software, and services - usually thought to benefit users through reliability and security - is recast as a scheme to “lock in’ users and block any potentially competitive ecosystem from gaining a foothold.
Apple argued that its closed ecosystem is pro-consumer (secure, convenient, and reliable) and chosen freely by customers. Importantly, Apple claimed that consumers were not being harmed. Customers were choosing Apple’s integrated approach despite somewhat higher prices, which shows they value Apple’s quality and features. Again, the harm to consumers in the Apple case is largely speculative.
The Paradox of Enforcement
It’s worth noting a paradox underscoring recent enforcements: regulators complain when a dominant firm excludes rivals, but also now when it partners with rivals. In Google’s case, DOJ said Google shouldn’t exclude competing search engines – yet Google’s approach was to strike deals to be featured by other companies (Apple, Mozilla). Those deals were mutually beneficial partnerships – Apple profited handsomely, and arguably delivered a top service (Google) to its users. Yet regulators viewed that cooperation as suspect collusion to entrench monopolies.
Likewise with Apple: enforcers seem to suggest Apple should perhaps make its devices more interoperable or even allow competing app stores (i.e. help rivals access Apple’s users) – effectively demanding collaboration to boost competitors. But if Apple had cut off all third-party integrations (say, completely blocking any non-Apple device or service), that would be exclusionary; if it selectively integrates (like allowing third-party apps but with some restrictions), that’s also branded exclusionary. Companies are almost in a no-win scenario: exclude rivals and you’re a bully; partner with rivals (on your terms) and you’re colluding to maintain power.
Consequences of Overreach
The recent wave of antitrust enforcement against Big Tech reflects a broader “techlash”—a bipartisan skepticism toward dominant technology firms. While concerns about market power and consumer protection are valid, the current approach risks undermining U.S. innovation, economic growth, and global position.
Innovation at Risk
Unlike in past decades, innovation today is driven by the private sector. America’s leading tech companies—Apple, Google, Amazon, Microsoft, and Meta—collectively invest over $220 billion annually in research and development. These firms are not just corporate giants; they are engines of progress, fueling advancements in AI, cloud computing, consumer electronics, and more.
Also, anti-big-tech climate may reduce incentives for start-ups too. Normally, one motivation for start-ups is the possibility of being acquired by a larger company if they succeed – a lucrative “exit”. If every big company is under fear of antitrust for acquiring smaller firms (as in the FTC’s post hoc challenge of Facebook’s Instagram purchase), big firms will refrain from acquisitions. That could mean fewer buyouts and less funding for start-ups, as VCs can’t count on M&A exits. Additionally, if companies fear that becoming too successful will invite government break-up, that could subconsciously dampen their expansion ambitions – though this is hard to quantify, it’s the kind of risk Commissioner Wilson alluded to: businesses might “reduce investment due to fear of too much success” if success itself is penalized.
Killing the Golden Goose
The U.S. tech sector has been an enormous engine of innovation and economic growth. Six tech-related industries drove 35% of U.S. GDP growth in the last decade. The tech industry promises to bring home $3.7 trillion in AI gains by 2030. It also creates high-paying jobs and knowledge spillovers. Overzealous regulation that hamstrings these firms could inadvertently slow innovation, reduce tech investment, and hurt consumers who benefit from rapid tech progress. The Information Technology & Innovation Foundation warns that instead of targeting these sectors, “policymakers should be celebrating their success and seeking to support them as they power even more growth,” not “complaining…and trying to throw sand in their gears.”
Global Stakes
There are also geopolitical implications. The U.S. has enjoyed a leading position in tech in part due to its historically light-touch regulation of the sector, allowing companies to grow and reinvest profits ambitiously. It has long been said that Europe regulates and America innovates. Europe’s tech sector has lagged in producing giants of its own, which some attribute to an environment less friendly to high-growth tech business models.
Now, technology leadership is a key battleground of international competition, especially between the U.S. and China. Chinese firms benefit from expansive state support—subsidized land, energy, and capital—while American companies rely on market-driven investment. Kneecapping successful U.S. firms could hand strategic advantages to foreign competitors. As one analyst put it, “Hurting Apple may help Huawei.” Not to say that U.S. companies are above the law due to nationality – but it does warrant a careful cost-benefit analysis.
Market Dynamism and the Limits of Regulation
Moreover, technology markets are uniquely dynamic - today’s dominant player can be disrupted by tomorrow’s new invention. In fact, in his decision, Mehta noted that Google (and search engines in general) now face serious competition from generative AI. The technology is gaining popularity with every demographic. AI chatbots, like ChatGPT and Bing Chat, offer an attractive alternative to traditional search. In such fast-evolving landscapes, market power can be transient, and aggressive regulation risks overshooting.
Diverting Enforcement Resources
Finally, there’s the issue of enforcement bandwidth. Resources spent pursuing speculative antitrust theories against popular tech platforms may come at the expense of addressing more direct consumer harms—such as price-fixing, fraud, or deceptive practices. Regulators must prioritize cases where the evidence of harm is clear and the consumer impact is tangible.
Recalibrating Antitrust
While antitrust enforcement plays a critical role in maintaining fair competition, it must be calibrated to avoid collateral damage. Punishing success without clear evidence of consumer harm risks chilling innovation, weakening global competitiveness, and misallocating regulatory focus. The goal should be to protect consumers—not to penalize companies for being very good at what they do. As Commissioner Wilson put it, “the sword [of enforcement] should be in a firm grip… ready to fall on those who create or maintain a monopoly through anticompetitive conduct, not… those who succeed by delighting consumers.”
Comments