The Spotlight on Big Tech: How Increasing Regulation is Shaping the Industry

Introduction

Together, Alphabet, Amazon, Apple, Meta and Microsoft form the ‘Big Five’[1]. Defined by global dominance, their capabilities extend far beyond the world of technology. Consider Nvidia and Tesla, and the ‘Big Five’ becomes the ‘Magnificent Seven’[2]. Indeed, they are magnificent. However, the praise often ends there. The pressure is rising on government bodies to regulate the capabilities of Big Tech. United States v Google LLC[3] signals a movement towards a more scrutinised technology sector. A global trend that has already begun.

The Implications of United States v Google LLC on the Technology Sector

On 5th August 2024, a US District Court held that Google had violated the US Sherman Antitrust Act[4]. The $26 billion expenditure on exclusive deals with other tech platforms was seen as fortifying Google’s illegal monopoly on general search[5]. The DOJ capitalised on their success, and were quick to publish their proposed ‘behavioural and structural remedies’[6]. While the remedies have not yet been implemented, it is important to consider the precedent they could set for the future of Big Tech.

The breakup of Google 

The first suggestion, and the most publicised one, is the proposed breakup of Google. The remedy could prevent Google from using platforms such as Chrome Browser, Play app store and Android operating system[7]. The restraints are intended to promote app store competition by improving access for smaller startups to break into the market. Theoretically, this could redistribute exposure in favour of companies outside of the Big Five. However, critics argue that regulation would need to accompany the remedy to ensure its effectiveness[8].

The banning of exclusive contracts

The second notable remedy is that exclusive contracts could be banned. Apple may no longer be able to pocket Google’s $20 billion annually in return for Google’s place as a default search engine[9]. As a result, Apple could face a 4-6% decrease in profits[10]. The proposal shows that no member of the ‘Big Five’ is immune to the DOJ’s crackdown.

The publication of data

The suggestion to force Google to publish their search data could promote the growth of tech startups, especially in AI. Tech companies, such as OpenAI, have introduced an integration of web search and AI[11]. Access to Google’s data would enable them to shape their software more effectively towards public appeal. Though Google could still apply monopolised insights to their AI Gemini model[12], the remedy would still achieve its aim of promoting competition. Competitors would be given increased access to the public’s once ‘undivided attention’[13]. In turn, this could weaken Google’s dominance – a prospect that seemed unimaginable previous to United States v Google LLC.

International technology regulation

US regulation

The Google remedies are the DOJ’s boldest antitrust move yet. They illustrate a growing caution surrounding the power and influence of Big Tech, especially within the context of expanding AI.  To counter this concern, the DOJ have adopted an arguably more proactive approach in their control over tech expansion. For example, the US have introduced the Federal Artificial Intelligence Risk Management Act 2023. The DOJ have maintained this momentum, and have already opened antitrust investigations into Microsoft, OpenAI and Nvidia[14]. Perhaps the Google crackdown could be seen as giving regulators a new lease of life. The scale of the movement, however, can only be truly appreciated within an international context.

EU regulation

The EU has recently introduced the Digital Markets Act (DMA). The legislation defines ‘gatekeepers’; tech entities who must report their compliance with requirements set out in the Act. Six platforms have been categorised as ‘gatekeepers’[15]. Five of these six form the complete ‘Big Five’. The EU’s regulatory approach, therefore, differs to the US. Instead of refining their focus towards a singular firm, they have targeted all of them at once. The DMA is also a key indicator of a strategical shift. The EU have previously fined Google on multiple occasions – one example being an antitrust violation in 2018 that resulted in a $5.1 billion fine[16]. However, their approach has now moved from economic to structural and operational restrictions; a trend in line with the US.

UK regulation

The UK has introduced the Digital Markets, Competition and Consumers Act 2024 (DMCC). The legislation is widely seen as parallel to the DMA[17]. The Competition and Markets Authority (CMA) issued its intention to use the DMCC to identify firms with Strategic Market Status, who are subject to the Act’s regulations[18]. Commentators suggest that the CMA’s 2022 Mobile Ecosystems market study is indicative of the firms targeted for this classification[19]. Apple and Google both feature prevalently in this report. Again, the increasing focus of regulation can be seen as streamlined towards the Big Five. 

The global regulatory pressure Big Tech firms are increasingly under has resulted in an increased need for their regulatory awareness. Noah Brumfield, a Partner at A&O Shearman, has suggested that technology companies must now anticipate jurisdictional trends, and be prepared to adapt[20].

Conclusion

The global spotlight on Big Tech is increasingly growing. The tolerance for their dominance has disintegrated, and regulators now look to restrain the Big Five. United States v Google LLC provides only one example of this. What this means for AI, and its growth, remains to be seen. Until then, technology companies must remain aware and vigilant.

[1] P. Furlong, ‘The Consequences of Big Tech’s Unchecked Consolidation of Power’ TechPolicyPress (06 August 2024).

[2] A. Sebastian, ‘The Magnificent Seven stocks: still a great opportunity or overpriced and set to fall?’ The Times (23 October 2024).

[3] United States v Google LLC [2023] 661 F Supp 3d 480.

[4] N. Robins-Early, ‘Google broke law to maintain online search monopoly, US judge rules’ The Guardian (06 August 2024).

[5] S. Palma and S. Morris, ‘US weighs Google break-up in landmark antitrust case’ Financial Times (09 October 2024).

[6] Ibid.

[7] Ibid.

[8] M. MacCarthy, ‘Google’s antitrust troubles demonstrate the need for a digital regulator’ Brookings (30 September 2024).

[9] S. Palma and S. Morris, ‘US weighs Google break-up in landmark antitrust case’ Financial Times (09 October 2024).

[10] A. Soni, ‘Google antitrust ruling may pose $20 billion risk for Apple’ Reuters (07 August 2024).

[11] R. Waters ‘Google is winning the AI search wars’ Financial Times (31 October 2024).

[12] Ibid.

[13] Ibid.

[14] D. Milmo, ‘Microsoft, OpenAI and Nvidia investigated over monopoly laws’ The Guardian (06 June 2024).

[15] T. Wheeler, ‘Road testing Big Tech regulation in Europe’ Brookings (06 March 2024).

[16] Ibid.

[17] M. Kirkwood, ‘The UK’s Digital Markets, Competition and Consumers Act: A Targeted Approach to Tech Regulation’ TechPolicyPress (22 August 2024).

[18] Ibid.

[19] Ibid.

[20] ‘Big Tech and antitrust regulation’ Financier Worldwide (October 2024).