The U.S. Google Search Antitrust Ruling: Lessons for Japan’s Tech Regulation
Judge Amit Mehta’s recent decision in the U.S. Justice Department’s (DOJ) antitrust case against Google has garnered significant global attention and has been greeted with great fanfare by many. In Japan, where the Japan Fair Trade Commission (JFTC) has been proactively investigating major tech companies and discussing digital markets regulation, this ruling might seem like a potential blueprint for future actions (the case does share similarities with concerns raised by the JFTC). Japanese policymakers, scholars, and enforcers should exercise caution, however. Overestimating the significance of the Google ruling or viewing it as a definitive roadmap for antitrust enforcement in digital markets could lead to misguided policies that may not suit Japan’s unique market dynamics.
From the outset, it’s crucial to dispel the notion that the Google Search case represents the “first major antitrust ruling against a technology giant.” Such a perspective overlooks a history of antitrust actions against tech firms, both in the U.S. and globally.
While the case may be the most publicized and recent global antitrust action against “big tech,” it is wildly incorrect to claim that only now are “internet companies… accountable under the antitrust laws.” There have been many cases against tech companies in the U.S.—some successful (including a jury finding that “Google willfully acquired or maintained monopoly power by engaging in anticompetitive conduct”), others less so.
Nor is the U.S. an outlier in this sense. The JFTC, for example, has been actively investigating and regulating the practices of major tech companies. Among other actions, it has investigated (and obtained remedial commitments from) Apple over its App Store payment practices, Amazon over price-party clauses, and Google over the alleged unfair treatment of Yahoo! Japan. Meanwhile, the companies have been subject to countless antitrust investigations, merger challenges, and market studies by antitrust enforcers around the globe.
Nevertheless, some tout the Google Search decision as an “aha!” moment because Google is now an “adjudicated monopoly.” But the truth is that this decision doesn’t change much, and it certainly doesn’t provide a roadmap for other jurisdictions to follow.
Understanding the Limitations of the Ruling
First, the court’s monopoly finding isn’t surprising—or particularly telling. Google has long held an extremely large share of general search in the United States. But, as a U.S. Court of Appeals held in the watershed 2001 Microsoft decision, “merely possessing monopoly power is not itself an antitrust violation.” Rather, a plaintiff must also prove exclusionary conduct—a much taller order.
Second, just because a court determined that Google has monopoly power in search doesn’t mean another court will agree it has monopoly power in online advertising or other markets—or that Amazon has monopoly power in retail or Apple has monopoly power in smartphones—particularly in other countries.
Third, the decision is fundamentally flawed. The U.S. case concerns Google’s agreements to pre-load Google Search as the default search engine in internet browsers and on mobile devices. According to the DOJ, these agreements excluded Microsoft Bing (and other general search engines) from effectively competing because users rarely switch from the default.
There’s another explanation for Bing’s lack of success, however: maybe it just wasn’t as good. The court doesn’t rule this out or show that Bing would have succeeded without Google’s deals. This is particularly relevant in Japan where Yahoo! Japan has long enjoyed a significant market presence.
The court’s failure to thoroughly consider consumer preference as a factor in Bing’s lack of success raises concerns. As we have discussed extensively elsewhere, the court’s legal conclusion—that the DOJ didn’t need to prove that the agreements were the cause of Google success—rests on a misinterpretation of the Microsoft decision. To prevail, the government should have been required to prove that Google’s default distribution deals genuinely excluded Bing from the market to the detriment of consumers.
Moreover, these default agreements aren’t exclusive, and users can and do switch to other search engines with relative ease. The real question is why users often choose not to switch. Is it due to the so-called “power of defaults,” or is it simply because they prefer Google’s service? Evidence points toward the latter.
In Europe, for instance, where Google has been prohibited from being offered as the default on Android devices since 2020, its market share has remained largely unchanged. On Windows devices, where Bing is the default, the majority of users still opt for Google. These examples indicate that when alternatives are preferable, users are willing and able to change their default settings.
If consumer preference is indeed the primary reason for Google’s dominance, then the court’s decision may inadvertently hinder users from accessing their preferred services—a counterproductive outcome. This scenario underscores the importance of thoroughly understanding market dynamics before implementing regulatory interventions.
The court’s conclusion seems rooted in a presumption that large tech firms can’t become dominant simply by being better. And this same assumption permeates much of the world’s new-found antipathy to big tech. Efforts to ban similar types of conduct (like Apple integrating iMessage with iPhones or Google “self-preferencing” its maps in its search results) without proof of harm to consumers risk stifling innovation and disregarding consumer preferences.
Implications for Japan’s Regulatory Approach
Thus far, Japan’s forays into digital competition regulation beyond antitrust (like the 2021 Act on Improving Transparency and Fairness of Digital Platforms) have been cautious, particularly relative to the EU’s aggressive Digital Markets Act, which has begun to impose a host of detailed (and problematic) obligations on digital platforms. But this year the National Diet enacted the Act on Promotion of Competition for Specified Smartphone Software, which imposes specific obligations on smartphone operating systems aimed at prohibiting them from discriminating against third-party apps and services in favor of their own. The limited scope of the act and the JFTC’s long history of careful and deliberate enforcement will likely help to curb the act’s ability to harm consumers, but it certainly has the potential to stifle consumer preferences and impede innovation.
By learning from the U.S. while considering its own market dynamics, Japan can develop a nuanced approach that promotes competition, protects consumers, and maintains its status as a global tech innovator. As some have suggested, rather than hastily adopting new ex-ante regulations, a more effective strategy might involve enhancing the JFTC’s capabilities. Investing in specialized personnel—such as IT experts and economists—and refining enforcement powers under the existing Anti-Monopoly Act could provide the flexibility and expertise needed to address any possible competition concerns in the rapidly evolving digital landscape.
While the U.S. Google Search antitrust ruling is significant, it should be interpreted with caution in the Japanese context. The decision’s questionable legal foundation and its potential to misguide policy underscore the need for Japan to chart its own course.