Why courts are reluctant to punish tech giants like Meta and Google

More than a year ago, it appeared that America’s antitrust police had finally gained the upper hand in their long-running campaign to control the nation’s tech giants.

Within nine months, the Justice Department and a group of states won lawsuits against Google over allegations that the company had created illegal monopolies in Internet search and online advertising technology. And a Federal Trade Commission lawsuit accusing Meta of illegally thwarting nascent competition when it bought Instagram and WhatsApp years ago just went to trial.

In all three cases, the threat of harsh, trade-shattering punishments loomed. This included court-ordered separations.

But on Wednesday, a federal judge ruled against breaking up Google’s ad tech business, leaving the company largely intact. Another judge made a similar decision a year ago in the search, referring to the rapidly developing technology. And in November, a federal judge ruled in Met’s favor, ruling that time and technology had passed the case.

The rulings show courts’ wariness of requiring major business changes, even after finding clear antitrust violations, as technology races forward. They also reflect how deciding whether rules have been broken is an examination of the past, while determining what to do about them requires looking to the future.

Exhibit A? The Rapid Rise and Disruptive Impact of Artificial Intelligence.

“Dynamic markets present a real challenge for courts and have been seen as a cause for caution,” said William Kovacic, a George Washington University law professor and former FTC chairman.

The Justice Department filed suit against Google in 2020, during the waning months of the first Trump administration. And the Biden administration has taken an aggressive approach to antitrust enforcement, filing lawsuits that seek to limit the market power of tech giants.

We have two more big court tests ahead of us. The FTC and a group of states sued Amazon, alleging that it squeezed out sellers on its online marketplace and favored its own offerings. (The FTC sued Amazon again on Monday, alleging the e-commerce giant secretly raised the price of advertising on its website for more than a million companies.) And the Justice Department and states have accused Apple of using its dominance of the smartphone market to stifle competition. That case and the first lawsuit involving Amazon are scheduled to go to trial in the coming years.

However, recent history suggests that relying on the courts to impose tough penalties will continue to be an uphill battle.

In an antitrust case accusing Microsoft of unlawfully stifling competition in personal computer software more than a quarter-century ago, a federal appeals court found the breakup unconstitutional. Even the landmark breakup of AT&T in 1984 over allegations that it illegally monopolized the telecommunications market was the result of a settlement, not a court order.

Courts have been too cautious about Big Tech, some legal experts said.

“We’re seeing a failure of the courts to fix the competition problems they’ve uncovered in these complaints,” said Fiona Scott Morton, an economics professor at the Yale University School of Management and a former Justice Department antitrust official.

In the Google search and ad technology cases, the judges held separate hearings on proposed remedies, known as remedies. But devising an effective remedy is a tricky business because the tech industry can change quickly and unpredictably.

Antitrust laws are designed to protect and promote competition for the benefit of consumers and new innovators.

The tech giants played the long game, backed by armies of highly paid lawyers. Time works in their favor. The meteoric rise of artificial intelligence has shown how new competitors like Anthropic and OpenAI can thrive. So the companies argue that judicial caution is the prudent course.

In the Google Search case, which produced the first major tort decision of the modern Internet era, Judge Amit P. Mehta of the U.S. District Court for the District of Columbia adopted this view. He has ordered Google to share some data with rival companies and imposed certain restrictions on its payments to ensure that its search engine gets a top spot in web browsers and smartphones.

But he brushed aside the government’s proposal to force the sale of Google’s Chrome browser as too extreme. Courts have great discretion in choosing sanctions, but “must approach the task of creating remedies with a healthy dose of humility,” Justice Mehta wrote. “This court has done so.

Jonathan Kanter, the Justice Department’s antitrust chief during the Biden administration, oversaw the government’s legal battle against Google in that case. In an interview, he called the several changes to Google’s contracts and data-sharing practices that Judge Mehta ordered “a huge missed opportunity.”

In February, the Justice Department and a group of states said they would appeal the ruling on appeals, while Google challenges the original court ruling that it violated antitrust laws.

On Wednesday, Judge Leonie M. Brinkema of the U.S. District Court for the Eastern District of Virginia issued a sealed decision that was released in short order by the court. Without giving details or its reasoning, it said it had ordered Google to change its business practices to benefit competitors.

Some antitrust experts have said the ad tech case is a good candidate to break up because Google’s ad exchange is a separate business and the economic risk of inadvertent harm would be much smaller than in search giant Google.

While Mr. Kanter sees the court-ordered penalties as disappointingly light, he insists that the antitrust challenge to the big tech companies was worth it.

The series of lawsuits signaled a resurgence of antitrust policy after two decades since the Microsoft case in the 1990s, he said. Victories in the search and ad tech cases against Google, he said, showed that antitrust law was “alive and well,” setting a precedent and encouraging private litigation.

But to some antitrust experts, a flurry of government cases has shown the limits of taming the excesses of these corporate superpowers.

“My concern is that we may be exactly where we would be if none of these lawsuits had been brought,” said Nancy Rose, a professor at the Massachusetts Institute of Technology and former chief economist for the Justice Department’s antitrust division.