Suit against Google a $43 million boondoggle for Texas
Slapping regulatory controls on and initiating expensive litigation against successful technology companies have become a central focus of federal and state governments across the country. No doubt many companies are in the crosshairs for recent controversial behavior, but should the government step in to rearrange winners and losers? Does that truly benefit consumers?
Here in Texas, our attorney general is leading a 14-state lawsuit against Google for alleged monopolistic advertising practices. When it comes to the consumer, can there be benefit resulting from a government effort to impose regulatory market controls or regulate Big Tech in case-by-case litigation? That effort can only result in hampering innovation, discouraging competition and ultimately hobbling the tech industry.
In a state that prides itself on being open for business and supportive of free markets, leaders should consider the harmful consequences of Texas’ participation in the case against Google.
America fosters the greatest startup and entrepreneurial environment in the world. While Google has been the top provider in the adtech — advertising technology— space, it is still an emerging market. The largest and most innovative companies in the world fight for market share in online advertising. AT&T, Amazon, Oracle and Facebook are not stepping aside for Google. Historically, antitrust litigation has served more as a major weapon in corporate warfare than as protection for the consumer — an issue our leaders should consider before placing judgment.
History further tells us that when an industry is subjected to regulatory control, the regulated eventually control the regulator. The consequence is higher bars impeding new market entrants, thus competition.
As for antitrust litigation, it’s expensive and history questions its efficacy. For instance, the U.S. Department of Justice’s IBM antitrust investigation, starting in 1969, lasted 13 years. When it ended, IBM was no longer “Big Blue” — not because of government litigation but because of market innovation.
Also, antitrust litigation is a heavy-handed weapon that Texas should be wary of using. Regulation by litigation can only result in inconsistent decisions and remedies as businesses try to navigate the broader significance of decisions designed only to address the particular issues raised in court. And in this case, the action sends a strong signal that if a company is successful and innovative in its space, our state will impose government control. One can only warn: “Watch out, Tesla.”
Finally, few legal actions are as expensive as antitrust. The same is true regarding Texas’ antitrust litigation against Google. Texas taxpayers are being asked to foot a $43 million bill to fund, initially, the Google litigation, and the Texas Legislature is signaling it may grant this request.
But before our legislators succumb to the “urge to do something,” they must consider that this request by the attorney general’s office is only a down payment. The litigation will take years to navigate the trial and appellate courts. It could ultimately cost hundreds of millions of dollars, leaving the state even further in the red.
And whether it ends in Texas’ favor will ultimately not matter; during all that time, the tech ecosystem will not have been static. If history is the guide, market evolution and competition will prevail, rendering any result from the suit irrelevant.
I have had the privilege of sitting on Texas’ highest bench and studying the proper role of courts in resolving important issues of the day. Regulation by court decision is the least productive process. But primarily, we Texans champion free markets and pride ourselves on a state that is open for business. Our leaders should contemplate the costly consequences of anticompetitive steps taken in the name of antitrust.