Utahs Attorney General Sean Reyes, who once hoped for a seat on the five-member Federal Trade Commission, is co-leading a coalition of 36 other states pursuing a lawsuit against tech giant Google (a unit of Alphabet).
Characterized as bipartisan, the state attorneys general accuse Google Play of violating U.S. antitrust laws by adopting exclusionary practices supposedly hamstringing rival app stores access to software developers and to prospective app customer-users.
Googles monopoly is a menace to the marketplace, the lawsuit claims. Not so fast.
Whilst it may be splitting hairs, Google is not a monopolist in any marketplace, including search engines and software apps, in the economics textbook sense. Google does not account for 100% of the sales of any good or service.
To be sure, Google is big, perhaps even dominant, in some markets. But such dominance is expected because consumers assign higher values to platforms that connect them to larger numbers of apps and to other users of the same apps. Economists call them network goods.
Second, many antitrust scholars (including me) agree with the late federal judge Robert H. Bork that the laws were intended to protect consumers against high prices and other abuses of market power. Mr. Reyes lawsuit barely mentions consumers and focuses on the substantial harm Google Play allegedly has done to competing app distribution channels.
Harm to rivalsa hallmark of a competitive market process allowing companies to succeed or fail by serving customers well or badlyis not something about which the antitrust laws or their enforcers should be concerned. Unfortunately, though, public officials frequently are captured by special interests that strive to win benefits for themselves in courtrooms or before regulatory agencies that they are unable to win in a freely functioning marketplace.
Indeed, reasons can be found for concluding that the Reyes-led action actually was instigated by Epic Games, a North Carolina company 40% owned by Chinese tech giant Tencent, that spearheads something called Project Liberty. Epic and its fellow group members repeatedly have sued Apple and Google, charging both with interfering unlawfully with Epics own app distribution platform.
Google and Apple have adopted very different business models for developing and distributing apps. Google Play is one of many app stores based on an open-source Android operating system; Apples apps require an Apple (iMac, iPhone or iPad) device.
Millions of apps are available to billions of consumers on both device types globally, hardly evidence of exclusionary practices by any company. Larger numbers of apps can be downloaded to Android devices because developers can choose to distribute software directly to consumers through their own websites, third-party app stores, or Google Play. In the latter case, Google, like most market intermediaries (middleman), charges developers a modest fee.
In the digital world, like old economy platforms (printed newspapers or the stock exchanges first seen in the coffee houses of London and Amsterdam are good examples) primarily supply trust, helping to reassure buyers and sellers that transactions will be secure and go through as expected. Allowing consumers to rate software applications generates real-time feedback to developers and other users about functionality, reliability, ease of use and other performance metrics is one way of establishing the essential digital trust nexus.
As a matter of fact, public opinion polls consistently rank Google as the worlds most trusted brand, certainly much more trustworthy than the news media, the U.S. Congress, the IRS, or any other institution of government.
Google Play and other app stores (e.g., Galaxy, Amazon) compete with one another for app developers, user downloads, and with Apples App Store for software designed to run on that companys devices. Consumers are free to choose the device and operating system that fits their needs best. Distributing apps globally requires intermediating transactions between large numbers of developers and potential users, which favors platform size. App developers tend to be innovative individuals or small firms that do not have access to the marketing and distribution expertiseor the reputational capitalnecessary to engage and serve large customer bases.
Mr. Reyess lawsuit threatens many tech companies on Utahs silicon slope by making it more difficult to distribute apps tailored to Utahs specific circumstances of time and place. A search for Utah on Google Play pulls up at least 250 apps: Intermountain Healthcare, the Bank of Utah, Zions Bank, news and weather outlets, tourist destinations, local police departments, and many more.
Mr. Reyess job is not to carry water for a North Carolina company at the expense of Utahs app developers and users. To reiterate, the antitrust laws were intended to protect consumers, not the competitors of Google Play or any other commercial enterprise.