Class-action suit against Google collapses; that's a good thing

Google is coming under increased antitrust scrutiny. Photo / Getty

Remember when the federal government went to war against Microsoft?

At the time, antitrust investigators accused Microsoft of unfairly packaging Internet Explorer into every copy of Windows, making it hard for other browsers to gain traction with consumers. A new crop of litigants has recently thrown the same argument at Google - but now they've decided to pull the case after a judge ruled that they haven't sufficiently defended their claims.

It's tempting to draw parallels between Microsoft's behaviour in the 1990s and Google's in this decade, particularly as the search giant comes under renewed antitrust scrutiny. But the two cases are really different, and that makes things all the more interesting, not less.

The withdrawal of the more recent case, Feitelson et al. v. Google, highlights how differently we think about software and computing now in the age of apps and smartphones. Even if Google takes advantage of some of the same tactics Microsoft did, as Feitelson alleges, antitrust experts say the world has completely changed, raising altogether different concerns about competition in the tech industry.

To understand more, let's start with what Feitelson is all about. Ultimately, the case has to do with what you see when you fire up an Android phone. No matter what device you have - an HTC, a Motorola, a Samsung - using Android means getting access to all of Google's proprietary apps: Gmail, YouTube, Google Play and so on. And of course, Google search, which comes as the default on Android phones.

Feitelson's problem with this is that it encourages people to use Google products without thinking, at the expense of other companies that might want (but can't get) as much access to users like you and me. What's more, the complaint claimed, Google forced handset makers into this arrangement. Google was allegedly going around to manufacturers saying, "You want Android? You've got to put our apps front and centre on the home screen."

These tactics were basically Google's way to "maintain and extend its monopolies" in the search business, the plaintiffs argued.

Let's pause for a minute. There are some unavoidable echoes here with the Microsoft case that make the Google case worth unpacking. As we already know, Microsoft was bundling Internet Explorer with Windows in the 1990s. As far as many people were concerned, IE was the Internet. The browser was so widespread that by some estimates, 95 per cent of the market wound up using it.

The major alternative of the time, Netscape, wasn't bundled with Windows. You could install it yourself if you wanted, but why would you, unless you really cared? Most people didn't. As a result, Netscape was ultimately shut out as Microsoft used its dominance in the operating system world to gain a similar chokehold over the browser market.

In plain English, worrying about the harms posed by software bundling is, like, so '90s.

The accusation in Feitelson is largely the same: Google's bundling of YouTube, Google Play and its other proprietary apps funnels people into the Google ecosystem. Because it takes work for consumers to buck the default, the search giant's actions make it harder for Google alternatives to break through. (The company declined to comment.)

Importantly, though, a judge threw out the Feitelson case in February, explaining she wasn't convinced Google "prevented consumers from freely choosing among search products or prevented competitors from innovating." The plaintiffs hadn't provided enough evidence to tie any alleged abuses to an increase in smartphone prices, an indicator of anticompetitive behaviour. They were told they could rewrite their argument and try again, but instead they've opted to drop the suit.

The case for Feitelson does seem ambiguous - partly because, when it comes to apps and mobile platforms, consumers actually do have a great deal of choice. In addition to Android, which accounts for roughly 81 per cent of the global market, users can also choose iOS, which takes up about 15 per cent of the market. Add in Windows Phone and BlackBerry users, and you've got a nice menu of options to pick from. The term for this in antitrust circles is "inter-system competition."

Beyond operating systems, it's never been easier to install a new app. Unlike trying to get Netscape to work on Windows, it's a cinch to try a new email app, a new maps app or a new streaming video app, no matter which mobile operating system you use. Apple won't keep you from downloading Google Maps, for instance. Antitrust experts call this "intra-system competition," where even within the same platform you're not restricted to one company's apps.

"When you have inter-system and intra-system competition," said Diana Moss, president of the American Antitrust Institute, "that really does create the starkest contrast with what happened in Microsoft, where you had an 800-pound gorilla sitting in the operating system market. It's a very different fact pattern."

In plain English, worrying about the harms posed by software bundling is, like, so '90s.

The Microsoft case was important because of when it took place: early on in the history of personal computing and at the dawn of the Internet era, when many Americans were just being introduced to the Web. Years later, your PC may actually be the last device you turn to to get online. Many of the competitive issues concerning regulators today no longer have to do with how you reach the Internet, but the range of things you're able to do once you get there.

When Yelp complains, for example, that its restaurant reviews are being shortchanged and buried under a slew of Google-based restaurant reviews, that might not be a problem if it's easy for consumers to switch search engines and discover Yelp that way.

But officials may have more cause for that concern if they determine that users have effectively been locked into Google. Google has previously said that "the ways people access information online have increased dramatically, giving consumers more choice than ever before."

The debate isn't about platforms anymore - it's about the services that ride atop those platforms.

This is why, particularly for European but also for US regulators, there's been so much hay made about whether Google favours its own products in search results or if it's unfairly taking content from other companies and using it to augment its own offerings.

The Federal Trade Commission, in an accidentally released memo, said these types of behaviours were worth suing over as little as a few years ago. Even though the FTC decided not to sue Google then, instead striking a voluntary agreement with the company, the European Commission still might.

All this adds up to a whole bunch of renewed antitrust scrutiny for the search giant. And for that reason alone, it's worth understanding how Google is like Microsoft so many years ago - and how it's not.