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Big Tech gears up for a regulatory mud fight

July 1, 2021, 6:03 PM UTC

For the last five years, Microsoft and Google have agreed to play nice. 

In a 2016 non-aggression pact, the newly-installed CEOs of each firm committed to squashing squabbles through a formal complaint process, rather than tattling to regulators about allegedly bad behavior and bringing antitrust scrutiny. (Was this collusion? Regulators haven’t seemed to think so.)

But now that dubious truce has ended, Bloomberg reports. The straw that broke the anticompetitive camel’s back seems to be a tussle over Google’s Search Ads 360 tool, which lets advertisers track campaigns and get analytics across all different ad platforms.

Microsoft says that the latest and greatest features of its Bing search engine weren’t integrated into Google’s tool, making it comparatively easier and more efficient to buy Google ads on the platform instead.

Google disagrees. It says that it doesn’t even need to offer any interoperability with Microsoft, but does so anyway because customers ask for it.

The stakes, a Microsoft VP tells Bloomberg, could be hundreds of millions in annual ad revenue.

This news couldn’t come at a better time for tech regulators, champing at the bit for more ammunition in state and federal antitrust campaigns. Earlier this week, Bloomberg reported that the U.S. Department of Justice had accelerated its investigation into Google’s ad practices. This move could be in addition to the three antitrust cases that Google already faces, one from the DOJ and two others from state attorneys general.

Federal lawmakers have also introduced six bills aimed at curbing anticompetitive behavior, which would add friction for Big Tech in acquiring competitors and entering new markets.

Microsoft, despite its history of antitrust battles with the federal government, has largely avoided recent scrutiny placed on competitors like Google, Facebook, Apple, and Amazon

And those other companies have noticed. Representatives from all four told MarketWatch earlier this week that they thought Microsoft stoked antitrust fears to throw roadblocks in the way of its competition. Meanwhile, MarketWatch notes that the recent antitrust bills that once would have covered Microsoft businesses, like the Xbox video game console and the Windows operating system, have been rewritten to carve out exemptions for those products.

The most scrutiny Microsoft has faced in recent months is in the European Union, where workplace messaging service Slack has filed a complaint against Microsoft for bundling its Teams software with its Office products. If that sounds familiar, it echoes Microsoft’s infamous antitrust lawsuit from 1998 to 2001. In that previous case, Microsoft bundled its Internet Explorer browser with the Windows operating system, effectively bumping third-party browser Netscape from the market.

The goal of regulators in that 1998 case was to break up Microsoft, much the same way some regulators today speak about breaking up the various businesses inside Amazon, Google, and Facebook. But that Microsoft breakup never came to pass, emboldening the tech giants that are thriving today.

Companies know a regulatory storm is brewing. Microsoft is expanding its legal team by 20%, and other tech firms are scrambling to retain the limited number of experienced antitrust lawyers to defend their causes.

Google and Microsoft, once and now again fierce enemies, set the stage for antitrust allegations, but there’s one final piece of the puzzle that still hasn’t been placed for federal oversight to begin in earnest. President Biden still doesn’t have a top antitrust official at the Justice Department. 

Once that starting gun is fired, we’re likely to see a lot more movement on antitrust proceedings.

Dave Gershgorn 
@DaveGershgorn

Driverless cars are supposed to eliminate traffic, prevent millions of deaths and injuries, reduce congestion, and slash carbon emissions. They were supposed to be here by now, too. In 2016, then-Transportation Secretary Anthony Foxx, now the chief policy officer at Lyft, said in an interview that by 2021 “families will be able to walk out of their homes and call [an autonomous] vehicle, and that vehicle will take them to work or to school.” In 2019, Tesla CEO Elon Musk said by 2020 the company would have on the road over a million cars with full self-driving software. Neither have come to pass.  

On today’s Brainstorm podcast, Michal Lev-Ram and Brian O’Keefe examine why autonomous vehicles (AVs) were so overpromised and underdelivered, and what must happen in order for us to take our hands off the wheel and sit in the back as our car takes us where we want to go? Listen to the podcast here.

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Amazon balks at a critical FTC chair. Lawyers for Amazon have requested that new FTC Chairman Lina Khan recuse herself from any antitrust lawsuits regarding the company, citing her previous critical analyses of Amazon's business practices. This is, of course, a questionable argument. As Ars Technica notes, "political appointees seldom come into government as blank slates, wholly lacking in opinions related to the thing they’re going to oversee."

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Why didn't the Internet break during the pandemic? While the pandemic revealed immense inequity in access to Internet connectivity, the massive shift to online and remote work during the pandemic didn't cripple the Internet's infrastructure. Why didn't everyone using their computers all the time break anything? In a report for The New York Times, Shira Ovide suggests it's due to the emergence of cloud computing, as most of the Internet is hosted in tech giants' data centers. But another measure in place are "congestion control algorithms," the software that slows down Internet responsiveness when too many requests are being made. 

From the report: Dr. Sherry said that [the congestion control algorithm] was a response to unusable internet in the mid-1980s, when networks mostly used by universities kept breaking when too many people were online at once... And web video companies have designed software on a similar premise to automatically downgrade internet video quality if internet networks are clogged.

Those techniques, Dr. Sherry said, are adaptations based on the principle that the internet is never going to be perfect, and anything we access online must be able to function under less-than-ideal conditions.

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BEFORE YOU GO

Can I interest you in a free Lion? The elderly (read: 10-year-old) Apple operating systems, Lion and Mountain Lion, are now free. Apple had previously charged $20 for a copy of the obsolete software, but for any Apple enthusiasts still rocking OS X Snow Leopard on an Intel Core 2 Duo, it's your time to shine.

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