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You don’t need a search engine to see why Google won’t lose this lawsuit | John Naughton | Opinion

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So, in the dying days of Trump’s first term, the US Department of Justice (DoJ) has finally taken Google to court. Attorney general William Barr, in conjunction with the AGs of 11 states, has filed a 58-page complaint under the Sherman Act “to restrain Google LLC (Google) from unlawfully maintaining monopolies in the markets for general search services, search advertising and general search text advertising in the United States through anticompetitive and exclusionary practices, and to remedy the effects of this conduct”.

Google’s initial response was predictable: a blog post headed “A deeply flawed lawsuit that would do nothing to help consumers”. The DoJ’s lawsuit, apparently, “is deeply flawed. People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.” There then follow useful animated gifs showing how easy it is to change your preferred search engine on your phone etc. But of course there’s no mention of the anticompetitive behaviour cited in the government’s suit.

So far, so predictable. But this sudden outbreak of regulatory zeal in the DoJ raises two questions. The first is: what took it so long? The second is: why now? Of these, the second is easiest to answer. There’s an election coming and Bill Barr wants to be seen as fulfilling his boss’s threat to “do something” about the tech companies that, Trump believes, have recently turned against him by suddenly refusing their traditional role as relay stations and amplifiers for his lies.

The first question – about why it took so long for US authorities to complain about corporate behaviour that had been obvious for years and, indeed, had provoked responses from the European commission – is interesting. There are at least three explanations for the regulatory somnolence of several US administrations (including that of the sainted Obama).

The first is what one can only call legislative dazzlement. For well over a decade, lawmakers everywhere were hypnotised by Silicon Valley. Prime ministers and presidents alike craved an invitation to the campuses of the tech giants, where they could bask in the reflected glory of a new generation of teenage billionaires. And this translated into a lot of backroom influence for the companies. One thinks, for example, of the way Google’s former chairman Eric Schmidt became a fixture in the inner councils of the Obama administration and the Democratic party. And of the servility with which municipalities abased themselves in the hope that Amazon would deign to land a warehouse or even an office in their neighbourhoods.

A second reason is ideological. With their contempt for regulation, their views on state incapacity and their aversion to paying taxes, the tech companies were cheerleaders for neoliberalist ideas about unshackling corporations, especially when they did stuff that dazzled politicians and the media – and provided “free” services that voters loved and valued.

And then there was the shift in judicial thinking about antitrust triggered in the late 1970s by the prominent legal thinker Robert Bork and promulgated by the economics and law faculties of the University of Chicago. The essence of this new philosophy was that the size and dominance of corporations were only a problem if they resulted in consumer harm, inevitably measured by prices. And if the products were “free” (Google, Facebook and Twitter, say), where was the consumer harm?

These three factors shaped the unregulated environment in which the tech giants flourished. So the big question now is whether that era is coming to an end. Europeans have been thinking that for a while (though the news has yet to reach the Republic of Ireland, which is still in thrall to digital monopolies). The US was slower off the mark and the first, farcical congressional hearings last year did not bode well. But then a few weeks ago we had the majority report of a subcommittee of the House of Representatives after it had conducted a major investigation of Apple, Amazon, Facebook and Google, which concluded that they were all, in their different ways, abusive monopolists. And now comes Tuesday’s legal action by the Department of Justice.

I’m no lawyer, but the chances of the Justice Department winning this one seem slim because it is focusing on the wrong targets – search dominance and special deals with Apple and other companies that supposedly hobble competition. It’s as if nobody in Washington read the papers of the European commission’s actions against Google in 2010 over its suppression of independent shopping comparison sites in favour of its own. (In 2017 the company was found guilty and fined $2.7bn.) This was, as the veteran observer of the tech industry Charles Arthur observed on Wednesday, “the right move and concerned with the correct topic: that Google was manipulating search to favour its own products over what consumers evidently wanted. Effectively, that’s annexation: using your power in the market to push others out of an adjacent market.”

A cynical observer may conclude that the attorney general isn’t really interested in winning this case. And that would be an astute assessment: the lawsuit is a token gesture to keep the boss off his back. And, besides, Barr will be on gardening leave after 20 January so he won’t give a damn.

What I’ve been reading

Does no one get Covid?
It Wasn’t Just Trump Who Got it Wrong is a bracing piece by Zeynep Tufekci on how the reality-based, science-friendly information sources many of us depend on largely failed to understand the pandemic.

Biden – his time?
Joe Biden Has Changed is an intriguing essay by Franklin Foer in the Atlantic on how Trump’s opponent has been altered by the campaign.

Seeing is believing
How to write a reference for a student in the age of Zoom. Or perhaps not. Lovely piece by Matt Cheung in McSweeney’s.


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Pay squeeze and tax rises needed in UK to fill £40bn hole in public finances | Business

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Britain’s struggle to emerge from the Covid-19 pandemic will result in pay packets being squeezed and taxes rising to fill a £40bn hole in the public finances, two leading thinktanks have warned.

Despite record peacetime borrowing of £394bn this year, the Resolution Foundation and the Institute for Fiscal Studies said the run-up to the next general election would be marked by a hit to earnings and pressure on the government to balance the books.

The Resolution Foundation, commenting on Rishi Sunak’s one-year spending announcement on Wednesday, said the government’s plans to rescue Britain from the Covid crisis would fail to end a decade-long squeeze on wages, and would leave average pay packets by the middle of the decade £1,200-a-year below the level forecast before the virus outbreak.

Household incomes were on course to grow by just 10% in the 15 years since the start of the financial crisis in 2008, compared with the 40% growth in the 15 years up to the crisis, it said.

The IFS expressed scepticism about the new forecasts from the independent Office for Budget Responsibility, which showed only limited long-term damage on the economy from the biggest slump in 300 years.

The IFS director, Paul Johnson, said weaker growth and pressure on the NHS and welfare budgets would lead to worse than expected public finances over the coming years, necessitating tax increases or spending cuts of £40bn rather than the £27bn pencilled in by the OBR.

Both thinktanks noted that Sunak had shaved £10bn from the planned £25bn increase in the budgets of Whitehall departments next year. The government has insisted there will be no return to austerity, but Johnson said it would feel very much like it for non-protected departments.

Torsten Bell, the chief executive of the Resolution Foundation, said the pandemic was causing “immense damage” to the public finances and permanent harm to family finances as well.

“The pandemic is just the latest of three ‘once in a lifetime’ economic shocks the UK experienced in a little over a decade, following the financial crisis and Brexit. The result is an unprecedented 15-year living standards squeeze.”

Bell said there was the possibility of the economy growing more quickly in the short-term as consumers spent the money they had saved during 2020.

He added it was unprecedented for the UK to have “gone through a crisis where household balance sheets have improved”, and it was good news there was so much pent-up spending power.

The lesson from history was that after the first world war and the Spanish flu pandemic came to an end people were desperate to get out and spend. “It’s called the roaring 20s for a reason,” he said.

However, Johnson highlighted the downside risks to the OBR’s estimate that by the middle of the 2020s the economy would be just 3% smaller than it would have been in the absence of Covid-19.

“Those central scenarios are not great,” Johnson said. “But they are not terrifying. We have had much bigger economic shocks and fiscal tightenings before. See the last decade.”

He added: “I’m not so sure this is really a central scenario though. There are clearly downside risks to the economy from Covid and our ability to respond to it and, as the OBR make clear, from a no-deal Brexit.

“Of course, history need not repeat itself but remember that the long-term economic, and hence fiscal, hit from the financial crisis was far greater than predicted at the time.”

Johnson added that despite allocating a “whopping” £55bn for Covid next year, Sunak had allocated “precisely zero” for subsequent years. “I hope he is right that we will no longer need to spend anything at all on test and trace, PPE and the rest, but I wouldn’t bet on it.”

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The Treasury’s current plans involve ending the temporary increase in universal credit from April. “It was intended as a temporary policy and it is government policy to end it. Experience suggests, though, that pressure will build for it to be kept and the government may change course in response,” Johnson said.

He added that once all the pressures were added together, his central scenario was that borrowing would be at least 1% of national income higher in 2024-25 and thereafter.


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Singapore-Arcturus coronavirus vaccine candidate on track for 2021 delivery

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Singapore-Arcturus coronavirus vaccine candidate on track for 2021 delivery