States Taking the Lead on Regulating Google?

Republican Attorney General David Yost points the way forward if Congress fails to pass legislation against self-preferencing.

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This lawsuit comes directly out of Clarence Thomas’s anti-Google arguments in 2021. In a series of opinions and statements, Thomas, responding to Donald Trump’s removal from key internet speech platforms, began creating the legal infrastructure for conservatives to place public obligations onto big tech platforms. Yost took that argument and ran with it.

“Google cannot use its dominance in search to squeeze out competitors of other services, like travel reservations, shopping and consumer reviews,” Yost said.

Yost is focused on correcting Google’s “self-preferencing,” through which Google intentionally manipulates search results to direct users to Google products even when other products top the results of a Google Search. 

The idea here is that Google can’t downgrade links to rivals like Yelp, below its own reviews of restaurants, or place its own travel search results higher than those of Expedia. It’s the ‘self-preferencing’ idea that Congress is wrestling with right now, only done through common law at a state level.

This week, Yost won an important procedural motion to treat the determination that Google is a common carrier and the remedy for that status separately. Had they been handled together, as Google sought, it would have been a messy and difficult process, and the judge might have simply thrown up his hands. Now, Google’s legal position as a common carrier, and the remedy for that position, will be separate questions.

One of my favorite Wall Street analysts, Paul Gallant, made an excellent point on the politics of this case.

While this sounds like a long shot, recall Justice Thomas in 2Q 2021 signaled lower courts that major digital platforms may well fit the legal definition of common carriers and thus can be forbidden from unreasonable discrimination. If the Ohio AG wins, we'd expect other states to pursue similar regimes, particularly if Congress fails to pass the "no self-preferencing" antitrust bill by the end of Sept. before the midterm recess.

I’m not optimistic about Congress for the next few years, though I think we’ll get some useful things, and over time we’ll get more. But with Amazon gradually dropping its own product lines, and state AGs beginning to attack self-preferencing, big tech is getting pushed back.