Economists Attack Google’s Attempt to Block Consumer Choice Filing

A federal judge should deny Google’s attempt to block an expert opinion that the loss of consumer “variety” is an antitrust harm, economists argued Friday in docket 3:21-md-02981 before the U.S. District Court for Northern California in San Francisco (see 2305250052). Seventy plaintiffs, including three dozen states and D.C., allege Google monopolized the market for the distribution of Android mobile apps through the Google Play Store.

Google is seeking to exclude merits opinions from Boston University economics professor Marc Rysman, who argued that a loss of consumer “variety” is compensable under antitrust law. Google claims harm to product variety doesn’t qualify as injury to property under Clayton Act Section 4, which allows a private right of action for individuals to sue. Google argued product variety claims are the same as personal injury claims, which aren’t a basis for legal damages in antitrust law, according to filings.

Antitrust law is “designed to protect consumer choice and innovation,” the American Antitrust Institute argued in support of the states’ opposition to Google’s motion. “No basis exists to treat as compensable one fundamental harm of lost competition, higher prices, but not another, reduced consumer choice.” AAI argued Google’s “narrow definition of ‘property’ would effectively grant immunity from private damage suits to a wide swath of antitrust violations.” Such an exclusion would “weaken private antitrust enforcement’s ability to protect innovation and choice, which are among the most significant sources of competition in a modern economy,” said AAI.

If Google’s argument is accepted, it could mean a private party can seek damages for an agreement between companies that fixes prices but not seek damages for the same agreement limiting product types, said AAI. The filing cited a hypothetical agreement between tire companies: “Both conspiracies could deprive consumers of the tires they want -- whether because they are too expensive or because they are no longer on the market,” and both could result in higher prices for consumers.

A group of economists also filed in support of the states’ motion. Granting Google’s motion could “undermine the use of economic models generally and spell the end for models that identify or quantify innovation harms in particular,” argued Yale University’s Steven Berry and Katja Seim with Harvard University’s Ariel Pakes.

Google attempts to portray the harms attributed by Rysman to reduced innovation as “trifling and unworthy of serious attention or modeling,” they wrote. Economics has “long recognized” a connection between innovation and welfare, and the “increasing digitization of consumer goods and services will only elevate the importance of innovation based competition relative to competition based on price,” they said. “It therefore is important to develop models that explain and quantify innovation’s effects on welfare in particular markets.” It’s indisputable that innovation contributes to a consumer’s economic welfare and suppressing innovation “lowers quality and decreases variety, which reduces welfare and imposes economic harm,” they argued.