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In September, a federal district court issued remedies in the Justice Department’s lawsuit against Google’s ad-tech practices, following up on its earlier determination that Google had engaged in unlawful practices in the online advertising market. Previously, the court had found that Google engaged in unlawful monopolization of the online market to sell and place advertising. The remaining question was what remedy the court would impose to restore competition: behavioral restrictions on Google’s conduct or a structural remedy in which its ad-tech business would be divested from the rest of Google. The court imposed information and interoperability sharing requirements and prohibited self-preferencing and other anticompetitive conduct. The court, however, rejected the Department of Justice’s request to require a divestiture because it was not convinced that sweeping structural relief was necessary to restore competition.
The case highlights a broader issue at the intersection of U.S. antitrust and technology policy: In strategically vital markets, antitrust enforcement actions can have profound effects beyond domestic competition. For example, breaking up a U.S. firm could affect its ability to retain customers and sustain investment, while blocking an acquisition could prevent it from gaining key capabilities or entering new markets. In some cases, those consequences could create durable advantages for People’s Republic of China (PRC) competitors that are difficult or impossible for U.S. firms to reverse.
The case illustrates both the value and the limits of the current approach to antitrust enforcement in strategically vital markets. That approach focuses on the immediate benefit or harm of a remedy to consumers, whether relief is closely tailored to the alleged violation, and whether it is likely to restore competitive conditions. Thus, the court determined that, while remedies were needed to avoid harm to consumers, in that case behavioral remedies were sufficient. This approach did not address, however, the broader strategic risks and consequences of reorganizing a major company’s technology platform, or of blocking acquisitions that could give a U.S. firm the capabilities or distribution to build and sustain its global customer base. Thus, it failed to address a key policy question: What are the potential strategic consequences of the proposed enforcement action? While such consequences will not be relevant in every case, there are instances in which proposed remedies could affect strategically significant variables, including cybersecurity, investments in key technologies, the ability of U.S. firms to compete with non-U.S. rivals in international markets, or sensitive personal data.
The separate search-remedies case against Google makes the distinction even clearer. There, the court considered whether requiring Google to divest Chrome or imposing a data-sharing mandate might create cybersecurity vulnerabilities, harm products used by billions of consumers, or expose sensitive data of U.S. consumers. The court was right to consider those factors in determining the appropriate remedy for the antitrust violation. The court’s analysis, however, did not contain a broader assessment by national security experts of how different approaches to enforcement would likely affect U.S. technological capabilities or strategic competition with the PRC. Such an assessment could have considered, for example, how different remedies might affect the ability of Google and other U.S. companies to invest in and distribute AI technologies—and what those effects could mean for U.S. technological leadership.
Such assessments are needed, and they should not be an afterthought. Further, they should occur before—not after—the federal government commits itself to antitrust actions that involve foundational technologies. This argument does not favor turning national security into an automatic escape hatch or an opportunity for political interference, but rather treating it as a safety valve that can be applied when the federal government determines that national security concerns are present and persuasive. Antitrust enforcers should still engage in antitrust analysis, focusing on whether they can prove there was actual exclusionary conduct and direct and immediate harm to consumers. However, the federal government, led by its national security agencies, should separately assess whether antitrust enforcement or particular antitrust remedies would create national security risks—and, if so, whether such risks should affect the federal government’s approach.
Thus, the recommended approach is for the federal government to conduct a serious, evidence-based national security assessment in antitrust enforcement actions involving strategically consequential technologies. Findings from national security analysis should inform the federal government’s antitrust enforcement strategy from the outset. Other traditional antitrust analysis, such as analysis of competitive effects on consumers and barriers to entry, should be conducted as it is today. That analysis should inform the government’s overall enforcement approach, including the decision on whether to move forward, the timing of any enforcement action, and the choice of remedies.
Technology antitrust issues have become issues of national security because commercial technologies have become increasingly central, not tangential, to global strategic competition with the PRC. During the Cold War, many key technologies, such as nuclear weapons, were owned and controlled by governments—though there were instances in which commercial technologies were also critical. Today, global leadership—both militarily and economically—largely depends on commercial ecosystems that produce frontier artificial intelligence models, massive data center complexes, advanced semiconductors, and secure and sprawling networks. In these markets, structure affects far more than price. It can affect whether companies are able to finance the necessary massive long-term investments to fund global digital infrastructure; fund research and development into new technologies such as quantum computing; attract and retain specialized talent; and develop and maintain a large, durable global customer base. This last factor is particularly critical: Because the PRC has a significantly larger market than the United States in many categories, unless U.S. firms can attract and retain customers outside the United States, they will fail to be globally competitive.
Further, antitrust enforcement can have the effect of shifting market share toward PRC firms. This does not suggest that every merger is strategically necessary or exempt from antitrust analysis. However, it does indicate the need for a separate and disciplined assessment of a potential antitrust action’s real-world strategic consequences. This argument carries particular persuasive force in foundational technology markets, where long product cycles, high fixed costs, global technical standards, and the need for tight integration between customers and suppliers can make global scale a cumulative, self-reinforcing competitive advantage. A decision to break up a firm or prevent a critical merger could have the effect of weakening a U.S. firm, causing its customers and suppliers outside the United States to migrate to PRC competitors—and making it difficult or impossible for the firm to restore its lost market share.
Neither concentration nor a more dispersed market structure is inherently conducive to U.S. national security. Further, firms should not be allowed to simply invoke “China” as though it were an argument. The federal government should require firms to identify which capabilities or infrastructure are at stake and explain the causal link between the challenged conduct or proposed merger and those capabilities. National security officials should independently evaluate those claims. Antitrust enforcers should still engage in traditional competition analysis—but they should not be the only decisionmakers at the table when the federal government considers the potential consequences of enforcement.
Matt Pearl is director of the Strategic Technologies Program at the Center for Strategic and International Studies in Washington, D.C.
