Tech Giants Bullying Competition Isn’t Free Market Economics

The U.S. Supreme Court is scheduled to hear a case in a few weeks that has the potential to force tech giant Google to finally start playing by the rules.

Google v. Oracle America, which will be heard on March 24, marks the end of the road for a now-decades long dispute between the two tech titans. At its center sits 11,500 lines of code that now reside within Google’s Android operating system, which powers most of the world’s smartphones. Oracle claims that Google swiped the code without paying for it, and now owes the company $9 billion. Google doesn’t dispute that it took the code—but claims instead that the code was “fair use,” thus not subject to copyright protections, and so it owes Oracle nothing.

This case goes to the very heart of what the rules of the road will be for tech innovation. Tech creatives rely on fair use as a means of building new and original products. The concept allows limited use of open source copyrighted material for free—if, for example, a new user wants to use someone else’s work for scholarship, research, teaching, or as a building block to make something entirely new.

The concept of fair use itself is not at issue here. Rather, it is Google’s abuse of it.

And here, the issue is clear: Oracle’s code was not open source, or subject to fair use. Like most software companies, Oracle offers open-source versions of code. Developers can take an “open source license” and create new programs and innovations. But they must contribute back to the open-source community. For commercial developers, Oracle charges a licensing fee for competing platform developers or those who want to embed the code in an electronic device.

Google knew it needed such a license, as emails from their engineers demonstrate, and in fact, the company tried for months to license the code from Oracle after repeatedly trying and failing to write its own versions.

When negotiations broke down, Google simply copied the code anyway, moving it from one platform to another without changing it. Google then made the Android code—including Oracle’s component—free to developers under open source, devastating Oracle’s licensing business model.

Meanwhile, according to the Federal Appeals court, advertising on the Android phone—whose operating system Oracle’s code made possible—has netted Google over $40 billion.

In 2018, the U.S. Federal Circuit Court of Appeals, which specializes in intellectual property law, rebuked Google’s fair use argument, finding that Google did not at all sufficiently transform the code to countenance fair use. To Google’s claim that the 11,500 lines represent a minuscule component to the millions of lines of code it wrote itself, the court referenced a quote from Judge Learned Hand: “No plagiarist can excuse the wrong by showing how much of his work he did not pirate.”

Google’s actions are not how fair use works, to put it mildly. But, more importantly, this is also not how a free market works.

Increasingly, however, this is the pattern of behavior Google relies on for commercial success: stealing the intellectual property of smaller competitors and daring them to spend millions of dollars over many years to duke it out in court.

It goes without saying that smaller competitors do not have the resources to sustain these legal battles. That Oracle has lasted this long is as much a testament to its size as it is to the merits of its arguments.

Patrick Spence, the CEO of the wireless speaker company Sonos, is only the latest small competitor to take Google to court over patent infringement. Spence actually has claims against both Amazon and Google, but can only afford to take on one tech giant at a time.

The consequences for retaliation are as real for Sonos as they are for any small company trying to challenge a giant upon whom they also rely on for reaching the wider market. “Any of these companies could bury them tomorrow,” Sally Hubbard, a former assistant attorney general in New York’s antitrust bureau, told the New York Times. “Google could bury them in their search results.”

Google cannot be allowed to bully, cheat, and steal its way into market dominance, particularly at the expense of the innovation—and the innovators—that drives a true free market. What small business owner is going to pour resources into creating new tools or products when Google can simply come along and swipe their intellectual property with impunity?

The answer is none. And that is why the arguments this month are more than simply a dispute between Oracle and Google; it’s a question about what the market will look like in tech. Will it be a creative and competitive one—or will it be one that is dull and deadened, stifled under the thumb of Big Tech?

Editor’s note: Rachel Bovard is a senior advisor to the Internet Accountability Project, which has filed an amicus brief on behalf of Oracle.

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About Rachel Bovard

Rachel Bovard is senior director of policy at the Conservative Partnership Institute and Senior Advisor to the Internet Accountability Project. Beginning in 2006, she served in both the House and Senate in various roles including as legislative director for Senator Rand Paul (R-Ky.) and policy director for the Senate Steering Committee under the successive chairmanships of Senator Pat Toomey (R-Penn.) and Senator Mike Lee (R-Utah), where she advised Committee members on strategy related to floor procedure and policy matters. In the House, she worked as senior legislative assistant to Congressman Donald Manzullo (R-Il.), and Congressman Ted Poe (R-Texas). She is the former director of policy services for the Heritage Foundation. Follow her on Twitter at @RachelBovard.

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