The Antitrust Fine Paradox

Who Benefits When Big Tech Gets Fined?

When the European Union imposed a €2.95 billion fine on Google for abusing its advertising dominance on September 5, 2025, many observers described the decision as a significant win for competition (European Commission, 2025). Yet a central question remains: who actually benefits when governments fine corporations for anticompetitive conduct?

The answer exposes an ethical and democratic tension in current enforcement models. If effective, fines can generate enormous societal benefits through deterrence – preventing anticompetitive behavior that would otherwise harm millions of businesses and consumers. Recent research provides “clear evidence that antitrust enforcement increases the level of economic activity (measured as employment), the creation of business, average wages, and the labor share” (Babina et al., 2023). Conservative estimates suggest that “more than half of all potential cartel harm never occurs, because it is deterred,” with the proportion potentially “as high as 90%” (Boyer & Kotchoni, 2017).

However, these deterrent benefits depend critically on whether penalties are sufficiently large to change corporate behavior rather than becoming mere “costs of doing business.” Moreover, while fines serve important regulatory purposes, they rarely compensate those who directly experienced harm. This imbalance becomes more evident when compared with private settlements that allocate remedies to victims, as well as the risks of litigation abuse.

Impact on Affected Businesses

Businesses that may have been disadvantaged by Google’s practices do not receive compensation from the fine. The proceeds flow into the EU’s general budget, leaving victims to pursue separate litigation if they seek redress. For many smaller firms, the cost and complexity of such legal action make it unrealistic.

This raises a fundamental ethical question: if penalties are imposed in the name of competition and the public, should those harmed be excluded from the remedy? Similar dynamics occur globally. Whether fines are imposed on U.S. technology companies in Europe or on domestic firms by U.S. regulators, the victims of anticompetitive practices rarely receive direct compensation (Bacharis & Kwan, 2025).

Government Enforcement Rationale

Regulators emphasize that antitrust enforcement is designed to protect the competitive process rather than individual firms. From their perspective, fines serve several functions:

Deterrence: Large penalties signal that anticompetitive conduct will have serious consequences. Research indicates that “competition enforcement and its deterrent effects increase GDP in the long run” (CMA, 2025). The deterrent effects can generate economic benefits far exceeding the fine amount by preventing widespread market distortions across entire industries.

Market-wide signaling: Successful enforcement creates industry-wide behavioral changes. When major firms face substantial penalties, it establishes boundaries for acceptable conduct across all market participants, potentially protecting competition in sectors worth trillions of dollars.

Innovation protection: Effective antitrust policy promotes “a vigorous competitive process” where “rivalry spurs firms to introduce new and innovative products” (Federico et al., 2019). Deterring anticompetitive practices preserves the innovation incentives that drive technological progress and economic growth.

Enforcement funding: Fine revenues can sustain regulatory agencies’ operations (Chen, 2021).

Administrative efficiency: Distributing funds to thousands of affected parties would be costly and complex.

Legal precedent: The established separation between regulatory enforcement and private compensation is viewed as necessary for consistent application of law.

Regulators also argue that their investigations provide evidence that strengthens victims’ chances in private lawsuits. Yet the ethical question persists: is deterrence sufficient if those harmed remain uncompensated?

Corporate Calculations

For large corporations, these penalties are often absorbed within broader financial performance. Alphabet reported revenues of over $280 billion in 2022, making the €2.95 billion fine equal to about one percent of annual revenue (Alphabet Inc., 2023).

Corporations may treat fines as part of regulatory risk. This raises several concerns:

Profit vs. penalty: If profits from anticompetitive behavior outweigh penalties, fines may fail to deter misconduct. The key question becomes whether enforcement is sufficiently robust to make anticompetitive conduct unprofitable rather than merely expensive.

Settlement preference: Firms may favor government fines over unpredictable and prolonged private litigation.

Legitimacy risks: Critics argue that the current system can create the perception that powerful firms effectively purchase the right to continue problematic practices (Lianos, 2024).

The ethical issue here is proportionality: are sanctions sufficiently structured to prevent misconduct and preserve competitive markets, or do they reinforce corporate power by allowing large firms to absorb violations as manageable expenses and even exploit their scale to gain advantage? The societal stakes are significant. Successful deterrence can protect competitive processes worth hundreds of billions in economic activity, while failed deterrence allows market distortions to persist.

Alternative Models of Compensation

The recent Anthropic settlement demonstrates a different approach. On September 5, 2025, the company agreed to pay $1.5 billion directly to authors who alleged unauthorized use of their copyrighted works in AI training. Each author was compensated $3,000 per book, and the case has been described as the largest publicly reported copyright recovery in history (Authors Guild, 2025).

This outcome contrasts with government fines in several ways:

• Direct compensation for identifiable victims
• Enforcement through private negotiation and litigation
• Clearer measurement of individual harm

This comparison raises normative questions: if direct compensation is possible in other legal domains, why should antitrust enforcement exclude those most directly harmed?

Democratic Accountability Concerns

Government agencies justify fines as measures to protect competition, yet the absence of compensation for victims raises a democratic legitimacy issue. When governments collect billions while claiming to act on behalf of citizens, but those harmed see no direct remedy, the process risks being perceived less as representation and more as revenue generation.

Key ethical concerns include:

• Incentive structures: Agencies may prioritize high-value cases that generate significant revenue rather than those most effectively restoring fairness or maximizing deterrent effects.
• Budgetary dependency: Agencies benefit financially from violations they are tasked with preventing.
• Representation: Citizens and businesses harmed by misconduct may feel excluded from outcomes ostensibly designed to protect them.

As Bacharis and Kwan (2025) note in their analysis of UK competition enforcement, “Competition authorities’ potential role in providing redress for victims of competition infringements has attracted growing interest in Europe. This is attributed to the perceived lack of compensation for victims and the attendant deterrent effect due to the continued shortcomings of private enforcement.”

In democratic societies, enforcement should not only deter misconduct but also demonstrate accountability to those it claims to represent.

Risks in Private Litigation

A full shift to private enforcement is not without risks. The U.S. legal system demonstrates challenges such as:

• Frivolous or exaggerated claims
• Opportunistic litigation across jurisdictions
• Manufactured disputes designed to generate compensation
• Punitive damages that exceed the scope of actual harm

Chen (2021) identifies additional barriers in private enforcement, noting how “third-party funding in overcoming competitive barriers in private antitrust enforcement practice” creates systematic gaps where smaller victims cannot access justice.

These risks highlight the ethical dilemma of balancing access to justice with protection against abuse.

Toward Ethical Reform

Reform proposals seek to combine the systemic strengths of government enforcement with greater fairness for victims. Suggestions include:

• Allocating a portion of large fines to victim compensation funds
• Developing distribution mechanisms for measurable harms
• Requiring violators to support market restoration initiatives
• Establishing safeguards against frivolous claims while preserving access for legitimate victims
• Ensuring penalty levels are sufficient to deter misconduct rather than merely generating revenue

The September 11th Victim Compensation Fund provides a precedent for large-scale compensation that was both administratively feasible and ethically justified (September 11th Victim Compensation Fund, 2023).

Research from Yale’s Thurman Arnold Project (2024) suggests that current enforcement frameworks suffer from “significant problems of underenforcement of antitrust law,” indicating that reform is needed not just for victim compensation but for overall deterrence effectiveness.

Accountability and Representation

The current enforcement model produces a three-sided imbalance: victims remain uncompensated, governments gain revenue, and corporations treat penalties as part of business operations. This structure raises questions not only of economic efficiency but also of ethics and democratic accountability.

Government enforcement is indispensable for addressing systemic harms and generating society-wide benefits through deterrence. When effective, the competitive markets preserved by enforcement can generate economic benefits worth multiples of the fine amounts. However, the legitimacy of this approach is weakened when victims are excluded from remedies and when penalty levels fail to achieve meaningful deterrence.

Private litigation can provide direct redress but is vulnerable to misuse and may not address broader market distortions or generate the industry-wide deterrent effects that benefit society as a whole.

An ethically grounded approach would integrate both: maintaining deterrence through government enforcement while creating mechanisms that recognize and compensate victims. As Scott Morton (2019) argues, “Antitrust enforcement and competition policy are lagging behind academic knowledge, and new energy is required to bring these issues to public attention and into the policy arena.”

Enforcement agencies should also be accountable to the public they represent, ensuring that penalties serve their deterrent purpose rather than being primarily viewed as an alternative source of revenue.

The €2.95 billion Google fine and the $1.5 billion Anthropic settlement—both announced on the same day—illustrate the stark contrast in current models. As enforcement increasingly targets practices that affect millions of smaller firms, the moral case for victim-focused remedies strengthens. In the end, corporate accountability is not only a matter of deterrence but also of fairness, representation, and ethical legitimacy. The success of deterrence in protecting competitive markets and innovation ultimately determines whether these substantial penalties serve the public interest or merely transfer wealth to government coffers.

References

Alphabet Inc. (2023). Annual report 2022. Form 10-K filing with Securities and Exchange Commission. https://abc.xyz/investor/static/pdf/2022Q4_alphabet_earnings_release.pdf

Babina, T., Barkai, S., Jeffers, J., Karger, E. and Volkova, E. (2023). Antitrust Enforcement Increases Economic Activity. NBER Working Paper No. 31597. https://www.nber.org/papers/w31597

Bacharis, G., & Kwan, J. (2025). Public redress in UK competition enforcement: A study of rationales and techniques. Journal of Antitrust Enforcement, jnae056. https://doi.org/10.1093/jaenfo/jnae056

Boyer, M., & Kotchoni, R. (2017). The deterrence value of competition policy can and should be measured. Competition Policy International. https://competitionpolicy.ac.uk/blog/the-deterrence-value-of-competition-policy-can-and-should-be-measured/

Chen, J. (2020). Promoting competition in competition law: The role of third-party funding in overcoming competitive barriers in private antitrust enforcement practice. Competition, 30(1). https://competition.scholasticahq.com/article/115556

Competition and Markets Authority (CMA). (2025). Wider Benefits of Competition Policy and Enforcement, CMA Microeconomics Unit literature review. UK Government. https://www.gov.uk/government/publications/wider-benefits-of-competition-policy-and-enforcement/wider-benefits-of-competition-policy-and-enforcement-cma-microeconomics-unit-literature-review

European Commission. (2025, September 4). Commission fines Google €2.95 billion for breaching EU antitrust rules. https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1992

Authors Guild. (2025, September 5). What authors need to know about the $1.5 billion Anthropic settlement. https://authorsguild.org/news/what-authors-need-to-know-about-the-anthropic-settlement/

Lianos, I. (2024). Academic “capture”? The hidden costs of corporate funding in competition policy research and proposed remedies. SSRN Electronic Journal. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5023988

Scott Morton, F. (2019). Antitrust enforcement and competition policy research. Yale School of Management Knight Foundation Grant. https://som.yale.edu/news/2019/07/prof-fiona-scott-morton-receives-funding-from-knight-foundation-for-research-into-antitrust-enforcement

September 11th Victim Compensation Fund. (2023). Final report on fund administration and distribution. https://www.vcf.gov/sites/vcf/files/media/document/2024-02/2023-Annual-report.pdf

Giulio Federico & Fiona Scott Morton & Carl Shapiro, 2019. “Antitrust and Innovation: Welcoming and Protecting Disruption,” NBER Chapters, in: Innovation Policy and the Economy, Volume 20, pages 125-190, National Bureau of Economic Research, Inc. https://ideas.repec.org/h/nbr/nberch/14261.html

Yale School of Management Thurman Arnold Project. (2024). Modern antitrust enforcement interactive database. https://som.yale.edu/centers/thurman-arnold-project-at-yale/modern-antitrust-enforcement