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The “Trial of the Century” banners have been unfurled. The previews have been written. Today, the first major monopolization case in 25 years kicks off in U.S. District Court in Washington, as the Justice Department seeks to convict Google of anti-competitive conduct. The government alleges that Google paid outside companies like Apple billions of dollars to ensure that its search engine was the default on numerous devices and browsers and wireless networks, thereby boxing out competitors.
At one level, it’s an important initial challenge to the dominance of Big Tech that reinforces this administration’s determination to take on corporate power. At another level, it’s a leftover case from the Trump administration that doesn’t reflect the totality of what Biden’s antitrust enforcers are trying to do. And success or failure in one case won’t necessarily make or break that newly aggressive antitrust approach.
“This is the most amazing period in antitrust in a hundred years,” said Barry Lynn of the Open Markets Institute, who has urged stiffer antitrust enforcement for decades. “We’ve never seen this kind of global activity all tied together.
That said, he added, “it’s important not to oversell this case. Our side always does this.”
Indeed, this isn’t likely even to be the only U.S. v. Google case filed in the next several months, to say nothing of cases against Amazon, Meta, and possibly Apple. The administration’s direction against monopolies is set, and the outcome of a single case will not disrupt it.
This particular case against Google matters, however, because in many ways it’s designed to appeal to more traditional legal strains of thought on antitrust. It’s not a particularly novel application of the law. Google used special deals to get priority for their products over rivals. As I noted last week, in many ways it mirrors the last major monopolization case, the one against Microsoft, where the company was convicted of bundling the Internet Explorer browser with its operating system, giving it an advantage over Netscape and others.
Google’s lead lawyer, Kent Walker, actually worked at Netscape during the Microsoft trial; and its lead trial lawyer, John Schmidtlein, worked for state attorneys general on the Microsoft case. On the other side, Justice Department attorneys Kenneth Dintzer and Adam Severt were involved in the Microsoft investigations at various stages.
That case eventually ended in a settlement when the Bush administration took over. But it took up so much of Microsoft’s mind space in the late 1990s that the company didn’t dare attempt to slow down, well, Google, or other companies that it could have used its dominant browser to block. That’s part of the story here too. “For Google this is going to tie up a bunch of their lawyers, tie up a bunch of their thought,” Lynn told me. He pointed to a Financial Times article from when this case was initially filed at the end of 2020, in which Google CEO Sundar Pichai despaired of having to deal with regulators and lawsuits every day.
“It’s amazing he said that in public,” Lynn said. “The idea that 1,000 nibbles actually hurt. This case is one of those nibbles, one of those bites.”
Let’s look more deeply at this particular nibble.
THE JUSTICE DEPARTMENT INITIALLY FILED THIS CASE, along with 38 states, districts, and territories, at the tail end of the Trump administration. It was initially more expansive, including a section accusing Google of “self-preferencing” its own products in search. That section was removed by Judge Amit Mehta in his opinion in August, while leaving the rest of the case intact.
There’s little question that Google dominates the market for search engines, with over a 90 percent market share. Even after the hoopla about ChatGPT, which has been integrated into the Bing browser, Google has maintained its advantage, with Bing actually falling in market share since January, and with ChatGPT also cooling off.
The inability of even deep-pocketed companies to challenge Google, the government will argue, is by design. Google is the default search engine on almost all phones and web browsers in America. They pulled this off by engaging in a number of interlocking agreements that exchange this default status for money, to the tune of tens of billions of dollars that Google has paid to Apple, Mozilla, Samsung, AT&T, Verizon, T-Mobile, and others. (We don’t know the exact amounts because Google considers this a classified trade secret, and the court has not forced disclosure. But the Apple contract, which involves revenue sharing, is reputed to be as high as $20 billion in 2022.)
Billions of queries come through these defaults on a daily basis. In addition to preventing rivals’ access to these users, the information collected from the queries helps Google refine its product, so there’s an intrinsic value to being dominant that is denied to competitors. As we move into artificial intelligence, which requires huge data sets for training, companies with access to that information will have a head start, and Google fits that bill as well.
Theoretically, users can change the default, but in reality, few do, as evidenced by Google’s 90 percent market share. The company has said in prior arguments before the court that its deals are not exclusive; it notes that Mozilla once had Yahoo as its default browser, and then it switched back to Google. This happened, Google claims, because its search engine is a superior product. There certainly was a time when it was, though given all of the ads populating the top of Google searches (from which Google earns the majority of its revenue), there’s a real question whether that is still true.
This particular case against Google matters because in many ways it’s designed to appeal to more traditional legal strains of thought on antitrust.
But whose product is better is not really being adjudicated in this case; the question is whether Google used these special deals to give the company a head start. Moreover, as Judge Mehta has already said in the pretrial phase, if Google is such a superior product, why is it paying billions of dollars to maintain that default position?
However, the government does need to prove that harms have proceeded from Google maintaining its dominance. “Exclusive dealing is pretty down the middle of the goalposts,” said Hal Singer, an economics professor at the University of Utah who has testified in many antitrust cases. “There is one twist here, the harms that are felt are not the types of harms that are easy to quantify.”
In other words, because Google’s product is free to use, the harms are not necessarily price-related. They are harms to innovation from competitors who can’t get out of the starting gate; harms to quality because the lack of competition enables Google to pollute its searches with ads; harms to privacy because Google’s ubiquitous ads track users across the internet and competitors don’t do so, which means they can’t reach users.
The harm to quality seems like something the Justice Department will harp on in the case. In a recent press call, several antitrust advocates and former enforcers have explained the slow decline of Google Search. “My partner and I are going to Mexico City,” said Maria Langholz of Demand Progress. “If you Google Mexico City, you get Google Flights, a way for them to make money. You get Google Maps, links to restaurants and bars optimized by Google, and YouTube videos. (YouTube is owned by Google.) Most of [the links] are directed back to ways they can sell things and make money.” If the government can make the connection between this degraded quality and Google’s monopoly, it would go a long way toward proving the case.
Because the default arrangements were made with outside companies, that exposes Google to more liability than if they were just presetting their own phones and browsers with the Google search engine. “There’s this weird gap in antitrust law that says that if you vertically integrate and do stuff within firm boundaries, antitrust gives you a pass, but as soon as you cross the boundary and enter into contract with a rival, that’s when all of a sudden you’re exposed,” said Singer. The ten-week trial will likely include testimony with the officials from the outside companies who made these agreements with Google.
Though the Justice Department had enough evidence to bring the case, they will also argue that Google destroyed documents—both emails and chats—that would have revealed even more about its practices. That will play into a narrative of a company that sees itself as above the law.
The trial phase will establish liability, and only after that, if liability is found, would there be a remedies phase. The government could take a number of steps in that phase, from ending the special deals and giving users a choice of default search engines, to forcing Google to lease its web crawler so that other search engines get the opportunity to improve their products. That would not be likely to happen for years.
Whether that would really make a dent in Google’s business or market share is an open question. “Even if you get rid of the blood money they were paying to Apple, it’s not like other competitors are going to come in and actually compete,” Lynn said. “Once they got the leadership position, did they keep the quality up or degrade it to make a bunch of extra money? Once you create an essential facility, what are your responsibilities to the public? Those are the more interesting questions.”
IMPORTANTLY, THIS IS NOT THE ONLY CASE AGAINST GOOGLE, and therefore it will not contain arguments about a number of other aspects of the company’s power. There’s a whole other Justice Department and state attorney general case targeting Google’s monopoly in advertising technology, which leads to more expensive ads and insulation from competition. (Ironically, in a motion in that case issued last Friday, Google released confidential information from News Corp, a non-party to the case, at the same time that it has been asking for trial information to be rendered a secret.) Unlike the case starting today, the ad-tech case will be a jury trial. (Google has claimed that Antitrust Division leader Jonathan Kanter has a “deep-seated bias” against the company.)
This still doesn’t exhaust the list of possible cases that could be brought against Google. There’s also a potential DOJ case coming over Google Maps. Another Google monopolization case with private litigants over its app store practices was just settled last week. A $5 billion class-action suit alleging that Google deceptively acquires user information faces a trial in November. And outside of Google, there’s an ongoing monopolization case against Meta and there will almost certainly be a Federal Trade Commission lawsuit coming imminently against Amazon, in addition to likely suits against Ticketmaster and possibly Apple.
Many of the theories of monopolization in the case starting today could have been available in 2013, when the Federal Trade Commission, against the advice of its own staff, decided not to pursue a case against Google. In a way, that’s what U.S. v. Google signals, that the government is no longer willing to turn its back to market consolidation anymore. The only real difference between this Google case and all the other ones against Google and other assorted companies is that this one made it to the trial phase first.
