zz/Siegfried Nacion/STAR MAX/IPx
Google’s New York headquarters is seen in February 2024.
Just a few days after being found liable of monopolizing digital advertising markets, Google will soon find out its penalty for monopolizing online search markets. On Monday, the remedy phase began of a trial that found that Google illegally muscled out competition in search by purchasing default space on devices and browsers.
“This is the time to tell Google and all other monopolists watching—and they are watching—that there are consequences when you break the antitrust laws,” said David Dahlquist, the attorney representing the Justice Department, in opening arguments.
This is the first major monopolization case in 25 years, successfully argued by Joe Biden’s Justice Department antitrust division. Now Donald Trump’s antitrust division must argue the remedy phase, where they are calling for a partial breakup of Google. The hearing before Judge Amit Mehta in D.C. district court is scheduled to last three weeks.
Dahlquist laid out DOJ’s proposed remedy in opening arguments. The biggest proposal is to split off the Chrome browser from Google’s parent company. User searches in Chrome are specifically tied to Google. Dahlquist said that Chrome is a “significant gateway to search,” a starting point for 35 percent of all user search queries. He also insisted that Chrome is a viable business that makes “far more money than it costs to run.” In fact, he argued, Google has underinvested in Chrome, which is a liability for users.
In addition, the special deals that allowed Google to pay billions of dollars for default placement would need to end, though DOJ insisted that the remedy could not stop at merely a choice screen, where users get to decide at the outset of using a new device or browser what search engine they want to use.
Another major remedy proposal would force Google to give up years’ worth of data to rivals. DOJ argued that there could simply not be competition in this market without the kind of data that allows searches to improve. “Imagine a race where one runner got to start 10 years ahead of time,” Dahlquist said.
As a short-term remedy, Google would allow rivals to syndicate its search results. This is already done elsewhere in the world; Yahoo Japan syndicates Google search data, for example. Then there would be longer-term data sharing, like on user queries and website clicks, for the next decade, to allow rivals to catch up. The government has also proposed data sharing on Google ads.
We are still operating the same architecture for online search that Larry Page and Sergey Brin invented in the late 1990s with the Google search engine. But the remedy phase comes just as search is being disrupted by artificial intelligence. Google’s data advantage gives it an edge in developing new AI search tools, so part of the government’s thinking behind the request for data transfer is to allow for the AI era to look less like the digital platform era, with its entrenchment of a few tech giants.
The Justice Department plans to call rivals in search like Bing (owned by Microsoft) and Duck Duck Go, who will say that generative AI advances cannot overcome data barriers that give Google an advantage. A representative from OpenAI, maker of the popular ChatGPT product, also plans to testify that the data is needed for long-tail queries.
“Google claims consumers will be harmed because it cannot compete,” Dahlquist said. “They simply don’t want to compete on a level playing field.”
DOJ stressed the need for anti-circumvention provisions. For example, Google had been offering browsers and devices a new incentive agreement that was fundamentally similar to the one in place that was found to be illegal monopolization. Dahlquist said that Google’s distribution partners were afraid to testify because of concern about retaliation. “A wolf by any other name is still a wolf,” Dahlquist said.
The anti-circumvention provision would allow for better detection and enforcement of Google’s actions. To add to that, the government added a “conditional” divestiture of the Android mobile operating system if the market for search didn’t have more competition within five years. This would give Google an incentive to allow the remedies to go forward without interference.
“Google claims consumers will be harmed because it cannot compete,” Dahlquist said. “They simply don’t want to compete on a level playing field. They are now fearful of the need to actually compete against rivals who will get stronger every day.” He added that the best incentive for Google to compete would be the threat of losing users and ad revenue.
Google believes it should still be allowed to pay for search engine placement, despite this conduct having been found to facilitate an illegal monopoly. The only change it has proposed is that the pay-for-placement deals should have a duration of one year, though they could be renewed.
The company has made several arguments, including that user privacy would be compromised by data sharing, and even that national security could be threatened. Dahlquist said this was nothing new, pointing out that AT&T claimed that a breakup would contribute to the U.S. losing the Cold War. “American markets work best when American companies compete,” he said.
After the three-week trial, Judge Mehta is expected to rule before the end of the summer. Google is likely to appeal if they receive an adverse remedy.
