Biden initiates legal action against Google. Tuesday, in a Washington courtroom, the Department of Justice will launch a case designed to curtail Google’s dominance in online search, marking the first significant test of the Biden administration’s efforts to rein in the power of the tech titans.
The trial against the $1.7 trillion company will be “the most significant U.S. monopoly case in a generation,” according to Bill Baer, a Brookings Institution fellow and former antitrust chief at the Department of Justice under President Obama.
The DOJ’s suit against Google claims the company has become the overwhelmingly most-used search engine not because of a superior product but because it unlawfully uses its money to box out its competitors.
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With other federal investigations pending into Amazon, Apple, Ticketmaster, and others, this case could have far-reaching implications for the government’s concerns that modern companies are using their wealth and power to create new monopolies at the expense of competitors and customers.
The trial is also significant for Jonathan Kanter, the attack-dog attorney who was installed by President Joe Biden as head of the Department of Justice’s antitrust division and who helped construct the case, which was initially filed under the administration of former President Donald Trump. The DOJ hopes to succeed where the Obama Administration failed in 2013 when enforcement officials considered evidence that Google was becoming a digital colossus and decided not to sue.
The case centers on Google’s revenue-sharing agreements with Apple, Mozilla, Samsung, and others, worth tens of billions of dollars annually, and its control over the advertisements that populate search results. Google does not reveal the precise value of the transactions. The Department of Justice asserts that these contracts impeded competitors’ ability to compete and deprived consumers of the benefits of high-quality, innovative services that can only be fostered by competition.
According to some estimates, including those cited in the DOJ’s lawsuit, Google controls approximately 90 percent of the U.S. and global search engine market.
A court loss for Google could force significant changes to its business arrangements and even the potential sale of key parts of the company. It would also unnerve Google’s fellow internet titans, who would face their investigations and lawsuits.
A loss could force the Biden administration to reconsider its legal strategy in other pending technology cases. And while they wouldn’t necessarily retreat entirely, law enforcers could adopt a more cautious stance.
Baer stated, “The outcome of this case will affect how U.S. courts and enforcers view the behavior of dominant companies that entrench their monopoly power.”
According to court filings, the DOJ will likely argue that Google’s business decisions have harmed internet consumers by limiting their options. For instance, if the search engine market were more competitive, consumers would have access to more privacy protections. DuckDuckGo, a privacy-focused search engine whose selling point is that it does not exploit user data for advertising purposes, has been a longtime adversary of Google.
Google argues in court filings that its agreements with suppliers and platforms are not exclusive and that the default setting can be readily altered to use competing search engines like Microsoft’s Bing. It states that it competes vigorously for these contracts and succeeds because its product is superior.
The Department of Justice and Microsoft did not have any comment before the trial.
Obama appointed U.S. District Judge Amit Mehta in 2014, and he will resolve the case in a bench trial without a jury.
The long path to a conclusion
Over the next eight to ten weeks, top executives from Google, Apple, Microsoft, Samsung, and other companies will testify regarding the benefits and drawbacks of Google’s outsized role in the internet, debating whether the company is an aggrieved innovator being punished for its success, or whether it has intentionally stifled competition for its financial gain.
However, it will likely be years before a victor is announced. Mehta is not anticipated to decide until the spring, and the trial commencing on Tuesday will focus solely on whether Google violated the law. A ruling against Google would necessitate a second trial to determine the most suitable remedy. The appeals process could ultimately reach the U.S. Supreme Court and add several years to the litigation process.
During this period, Google will also face a trial in 2024 in which the Department of Justice challenges its online advertising business. The DOJ is also investigating whether Google’s market-leading mapping service violated antitrust law. In an interview last week, Google’s chief attorney, Kent Walker, stated that search engine default settings do not ultimately determine Google’s success. “Everyone would agree that the default position has value, which is why we pay for it. But individuals are not locked in, and if a superior search engine or browser appeared tomorrow, they would switch immediately.”
Walker stated that Google faces competition from all sides in the search market, including Amazon, which consumers are increasingly turning to for product-related queries, according to Walker. “It’s frustrating, or perhaps ironic, that we’re witnessing this backward-looking case and truly unprecedented innovation,” the author writes.
Mozilla’s decision to transition its default search engine from Google to Yahoo! and back to Google is cited by Google as evidence that its market-leading position results from a superior product.
Mehta asked Google in court earlier this year whether the default position is equivalent to a 200-meter head start in a 400-meter race. John Schmidtlein, a counsel for Google, responded that there is no factual dispute regarding the default’s 200-meter advantage. Schmidtlein stated that Google began signing these agreements in 2002 before becoming the preeminent search engine. “When Google introduced Chrome in 2008, after years and years of monopolistic behavior by Microsoft on Internet Explorer, it was 350 meters behind.” In a 400-meter race, Google was 350 meters behind when they caught up and passed them.
Regardless of what occurred in the past, the DOJ maintains that Google has an obligation under antitrust laws not to abuse its dominant position. According to the government, the default position enables the company to scale its business in a manner unavailable to its competitors. Being the default browser on so many devices creates a “feedback loop” in which the browser gains access to more users, generating more data to enhance the product and, ultimately, its ability to retain customers.
The DOJ cites the failure of Neeva, a search engine founded by a former Google executive that shut down earlier this year, as evidence of competitors’ inability to gain market share.
In its lawsuit, the Justice Department stated, “Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet 20 years ago.” “That Google is long gone.”
Google contends that when considered in the broader context of how consumers discover information online, it has no monopoly and argues there are “diminishing returns” to scale.
Regarding the future of the AI landscape
As the world transitions to new computing platforms supported by artificial intelligence, the DOJ will likely contend that Google’s search dominance will give it an advantage over its competitors.
Google is one of the few organizations with access to the massive data sets required for the large language models that undergird chatbots and other artificial intelligence applications. While Google cites OpenAI as a prime example of the fierce competition it confronts, the DOJ is expected to argue that Google is one of only a handful of companies with a high likelihood of success in AI.
Visible tension
Even though the search case was initially filed during the Trump administration, current DOJ antitrust chief Kanter has a long history of representing the company’s competitors, including Microsoft, and played a significant role in molding the search case from outside the department.
Google has argued that Kanter should recuse himself, claiming that the DOJ’s current stance toward the company mainly stems from Kanter’s bias.
According to the DOJ, Google attempted to thwart its investigation and lawsuit at every turn. And while bare-knuckle tactics are commonplace in every courtroom, the government claims Google destroyed a substantial amount of evidence in the form of deleted internal instant messages and exploited its legal privilege to conceal other documents. Disputes over missing evidence will permeate the entire trial, and Mehta could ultimately sanction the company if he determines it acted dishonestly.
