Google has two antitrust cases against the Justice Department this year – and the first, over Google search, is finally coming to an end. On Thursday, lawyers appeared in District Court in Washington, DC, for the first of two days of closing arguments in the bench trial before Judge Amit Mehta.
This was the first tech anti-monopoly lawsuit filed by the government in two decades USA versus Microsoft. Its results directly impact one of the most valuable companies in the world. At this point, the judge will only determine whether Google is liable for the antitrust allegations made against Google. If this is the case, there will be a separate process to identify appropriate remedial action. This could involve court-ordered restrictions on Google’s behavior or something as drastic as breaking up parts of its search business.
Thursday’s arguments centered on allegations that Google violated antimonopoly law – Section 2 of the Sherman Antitrust Act – through its alleged anticompetitive behavior in the general search engine market. The DOJ has defined the relevant market as “general search engines” – such as Google Search, Bing and DuckDuckGo, as opposed to specialized search engines that focus on a category, such as Yelp. Whether this is actually the relevant market is left to the judge, as is the question of whether Google is a dominant player in this market.
It’s not enough to be dominant – the DOJ must also prove that Google used its dominance to exclude competitors and maintain monopoly power. Thursday’s arguments also addressed the question of whether Google’s actions were anticompetitive or merely sensible business decisions. Closing arguments on Friday will focus on the government’s allegations that Google illegally monopolized the search advertising market.
The DOJ must also prove that Google used its dominance to exclude competitors and maintain monopoly power
The government argues that Google has maintained its monopoly on the general search market through exclusionary agreements that block distribution channels so that competitors cannot become real threats. It is alleged that Google’s deals with phone makers and browser companies over default search engine status make it harder for rivals to enter the market and reinforce a negative feedback loop that makes it nearly impossible for them to achieve scale – particularly devastating since size is key to having a quality search engine .
Google says it’s easy to change default settings and that manufacturers want to do business with it because it’s designed to be the best search engine on the market.
Judge Mehta had no idea how he would rule, but his questioning of both the government and Google made clear where he may see gaps in their cases.
Barriers to entry and business trade-offs
Mehta appeared to agree with the government’s definition of the relevant market as general search engines – the first step in proving a monopoly. He didn’t seem convinced that Google could be sufficiently replaced by a search provider for a specific category (like Amazon in shopping), even if they could compete in some areas.
But he appeared to grapple with the question of whether Google’s business decisions were sensible or anticompetitive. For example, Google Search isn’t as privacy-focused as DuckDuckGo – but isn’t that just a sensible business decision?
DOJ’s Kenneth Dintzer said Google’s decisions seemed arbitrary at times. For example, query-related data was retained for 18 months, while most users preferred retention for two months or less. Ignoring users “because you feel like it” doesn’t seem like a business decision, he said.
Mehta also told Dintzer that he had “difficulty” concluding “that Google’s product has deteriorated over the last decade,” particularly due to a lack of competition.
The judge also questioned whether the government had actually proven that Google had created barriers to entry, citing the example of rival search engine Neeva. Although the venture ultimately failed, Mehta asked why he shouldn’t take Neeva’s entry into the market as an indication that the barriers to entry weren’t that high.
Dintzer said that while Neeva was able to enter the market, it still relied on Microsoft’s Bing for many of its queries. Additionally, barriers to distribution – the huge difficulty of getting people to use your non-Google search engine, which probably cost Neeva her life – are also barriers to entry. (Neeva initially relied on Bing’s API, like DuckDuckGo, but later created her own search engine from scratch at great expense.)
The specter of Neeva resurfaced when Mehta directed questions to Google. In a multi-billion dollar market like search, “you would think… there would be a lot of companies trying to come in and take that profit.” Instead, only two new competitors (Neeva and DuckDuckGo) have emerged in the last decade. “Doesn’t that tell us everything we need to know?”
Google lawyer John Schmidtlein said massive investments in AI will significantly change the way people interact with websites. Mehta acknowledged that may be true, but “my resolve here is for today.”
Google’s multi-billion dollar deals with Apple
Mehta took particular heat from Google for its massive payments to Apple to remain the default search engine on iOS. Last year’s test found that Google gave Apple 36 percent of search ad revenue from Safari. The New York Times It was previously reported that Google paid Apple about $18 billion for default status in 2021.
The judge noted that in order to effectively compete with Google for that default spot, another search engine would not only have to be just as good, but it would also have to spend the billions that Google pays to be the default spot – perhaps even more. Mehta noted that there is only “one example in the last 15 years of someone knocking Google out of its default spot,” referring to Yahoo’s short-lived default status in Mozilla’s Firefox browser.
Additionally, Mehta said, “There is no example of any of these vendors seriously considering anyone other than Google.” And in the one area where “Microsoft believed they were making progress, we heard it.” [Apple executive] Mister. [Eddy] Keyword: There is no price they could have offered us. How is this a competitive market?”
“How is this a competitive market?”
Schmidtlein said Apple compared Bing’s quality to Google’s and ultimately chose Google. But then, asked Mehta, why sign such an expensive contract with Apple? Schmidtlein said that Apple’s ability to exit the agreement whenever it expires “is enough to keep Google on its toes and keep Google competing.”
Mehta acknowledged that Apple doesn’t have better alternatives to choose from. Dintzer responded that there was no real competition since Google had a monopoly for over a decade.
“Legitimately concluding quality agreements” might discourage potential competitors, but that doesn’t mean it’s anti-competitive, Schmidtlein argued.
Mehta asked whether it was even possible for an emerging competitor to displace Google. Yes, said Google’s lawyer, pointing out that this represents almost 40 percent of the market not blocked by standard contracts.
Mehta replied that it would take a company with huge capital and the ability to create an equally good search engine without user data. “If that’s what someone needs to displace Google as the default search engine, wouldn’t the people who wrote the Sherman Act be concerned about that?”
Closing arguments in the trial will continue Friday morning.