On September 12, 2023 starts one of the biggest tech trials to date. DOJ (Department of Justice) has raised a lawsuit against Google. One expert actually referred to this trial as the “antitrust trial of the century”. This is basically a major tech monopoly trial, as the US will try to take control. This is a trial against Google, but many other companies are a part of the equation. In this article, we’ll go a bit deeper on what exactly is going on, and will keep you up to speed on the proceedings. This trial could go on for quite some time, so get ready.
The article will be updated regularly with new developments. You can find the updated content at the very end. Last update: September 20, 2023.
Why is it happening?
Why did the Department of Justice raise an antitrust lawsuit against Google? Well, the DOJ will try to prove that Google violated anti-monopoly law. Google has a number of exclusive agreements with smartphone manufacturers and browser makers, which make its search engine default for consumers. Yes, Google pays Apple and other companies to keep things the way it is. DOJ will argue that those deals are freezing out competitors, basically. Google, of course, disagrees, and claims the market is wide open.
What is Google’s stance?
Google believes there’s no wrongdoing here. The company says that using Google is not mandatory on any smartphone, and that all of this is by choice. That the arrangement it has with companies is perfectly legal. People can choose different web search engines at any time, nothing is stopping them. They choose to use Google.
Who exactly is suing Google?
The Department of Justice (DOJ) is behind this lawsuit, but that’s not the whole story. The DOJ is in coalition with 39 states from the US. In other words, this is a huge case, and something that will be in the focus of the public until it’s over.
How dominant is Google?
Google holds about 88% of the domestic (the US) search market, based on the Public Data Sources. The rest falls on Bing, DuckDuckGo, and others. In other words, Google is very dominant in that regard. The company also has over 70% of the US search advertising market, the ads you see when you search.
The US vs Big Tech?
Many see this trial as the US vs Big Tech trial. Why? Well, it will kind of show whether the US has the legal authority to take some control from the big tech companies, essentially. Big tech companies basically control how we access information these days, and this trial will show whether the US can take some control away from them. It may not have legal grounds to do so, we’ll have to wait and see.
DOJ hopes to be more successful than the FTC
FTC (Federal Trade Commission) tried to block a number of acquisitions for Big Tech, but it failed to do so. FTC tried to block Microsoft’s acquisition of Activision, which is a monstrous $69 billion deal. The same happened with Meta’s Within deal, and more. Analysts do believe this is a whole different ballpark, though, and that the DOJ has a case here.
When did this all start?
This lawsuit originates from 2020, back when the Trump Administration was in control. Two separate complaints are actually in question here, but in time, they became a single case that is presented here. Back in 2020, the DOJ and dozens of states accused Google of its dominance in online search. They alleged that Google is harming the competition by making deals with wireless carriers and smartphone makers. They alleged that those deals made Google Search the default or exclusive option for people.
We’ve seen semi-similar lawsuits in the past
This course of events will seem familiar to the older generations. Every 20 years or so, the DOJ decides to take on the dominant force(s) in the tech industry. DOJ did that with IBM at the end of the 1960s, and then it was Microsoft’s turn at the end of the 1990s. Granted, many see this as a much bigger case than those were, and they’re probably right. It is worth noting that DOJ lost both of those cases, as IBM and Microsoft won. The thing is, those cases did affect both companies in a rather negative way, and they did lose their momentum in the process.
What’s at stake for Google?
What’s at stake for Google here? Well, experts don’t see the outcome of this trial as the main problem, believe it or not. They see the trial’s existence as a huge problem as it is. As already mentioned, both IBM and Microsoft lost their momentum during their trials, and the same could happen to Google. This, of course, is an entirely different case decades after the first two, so… we’ll see. There are many outcomes to this. If Google loses the case, things could become really problematic. The outcome will affect not only Google, but many other companies included in the process. Including Apple, Mozilla, and more.
What’s Google’s plan of defense?
Google considers this case to be “deeply flawed”. The company laid out its plan of defense quite recently, actually. It was laid out by the company’s president of global affairs, Kent Walker. Google will argue that its distribution agreements haven’t harmed the competition for search. Google also plans to mention Amazon and some other companies for simple reasons. Around 60% of users start their product searches on Amazon, in the US. The company will make sure to point out that browser and device makers choose Google amongst the competition, and that their choice is “based on the quality of products” Google offers. Walker also pointed out that Google isn’t the only company that pays for prominent placement on browsers.
Another point that Google plans to make is that Google’s payments to device makers and carriers to promote its search product and browser are just marketing, simple marketing. Consumers can easily change their search engines should they choose to do so, Google is not preventing them or anything like that. Several other details have been highlighted by Walker, but this is the gist of things.
How long will the trial last?
The trial is expected to last around two months. The exact dates have not been predicted, of course. Following the trial, appeals will be a possibility, of course. Either side will have the option to file an appeal on the outcome.
…the trial started…
The trial, as it happens:
September 12: The trial kicked off. Lead litigator for the DOJ, Kenneth Dintzer, said that Google “began weaponizing defaults” around 15 years ago. He said that such tactics are an “Achilles Heel” for competitors. Based on his words, Google pays about $10 billion a year to keep Google Search at the top of the food chain. The DOJ plans to use Google’s ex chief economist, Hal Varian, to back up some of its claims.
Google’s lawyer, Schmidtlein, argued that there are many more ways to navigate the web other than Google Search. Those ways are being used all the time, and TikTok was brought up too. Google also criticized plaintiffs for victimizing Microsoft. He also brought both Safari and Mozilla into the conversation, to prove how easy it is to switch a search engine. Schmidtlein also said that the DOJ and Colorado want to “distort search competition by hindering Google and its ability to compete, all in the hopes that forcing people to use inferior products in the short run will somehow be good for competition in the long run”.
September 13: Chris Barton, a former Google executive, was called to testify. He was at Google from 2004 to 2011. While he was there, Google made outstanding progress with carriers. Barton admitted that he was responsible for leading Google’s partnerships with mobile carriers, he said that earlier on his LinkedIn profile. Antonio Rangel was also called up by the DOJ. He teaches neuroscience and behavioral biology at the California Institute of Technology. Barton was called up to discuss how consumers behave under certain scenarios. He said that search engine defaults create a “sizeable and robust” bias toward the default. He was not talking about Google in specific, but in general. Barton also admitted that the effect is greater on mobile devices than on PCs.
The government also alleges that Google took some illegal steps to protect communications about the payments it made to companies. That is something Google’s attorney denied. He denied that Google broke the law in order to hold onto its market share.
September 14: On Thursday, Google showed the court one of its main pillars of defense. It showed everyone a bunch of data, which proves that users happily stick with its search engine. That goes for both when it comes pre-installed, and when something else is set as default, such as Bing, for example. The government, on the other hand, wrapped up its questioning of Antonio Rangel, which started a day early.
During cross-examination of Rangel, Google’s lawyer pointed to instances where a significant number of user search queries went to Google, even when another search engine was the default. He also showed the court an internal Microsoft document from several years ago. That document showed everyone data about search use by people who carried a BlackBerry. It showed that Verizon’s BlackBerry devices had Bing as the default search engine, AT&T’s and T-Mobile’s had Yahoo, while Sprint had Google.
The thing is, when users wanted to search for something they went to Google, regardless what was default. Verizon users, who used BlackBerry devices sold by the carrier, turned to Google, and it’s not even close. The document showed that 91% of users used Google Search, despite the fact it was not the default engine. Google once again reiterated that the government is wrong to assert Google broke the law, and once again mentioned that Google Search is used because of its quality.
September 15: Google tried to invoke bias by a top US Justice Department official, Jonathan Kanter. The company said the case is unlawful because of Kanter’s involvement. Google accused him because he used to represent ad tech companies and Google rivals, including Apple, before he managed to find its way to his current position back in 2021. A federal judge, Leonie Brinkema, has decided to reject that claim from Google, thus hurting Google’s defense, in a way. Brinkema called Google’s request a “red herring defense”, and added: “This is not the kind of horrendous case that you’re positing where an individual prosecutor or individual government lawyer with a vendetta against your client has brought an enforcement action. This is an enforcement action that is being brought by the entire Department of Justice.”
September 18: David Dahlquist, who was speaking for the government, showed a document that was redacted, a document that has a short back and forth about Google’s pricing and search advertising, reports Reuters. He argued that the document should not be redacted, as it’s “at the core of the DOJ case against Google”.
On the opposite side, John Schmidtlein, spoke for Google. He said that all discussions of pricing should be shared in a closed session, thus requesting that the public and reports to be moved from the courtroom. That is perfectly normal in such trials, actually, the same goes for redactions.
A Verizon executive, Brian Higgins, also testified on Monday. He talked about Verizon’s decision to pre-installed Google’s Chorme browser with Google search on its mobile phones. He Higgins’ testimony was actually closed for two hours, after it was open for about half an hour. Chances are there was talk about Google’s payments to Verizon, which is why.
Google once again highlighted that the quality of its product is the main reason for its market share, and not illegal actions.
September 19: The Department of Justice (DOJ) alleges (via The Verge) that Google’s dominance allows the company to raise prices for advertisers with very few repercussions. That is something that Google ads executive, Jerry Dischler, actually confirmed while on the stand. He said that Google tends “not to tell advertisers about pricing changes”, and that the company tweaks its auction process in ways that may have raised prices in the past by 5% for the typical advertiser. That was seemingly one of the ways Google increased search revenue during dry spells. One such spell occured in the spring of 2019, it woudl seem.
Another detail from the trial reveals that Google made $98 billion from search ads in 2019, that does not include revenue from YouTube, according to Big Tech on Trial newsletter reporter, Yosef Weitzman. That number crossed the $100 billion mark in 2020, says Dischler. Mobile search was the driving force that year. He also added that a 10% price increase was the upper limit, branding a 15% increase as “dangerous”. All of this could DOJ, says Weitzman.
…more info coming…
2023-09-20 15:05:40