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: November 17, 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 (September 12)…
The trial, as it happens (article update dates):
Updated on September 13:
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”.
Updated on September 14:
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.
Updated on September 15:
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.
Updated on September 18:
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.”
Updated on September 19:
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.
Updated on September 20:
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 would 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.
Updated on September 22:
Google demanded that DOJ stops sharing its search business for everyone to see earlier this week. That’s why DOJ removed the documents from its website. Well, Bloomberg decided to publish more than 10 of them separately. The judge on the case, Amit Mehta, was supposed to reach a decision on sharing such files on Wednesday, but to our knowledge, that hasn’t happened yet. The website is accessible, but Bloomberg says that “emails, charts, and internal presentations” are still unavailable to the public.
Google accused the DOJ of fighting “to promote the welfare of competitors rather than consumers”. The company added that it invests “billions of dollars in R&D” to improve the quality of Search every year. The DOJ may be required to give Google a 24 hours’ notice if it plans on sharing something publicly, that could end up being a compromise, but we’ll have to wait and see.
Updated on September 27:
Towards the end of last week, and this week, Google basically managed to throw a veil of privacy over the trial, reports the Prospect. Private documents ended up being shared, so Google pushed the judge to keep things private, so the trial wasn’t exactly open for the public. The same was the case with a number of testimonies that took place. The DoJ complained, but Amit Mehta is allowing Google to keep things private thus far, which is understandable to a degree, but a lot of info is not available.
What we do know, however, is what happened during the testimony of Eddy Cue, Apple’s VP, says The Verge. He took the stand yesterday, on Tuesday, September 26. He said that Apple chose Google as its default search engine because it’s “the best”. That happened back in the day, and he also said that there were not many alternatives back then too. Eddy Cue says that Apple always chooses the best option for its consumers, but it does allow them to change their preference, of course.
Updated on September 29:
A couple of interesting things happened in the last couple of days of the trial. The public availability of the trial documents is back on. The judge, Amit Mehta, decided to make them available after all. It’s not that simple, though. The documents won’t be made available immediately, and not all of them will be accessible, it would seem. The DoJ has basically agreed to inform Google of any documents it plans to post online. Google has until 9PM EST of posting a dispute about particular documents. That’s a somewhat good compromise, as Google was blocking the DoJ’s attempts of sharing info publicly.
Some details regarding deals between Google, Apple, and Samsung also came to light. Google has been the default search engine on Apple products for around 20 years thus far. Back in 2007, Apple approached Google to change that, so that it can open access to more search providers. Google said that it will stop giving Apple a share of the revenue if it wants that, following which Apple dropped the request.
Samsung wanted to step away too at one point. Samsung wanted to change things around when it comes to switching default search engines in its browser. Well, it did, briefly. Google notified Samsung that such a move violates the agreement the two companies had, at which point Samsung backed down.
Another detail that surfaced has to do with Microsoft and Apple, more than anything else. It seems like Microsoft wanted Apple to buy Bing back in 2020. The two companies held talks, but it was never close to an agreement. Microsoft is suspicious Apple only did it to improve its contract with Google.
Updated on October 3:
There were some interesting developments in the last couple of days. For one, Microsoft’s CEO, Satya Nadella, testified. During the destimony, he said “it’s really Google’s web, and everyone is just playing in it”. He was referring to the difficulty of breaking into the search market, basically. He also said that getting Bing (Microsoft’s search engine) to Apple devices, for example, would cost billions of dollars in short-term losses. Google also cross-examined him, and you can read more about it here, but these are the main takeaways.
In one of the documents the DoJ shared, a rather interesting remark from Google’s Vice President of Finance, Michael Roszak, popped up. He basically compared the search business with the “cigarettes or drugs” businesses. This did happen back in 2017, and Google said that it’s irrelevant, as it was drafted for a public speaking class. That statement was supposed to be “hyperbolic and attention-grabbing”, nothing more.
Updated on October 5:
Interesting things happened in the last couple of days. Wired actually reported that Google alters search queries in order to get you to buy products. That info allegely surfaced during a testimony of one of the company’s employees, there was a projector slide of some sort. Google did jump to deny it, though, while explaining what’s going on.
Microsoft, though Satya Nadella’s testimony, expressed its AI concerns. It’s worried that Google’s dominance will have a huge effect on AI. Also, it seems like Apple actually considered replacing Google Search with DuckDuckGo too, not just Bing. Bing was in play, or at least it seems like it, back in 2020. Bloomberg reports that Apple actually spoke to DuckDuckGo about replacing Google Search. The privacy DuckDuckGo offers was one of the main reasons why, it seems. The change never happened, though.
Updated on October 12:
Yesterday was an interesting day at the courtroom. The Home Depot exec testified, as well as Google’s ex employee that now works for Booking.com. Having said that, let’s focus on Ryan Booth first. He’s a senior advertising exec with The Home Depot. Him and his team conducted a ‘Go Dark’ experiment, to prove the effect of advertising on Google does on search results. They spend millions of dollars on advertising with Google yearly. They stopped that entirely for this experiment, and that had a massive effect on their traffic and sales.
Arjan Dijk is the other person who testified. He has worked at Google for 11 years, and is now over at Booking. He said that: “If you want to be found on the web, there is one door that is controlled by Google and we need to use that door”. He also referred to Google as a “benevolent dictatorship”. He also run an internal study in 2019 called ‘Project Tulip’, based on which he commented: “Google is optimizing their search results page (SERP) such that http://booking.com gets a smaller fraction of free clicks over time and thus the advertising spend is increased”. He added the following: “Consumers have to work pretty hard to find natural search results”. Read more about that here.
Updated on October 30:
We knew that Google is paying billions of dollars to Apple, to stay the default search engine on Apple devices. We did not know what sum exactly is it. However, it was revealed that the company paid Apple $18 billion in 2021 in order to stay at the top. Overall for 2021, the company sent out $26 billion, Apple’s sum is included in this number. So, just to stay the default search engine the company paid various companies a huge sum of $26 billion in 2021. We don’t know what the number was for last year, or what will it be for this year, but it’s possible it’s even higher than that.
More interesting information surfaced during the trial, thanks to some “exhibits and sensitive emails” that the DOJ shared. This information comes from Jason Kint, the CEO of DCN. Those documents seem to detail the work of the “Ads Quality” team, and Kint shared the most important tidbits. The “Ads Quality” team has major “knobs” and “levers”, says Kint, which “can determine participants in auctions and the prices that win”. There’s the quality based bidding (BDD), threshold tuning, reserve prices, and landing page quality (LPQ).
He also notes that Google did not want this information to be made public. It was also detailed how the Ads Quality team summarized their core technologies. They’re separated into Quality Based Bidding (QBB), Smart Ad Serving System (SmartAss), User-based Ads Quality (UBAQ), and Landing Page Quality (LPQ). In the shared documents it’s also explained how Google uses Quality to impact the number of action participants.
The Quality Score (QS) actually impacts the minimum bid in any auction. If that’s not high enough, then the auction participants decline rapidly, and lower the price at the same time. All that and more has been detailed in the slides that Jason Kint shared, and you can check them out in the gallery below.
Updated on November 14:
We’re getting closer to the end of this lengthy trial. This is possibly the last week of the trial, based on the initial timeline. Quite a few tidbits surfaced in the last couple of weeks, which we’ll round up here. First, Google’s CEO, Sundar Pichai, hailed search as “very competitive“. He basically wanted to state that Google is less in control of search on the Internet than the DOJ is implying. He also said that Google had to “make compromises” when negotiating a deal with Apple (to keep Google Search default on Safari). He did acknowledge that the deal with Apple was crucial for Google’s success in the search market. He also highlighted the deal with Apple as nothing more than business.
Information also surfaced that Google wanted Apple to preload Google Search on iOS. Google saw that as a way to remedy some of Apple’s complaints. Considering that Apple doesn’t usually do that, the company rejected the proposal. That happened back in 2018, by the way.
As the trial progressed, some conflicts between Google’s Search and ads teams came to light. The instance mentioned in the trial happened in 2019, and is referred to as ‘Code Yellow‘. The head of Google Search was worried about ads being too heavily entwined with search.
It also came to light that Google is sharing search revenue with Android OEMs. Google seemingly uses money to push OEMs toward releasing more security patches to their devices. Google also highlighted that search payments in general are integral for supporting Android.
In the last couple of days, Apple and Samsung came into focus. It was revealed that Apple gets additional cash thanks to Safari. On top of those billions mentioned earlier (in 2021 Apple received around $18 billion to keep Google Search as default), Apple is also getting 36% of ad revenue from Safari (via Google Search). We’re likely looking at billions of dollars here. It was also highlighted that Google paid Samsung $8 billion to default its apps on Galaxy devices.
Google also called up Kevin Murphy to the stand, to defend its practices. He teaches at the University of Chicago, and he tried to explain how Google’s actions are legitimate.
Updated on November 17:
It’s a wrap! After a little over two months, the trial has been concluded. The DOJ’s final witness was Michael Whinston, an economics professor from MIT. He actually disagreed with Google’s claims that it had to compete with Microsoft to be exclusively pre-installed on smartphones. He also said that Google’s payments to companies, including Apple and others, were basically monopoly profits paid to distributors. As a reminder, those payments accounted for over $26 billion in 2021 alone.
Mr. Whinston also added that Google had the market power to raise ad rates without losing advertisers. He also said that the fact Google holds nearly 90% of the search market gave the company little incentive to improve.
Google’s lawyer, in the company’s defense, said that Google’s payments were legal revenue-sharing deals. That is something Google said a number of times during the trial. He also said that Google’s quality made Google Search popular.
That being said, the Judge Amit Mehta will make a decision in early May next year.
…the trial is now over, we’re waiting for the ruling (coming in 2024)…
2023-11-17 15:05:56