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IN ITS FIRST MONOPOLY TRIAL OF MODERN INTERNET ERA, U.S. SETS SIGHTS ON GOOGLE

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IN ITS FIRST MONOPOLY TRIAL OF MODERN INTERNET ERA, U.S. SETS SIGHTS ON GOOGLE

September 6, 2023
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The Justice Department has spent three years over two presidential
administrations building the case that Google illegally abused its power over
online search to throttle competition. To defend itself, Google has enlisted
hundreds of employees and three powerful law firms and spent millions of dollars
on legal fees and lobbyists.

On Tuesday, a judge in U.S. District Court for the District of Columbia will
begin considering their arguments at a trial that cuts to the heart of a
long-simmering question: Did today’s tech giants become dominant by breaking the
law?

The case — U.S. et al v. Google — is the federal government’s first monopoly
trial of the modern internet era, as a generation of tech companies has come to
wield immense influence over commerce, information, public discourse,
entertainment and labor. The trial moves the antitrust battle against those
companies to a new phase, shifting from challenging their mergers and
acquisitions to more deeply examining the businesses that thrust them into
power.

Such a consequential case over tech power has not unfolded since the Justice
Department took Microsoft to court in 1998 for antitrust violations. But since
then, companies like Google, Apple, Amazon and Meta, which owns Facebook and
Instagram, have woven themselves into people’s lives to an even greater degree.
Any ruling from the trial could have broad ripple effects, slowing down or
potentially dismantling the largest internet companies after decades of
unbridled growth.

The stakes are particularly high for Google, the Silicon Valley company founded
in 1998, which grew into a $1.7 trillion giant by becoming the first place
people turned to online to search the web. The government has said in its
complaint that it wants Google to change its monopolistic business practices,
potentially pay damages and restructure itself.

“This is a pivotal case and a moment to create precedents for these new
platforms that lend themselves to real and durable market power,” said Laura
Phillips-Sawyer, who teaches antitrust law at the University of Georgia School
of Law.

The case centers on whether Google illegally cemented its dominance and squashed
competition by paying Apple and other companies to make its internet search
engine the default on the iPhone as well as on other devices and platforms.

In legal filings, the Justice Department has argued that Google maintained a
monopoly through such agreements, making it harder for consumers to use other
search engines. Google has said that its deals with Apple and others were not
exclusive and that consumers could alter the default settings on their devices
to choose alternative search engines.

Google has amassed 90 percent of the search engine market in the United States
and 91 percent globally, according to Similarweb, a data analysis firm.

Fireworks are expected at the trial, which is scheduled to last 10 weeks.
Google’s chief executive, Sundar Pichai, as well as executives from Apple and
other tech companies will probably be called as witnesses.

Judge Amit P. Mehta, who was appointed by President Barack Obama in 2014, is
presiding over the trial, which will not have a jury, and he will issue the
final ruling. Kenneth Dintzer, a 30-year veteran litigator for the Justice
Department, will lead the government’s arguments in the courtroom, while John E.
Schmidtlein, a partner at the law firm Williams & Connolly, will do the same for
Google.

The jockeying over the trial has already been intense. The Justice Department
and Google have deposed more than 150 people for the case and produced more than
five million pages of documents. Google has argued that Jonathan Kanter, the
Justice Department’s head of antitrust, is biased because of his earlier work as
a private lawyer representing Microsoft and News Corp. The Justice Department
has accused Google of destroying employees’ instant messages that could have
contained relevant information for the case.

Kent Walker, Google’s president of global affairs, said in an interview last
month that the company’s tactics were “completely lawful” and that its success
“comes down to the quality of our products.”

“It’s frustrating — maybe it’s ironic — that we’re seeing this backward-looking
case and really unprecedented, forward-looking innovation,” he said.

The Justice Department declined to comment.

Google’s search engine was created by Sergey Brin and Larry Page when they were
students at Stanford University in the 1990s. Their technology was widely
praised for serving up more relevant results than other web search tools. Google
eventually parlayed that success into new business lines including online
advertising, video streaming, maps, office apps, driverless cars and artificial
intelligence.

Rivals have long accused Google of brandishing its power in search to suppress
competitors’ links to travel, restaurant reviews and maps, while giving greater
prominence to its own content. Those complaints brought scrutiny from
regulators, though little action was taken.

In 2019, under President Donald J. Trump, the Justice Department and the Federal
Trade Commission decided to mount new antitrust investigations into tech
companies as part of a broad crackdown. The Justice Department agreed to oversee
inquiries into Apple and Google.

In October 2020, the government sued Google for abusing its dominance in online
search. In its lawsuit, the government accused Google of hurting rivals like
Microsoft’s Bing and DuckDuckGo by employing agreements with Apple and other
smartphone makers to become the default search engine on their web browsers or
be preinstalled on their devices.

“Two decades ago, Google became the darling of Silicon Valley as a scrappy
start-up with an innovative way to search the emerging internet,” the Justice
Department said in its lawsuit. “That Google is long gone.”

Google’s actions had harmed consumers and stifled competition, the agency said,
and could affect the future technological landscape as the company positioned
itself to control “emerging channels” for search distribution. The agency added
that Google had behaved similarly to Microsoft in the 1990s, when the software
giant made its own web browser the default on the Windows operating system,
crushing competitors.

A group of 35 states, Guam, Puerto Rico and the District of Columbia also filed
a lawsuit in 2020 accusing Google of abusing its monopoly in search and search
advertising to illegally wedge out competitors. That case will be tried
alongside the Justice Department lawsuit, though Judge Mehta threw out many of
the states’ key arguments in a ruling last month.

In January, the Justice Department filed a separate antitrust suit against
Google, accusing it of abusing its monopoly power in advertising technology. The
company faces two other lawsuits from states that accused it of abusing
monopolies in ad tech and for blocking competition in its Google Play app store.

For decades, judges have generally ruled against companies in antitrust cases
only when their conduct hurts consumers, particularly if they have raised
prices. Critics have said that lets companies like Google — which provides
internet search for free — off the hook.

Google’s Mr. Walker said the case was a moment for the court to double down on
that standard.

“American law should be about promoting benefits for consumers,” he said,
adding: “If we move away from that and make it harder for companies to provide
great goods and services for consumers, that’s going to be bad for everyone.”

Monopoly trials can change the direction of industries. In 1984, under pressure
from the Justice Department, AT&T split itself into seven regional telecom
companies. The breakup transformed the telecommunications industry by making it
more competitive at the dawn of the mobile phone era.

But the effects of the government’s antitrust battle with Microsoft in the early
2000s were less clear cut. The two sides eventually settled after Microsoft
agreed to end certain contracts with PC makers that blocked rival software
makers.

Some tech executives said the Justice Department’s actions made Microsoft more
cautious, clearing the way for start-ups like Google to compete in the next era
of computing. Bill Gates, a Microsoft founder, has blamed the hangover from the
antitrust suit for the company’s slow entry into mobile technology and the
failure of its Windows phone. But others have argued that the settlement did
little to increase competition.

Ultimately, the Google trial will test whether antitrust laws written in 1890 to
break up sugar, steel and railroad monopolies can still work in today’s economy,
said Rebecca Allensworth, a professor at Vanderbilt University’s law school.

“The Google trial is a big test for the government’s entire antitrust agenda
because its theory of monopolization is very much in play with many big tech
companies,” she said.

The post In Its First Monopoly Trial of Modern Internet Era, U.S. Sets Sights on
Google appeared first on New York Times.

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