Google will battle back government claims it stifled competition by creating an online monopoly in court today – in what is set to be one of the biggest antitrust trials of the century.
Already underway, the proceedings began with both sides’ opening statements at 9:30am – with the Justice Department being the other principle.
A veteran DoJ lawyer who served on the legal team of the government’s last big monopoly case began the arguments claiming the firm abused its dominance in search through deals with wireless carriers and smartphone makers.
Claiming the dealings made it so their engine was the first thing users see when they turn on their phones and browsers, lead litigator Kenneth Dintzer said his team has documents ‘that capture exactly’ what Google did, and allegedly show how execs sought to circumvent federal laws preventing monopolies.
A 30-year veteran of the department, he showed the court a 2007 presentation where a Google engineer allegedly said obtaining default search positions on devices from firms like Apple, LG and Samsung could be a ‘powerful strategic weapon’ for the company’s business – and an ‘Achilles heel’ for rivals.
The Justice Department’s case hinges on claims Google knowingly orchestrated those dealings, with the end goal of rigging the market and stomping out its competitors. A ruling against Google could see the firm permanently broken up.
Google will battle back government claims it stifled internet competition by creating an online monopoly in court today – in will be one of the biggest antitrust trials in recent memory
‘Google illegally maintained a monopoly for more than a decade,’ Dintzer on Monday asserted, before giving the floor to attorneys representing states and territories that also sued Google in 2020 on the basis the firm abused its monopoly power over search.
Their lawsuit, led by Colorado, is being considered alongside the Justice Department’s, and makes additional allegations against Google.
Their suit claims that the way Google structures its search results page harms competition by prioritizing the company’s own apps and services over content from third party sites, as well as other web pages, links, and reviews.
The DoJ’s top litigator, Kenneth Dintzer, began the arguments Tuesday by claiming the firm abused its dominance in search through shrewd, allegedly illegal deals valued in the billions with carriers and phone makers
The US government adds that Google’s Android operating system in particular has deals with device makers that are anticompetitive, due to the fact they require smartphone companies to pre-install other Google-owned apps, such as Gmail, Chrome or Maps, without the option of removing them.
Google, meanwhile counters that those practices were perfectly within the confines of federal law – particularly 1890’s Sherman Act that outlaws outsized monopolies – and that faces a range of competition from sites like Bing, which links to rivals like Amazon and Yelp
The claims come as the 1.72 trillion continues to command a roughly 90 percent of the internet search market, since its founding by two friends in Silicon Valley in 1998.
A hint of what’s to come over the next ten weeks, it’s the government’s first major monopoly case in a quarter century, and the first in the age of the modern internet.
‘This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist,’ ex-Attorney General William Barr said when the case was first filed in October 2020.
His deputy, Jeffrey A. Rosen, cited previous antitrust cases like its one in 1998 against Microsoft, which centered around claims the firm illegally grouped its products in a way that stifled competition and compelled people to use them.
U.S. Department of Justice lawyers, including Dintzer, center, are seen arriving at the E. Barrett Prettyman U.S. Federal Courthouse Tuesday ahead of Dintzer’s opening arguments. He said Google pays more than $10billion a year to maintain its stranglehold on the search market
Kent Walker, President of Global Affairs and Chief legal officer of Alphabet Inc, was also seen arriving at the courthouse Tuesday, as a ruling against Google could see the company broken up
Google’s headquarters are pictured in Mountain View, California. The company is facing claims it engaged in dealings with wireless carriers and phone makers that unfairly made their search engine the first thing users see when they turn on their devices or open their web browser
Google argues it faces a wide range of competition from engines like Bing, despite commanding about 90 percent of the internet search market
He also brought up what’s been billed as the last century’s Ali-Frazier of telecom fights, when the U.S. Department of Justice went toe-to-toe with AT&T in 1974 and broke up the old American Telephone & Telegraph into the new, seven regional Bell operating companies (RBOC)s – and the much smaller, new AT&T.
‘As with its historic antitrust actions against AT&T in 1974 and Microsoft in 1998, the Department is again enforcing the Sherman Act to restore the role of competition and open the door to the next wave of innovation,’ then-Deputy AG said at the time.
‘This time in vital digital markets.’
The Sherman Act forbids nefarious dealings to establish or maintain a monopoly to stifle competition
A 144-page lawsuit filed by 36 states and the District of Columbia in U.S. District Court for the Northern District of California, it claims Google violated the Sherman Act, the federal law prohibiting monopolistic business practices.
The Sherman Act forbids nefarious dealings to establish or maintain a monopoly by restraining free competition.
The act was famously used in 1911 to break up Standard Oil, and again in 1982 to split up AT&T’s monopoly, known colloquially as ‘Ma Bell’.
In 2001, Microsoft survived a Sherman Act suit, settling with the DoJ without breaking up.
Aside from the historical significance of those trials, they provide a somewhat dubious precedent for the Silicon Valley firm.
In the case involving Microsoft – where officials argued the then highflying company illegally maintained its monopoly in the PC market through the legal and technical restrictions on manufacturers and users to uninstall Internet Explorer – the judge ruled in favor of the Justice Department.
A landmark ruling, it saw Judge Colleen Kollar-Kotelly declared that Microsoft – by not allowing its users to use competing apps such as Java or Netscape – violated antitrust laws and held ‘an oppressive thumb on the scale of competitive fortune.’
Now, decades later, the similarities to the case and the new one against Google stand out as strikingly similar – and attorneys enlisted by the government are angling for a similar outcome.
‘That case was about a monopolist tech platform and the government won,’ Vanderbilt Law School professor Rebecca Haw Allensworth told NPR Tuesday morning, a few hours before Judge Amit Mehta brought up Dintzer to give his opening statement.
‘And so, everybody has viewed that as a kind of blueprint for how we might enforce the laws against the current tech giants,’ The professor, who specializes in antitrust law, added.
‘This is a real test of whether or not that theory works.’
That said, several members of the Justice Department’s team in the Google case, including University of Michigan Law School grad Dintzer, also worked on the Microsoft investigation.
On Tuesday, the jurist showed his experience by quickly getting to the heart of the case, speaking about the multiple billion-dollar agreements with firms like Motorola, Apple, and Samsung that sees Google pay billions to be their default search engine.
The trial comes just a couple weeks after the 25th anniversary of the first investment in the company – a $100,000 check that allowed funders Larry Page and Sergey Brin to set up shop in a Silicon Valley garage
‘This feedback loop, this wheel, has been turning for more than 12 years,’ he said, painting those agreements are part of a unending cycle that has culminated in Google’s current dominance.
‘And it always turns to Google’s advantage.’
Speaking before a packed court and Judge Amit Mehta of the District of Columbia, Dintzer claimed Google pays more than $10billion a year for agreements that ensure it is the default search engine on mobile phones and computers.
He went on to hint some of the evidence set to be produced in ensuing days, including documents that he said prove Google’s alleged plot.
District Judge Amit Mehta is presiding over the proceedings, which are slated to take place over the next ten weeks
At a point, he produced a slide from a 2007 presentation where a Google engineer allegedly said that default search deals with firms such as Apple were paramount to the company’s success.
Dintzer also provided a taste of how the prosecution will paint the relationship between Google and Apple – as officials seek to halt the search giant’s payments to the tech firm and others that ensure Google’s default placement on their devices.
Billing Google as a sort of bully aware of its indisputable dominance, the lawyer said Google was so dead-set on gaining default spots, that execs explicitly told Apple they would not share revenue without ‘default placement’ on its devices.
Shortly thereafter, Dintzer also claimed Google painstakingly worked to make sure that Apple couldn’t redirect searches to its Siri assistant product.
‘Your honor, this is a monopolist flexing,’ he told Mehta.
The attorney went on to claim that Google’s default agreements with other smartphone manufacturers and browsers, similar to the arrangement with Apple, were the key to its current monopoly power.
He said that in order to accomplish this, brass at the company knowingly hid documents from antitrust enforcers by including lawyers in talks covering the dealings solely so their contents were protected by attorney client privilege.
Dintzer also cited how Google’s internal chat system deletes messages after 24 hours – and even produced a message from Sundar Pichai, Google’s CEO, asking for chat history to be turned off in one conversation.
Prosecutors Tuesday cited how Google’s internal chat system deletes messages after 24 hours – and even produced a message from CEO Sundar Pichai (seen here) asking for chat history to be turned off. ‘They turned history off, your honor, so they could rewrite it here in this courtroom,’ Dintzer told the court
‘They turned history off, your honor, so they could rewrite it here in this courtroom,’ Dintzer declared before giving way to William Cavanaugh, one of the lawyers making the states’ case.
Like many antitrust lawyers in private practice, Cavanaugh used to work at the Justice Department.
On Tuesday, seeking to paint Google’s dominance over rival search engines like Bing as unfair, he argued that by withholding features in that product from Microsoft’s search ads service, Google purposely hurt its only real competitor.
Following his statement – which was relatively brief and included several redacted slides due to them containing confidential information that will at no point be made privy to the public – the court wrapped for a 15 minutes, before giving the floor to Google.
Speaking on behalf of the search behemoth, attorney John E. Schmidtlein honed in on the claims that Google is explicitly responsible for the lack of success seen with Microsoft’s search engine, which came out in 2009 and has since failed to catch up to Google.
In an attempt to explain that perceived failure to the court, Schmidtlein said Bing is unpopular for ‘many reasons’ – one being that Microsoft has failed to ‘invest, innovate and prioritize the development of search’ compared to Google.
Speaking on behalf of the search behemoth, attorney John E. Schmidtlein battled back claims that Google is explicitly responsible for the lack of success seen with Microsoft’s search engine, which came out in 2009 and has since failed to catch up to Google
Like his rival across the aisle, Schmidtlein also fought against Microsoft in 1998’s antitrust case, but is now representing the party accused of engaging in an unlawful monopoly
Like his rival across the aisle, Schmidtlein also fought against Microsoft in 1998’s antitrust case, but is now representing the party accused of engaging in an unlawful monopoly.
Focusing on Microsoft instead of the slew of smaller firms forced to play second banana to Google, Schmidtlein did not have a good answer when Judge Mehta asked how many people actually switch their default search engine.
Instead, Schmidtlein noted that if users want to change the default search engine on your device, you can search Google for instructions or watch a video on YouTube showing how – a how-to instructional that Google owns.
The lawyer’s opening defense also consisted of claims that the Justice Department has painted an inaccurate picture of the search firm’s dominant position in its relatively thin market.
Citing private browsers from much firms like DuckDuckGo and the Mullvad Browser, Schmidtlein said: ‘Users today have more search options and more ways to access information online than ever before.’
In an attempt to explain that perceived failure to the court, Schmidtlein said Bing is unpopular for ‘many reasons’ – one being that ‘Microsoft has failed to invest, failed to innovate’ compared to Google
The claim was accompanied with assertions that the agreements to preload Google apps on Android phones help to create a counterbalance to Apple’s competing iOS, and that default agreements with browser makers don’t lock up the market as the DoJ so claims.
At a point, Schmidtlein flat-out attacked the government’s case, claiming its suit is ‘forcing people to use inferior products’.
When asked to respond to the DoJ’s argument that the combination of Google’s scale and its default agreements made competition impossible, Schmidtlein replied: “This court cannot intervene in the market and say ‘Google . . . you have the best product, the best quality . . . but I’m sorry you can’t compete to be the default.
‘That is an anathema to US antitrust law.’
The declaration involving Bing, though, came in stark contrast to the position of the Federal Government, who insists that with these agreements – made over the course of more than a decade – Google has been able to box out smaller rivals.
One of these rivals is DuckDuckGo, an internet privacy company with its own search engine. Unlike Google, which tracks users searches and even location for targeted advertising, the firm ensures users’ searches are not tracked.
Google’s agreements with various browser companies and carriers have boxed out smaller rivals like DuckDuckGo, the government has claimed – citing the company’s $1billion evaluation compared to that of its long-reigning rival, which is valued at more than $1trillion
Still, since its release in 2008, the site has failed to come even close to the traffic a platform like Google commands – with many experts in the field positing that that’s largely due to the exclusive agreements Google has with other firms.
Speaking to NPR Tuesday, the $1billion company’s vice president of public affairs said she is glad the case has made it to trial, while echoing those experts’ sentiments.
‘Google has used its monopoly power to block meaningful competition in the search market by putting a stranglehold on major distribution points for more than a decade,’ Kamyl Bazbaz wrote in an email.
‘So even though DuckDuckGo provides something extremely valuable that people want and Google won’t provide – real privacy – Google makes it unduly difficult to use DuckDuckGo by default.’
the US government alleged in its initial complaint that Google pays billions of dollars a year to device manufacturers including Apple, LG, Motorola and Samsung – and browser developers like Mozilla and Opera – to be their default engine.
In many cases, those deals prohibit those parties from cutting dealing with Google’s competitors.
After an hourlong break for lunch, the prosecution called its first witness in the case, Google’s chief economist Hal Varian, who joined Google in 2002 and has stayed with the company since.
The Justice Department began by asking Varian – a former economist at UC Berkeley – about Google’s early days, in an apparent effort to show how execs for years have plotted to maintain their search engine’s dominance by blocking its rivals.
After an hourlong break for lunch, the prosecution called its first witness in the case, Google’s chief economist Hal Varian (seen here arriving at the courthouse Tuesday morning), who joined Google in 2002 and has stayed with there since
The Justice Department started by producing several exhibits of Varian’s early email discussions, memos, and more within the company, where the money expert commented on the value of making it harder to switch from Google to Microsoft’s search product
In a memo sent to an unnamed staffer in 2007, Varian – whom many have pegged as the mastermind behind Google’s ad auction markets – discussed the money-making potential of default browsers, billing it as an in that execs could capitalize on
In one memo about the looming threat of Microsoft in search sent sometime before Bing’s release in 2009, Varian (seen here in 2014) warned, ‘We also have to be sensitive about antitrust concerns’
Highlighting a memo penned by Varian in 2003 where the economist discussed the threat of Microsoft’s entry into search, prosecutors tore into the man many know as the architect of Google’s ad auction markets about the firms’ search strategy.
The Justice Department started by producing several exhibits of Varian’s early email discussions, memos, and more within the company, where the money expert commented on the value of making it harder to switch from Google to Microsoft’s search product.
In one internal memo about the looming threat of Microsoft in search sent sometime before Bing’s release in 2009, Varian outright warned, ‘We also have to be sensitive about antitrust concerns.’
In another sent to an unnamed staffer in 2007, Varian discussed the money-making potential of default browsers, billing it as an in that execs could capitalize on.
In that email, Varian preached the importance of Google being the home page search default on certain browsers such as Firefox, as a way to target rivals like Yahoo and Microsoft.
Varian responded by asserting that the same strategy could hold true for both platforms, saying, ‘They could use it to target a vulnerability to Google.’
The trial comes just a couple weeks after the 25th anniversary of the first investment in the company – a $100,000 check from Sun Microsystems’ Andy Bechtolsheim that allowed founders Larry Page and Sergey Brin to set up shop in a Silicon Valley garage.
Today, Google’s corporate parent, Alphabet, is worth $1.7 trillion and employs 182,000 people, with most of the money coming from $224billion in annual ad sales flowing through a network of services anchored by what’s by far the world’s most popular search engine.
Google could be hobbled if the trial ends in concessions that undercut its power. One possibility is that the company could be forced to stop paying Apple and other companies to make Google the default search engine on phones and computers.
Or the legal battle could cause Google to lose focus. That’s what happened to Microsoft after its antitrust showdown with the Justice Department.
Distracted, the software giant struggled to adapt to the impact of internet search and smartphones. Google capitalized on that distraction to leap from its startup roots into an imposing powerhouse.
When proceedings are near-done in November, Judge Mehta – not a jury – will be responsible for delivering a ruling.