Google defends search business in biggest US antitrust case of the century so far

The largest antitrust action since the turn-of-the-century Microsoft case is headed to trial today, as the federal government and a group of state attorneys general challenge Google’s dominance in search.

Google is specifically accused of creating a monopoly through the use of exclusivity contracts with device manufacturers and software providers — deals, in short, that make Google the default search engine for a given device or platform. The overall effect of those numerous deals, according to the government’s complaint, has been to artificially deny access to the search engine market to rivals, creating an effective monopoly.

The complaint, which was filed in October 2020 in the federal district court in Washington, D.C., further alleged that the exclusive contracts were used not just to broaden the use of its products, but to explicitly exclude competitors from chipping away at Google’s dominant market share in search.

“To preserve its dominance, Google has developed economic models to measure the ‘defensive value’ of foreclosing search rivals from effective distribution, search access points, and ultimately competition,” the government stated. “In sum, Google, deprives rivals of the quality reach, and financial position necessary to mount any meaningful competition to Google’s longstanding monopolies.”

What to expect in the Google antitrust case

To prove its case, the Department of Justice (DOJ) is likely to call witnesses from Google’s competitors, which is a common, well-worn technique in antitrust actions, according to David Olson, an associate professor at Boston College Law School.

“They’ll likely complain that the default placement of Google and the lock-in effect of that really hurt them,” he said. “And well, yeah, they don’t like Google, they’re competitors, so you have to take that with a grain of salt.”

The government, however, does have more potential sources of harmful testimony to Google — including Google itself, which may have made internal statements confirming the type of anticompetitive behavior covered by the lawsuit.

“When I teach antitrust, I tell students that the place you want to go for discovery is the sales and marketing people,” Olson said. “Sales and marketing people have a tough job, and they’re very rah-rah and they have to, you know, hype themselves up — so they will say things that sound terrible to an antitrust lawyer.”

Hance, the government can be expected to produce internal documents from Google that it will argue are “very damaging,” according to Olson.

What happens if the government wins against Google?

Surprisingly, nothing earthshaking will happen to Google itself if the government’s action succeeds, according to Vanderbilt University Law School associate dean Rebecca Haw Allensworth.

“This is a lawsuit against the use of these contracts, and the logical remedy is just ‘You can’t do these kinds of contracts,’” she said. “Google’s unlikely to get split up.”

A ruling for the Department of Justice could, however, have a substantial impact elsewhere in the tech industry, particularly for social media companies. The issues in the case center on the applicability of antitrust doctrine to “zero-price” markets, where the price of the actual good or service being sold is $0 — just like most social media networks — and a ruling against Google would set a major precedent.

“On the road to liability, if that’s what happens, the court would hold that a zero-price market is a market for antitrust purposes, and I think that holding would be very relevant for a lot of companies, particularly social media,” Allensworth said.

Google’s defense is likely to center on easy access to alternatives — rival search engines are merely a click away, the company is likely to argue — as well as the idea that their product is simply much better than its competitors, accounting for the low proportion of users who switch.

Shades of the Microsoft antitrust trial

The case is, as many commentators have noted, very similar to the Microsoft antitrust case filed in 1998 and settled with the DOJ in 2001. In that case — which had a tumultuous history and was more than a decade in the making — the government accused Microsoft of abusing the dominant position of Windows in the operating system marketplace to artificially prop up its Internet Explorer browser software, as well as systematically working to erode the market position of browser rivals like Netscape.

“I sometimes joke with my colleagues that they can just control-F for Microsoft and put in Google,” said Allensworth. “The idea is that you have a big dominant tech platform that’s not letting its rivals gain economy of scale.”

As search trial begins, advertising case looms for Google

While Judge Amit Mehta dismissed some of the claims against Google last month — which related to the Android Open Source Project, IoT devices, Google Assistant and various Android-related contracts with manufacturers — the remaining claims are set to proceed in a trial that is expected to last about 10 weeks. The case will be a bench trial, with no jury.

However, whether or not Google prevails, it is set to face a second antitrust action, this one related to Google’s advertising technology business, which appears more complex and widely considered to be harder to defend against. The advertising case, filed in the Eastern District of Virginia, accuses Google of abusing its control over multiple parts of the online advertising business to exclude rival advertisers, inflate costs and reduce revenues for news publishers and other content creators.

In the advertising case, Google is operating what is sometimes called a two-sided market, according to Boston College’s Olson. The company is both selling ads to buyers as well as placements for the ads.

“The real allegations are about whether, when it comes to placing ads for Microsoft, ads that are going to appear with rivals — whether they’re making that a little more difficult or clunky, or making it slower, so that people want to do more placement of ads with Google and Google search rather than with, say, Bing and competitors,” Olson said.

If the judge deciding the case thinks that such a scenario is effectively inevitable and policing Google conduct through a purely behavioral strictures would be insufficient, “then a structural remedy could come about where the ad buying services get spun out to a separate company,” Olson said.

The advertising case is expected to go to trial next year.

(This update adds information on the advertising antitrust case against Google.)