Google Really Doesn’t Want to Be Here
Reading Time: 6 minutesThe search giant’s historic antitrust trial began this week. Here’s what it’s arguing., Google trial: What Alphabet argued in the historic antitrust lawsuit.
If there’s something that Google wants you to know, it’s that the defendant in the United States’ most significant antitrust trial in 25 years is not a search monopoly established through unfair, anti-competitive means—and if people get that impression, it’s only because all the other search engines suck. Google is, literally, just built different.
Over the first week of U.S. et al. v. Google—a suit initially filed by the U.S. Department of Justice along with more than a dozen state attorneys general in 2020—Google’s lawyers put out myriad opening arguments to convince the U.S. District Court for the District of Columbia that the iconic company is not what the government accuses it of being: a search giant that reached and then stayed atop its pedestal by unfairly colluding with other tech companies to ensure its dominance. The DOJ alleges that Google intentionally crowded out search-engine competitors in order to control the sector, allowing it to overcharge advertisers, stifle the reach of other search sites, and leave consumers with no choice but to use Google’s steadily degrading product. Judge Amit P. Mehta will decide, over the course of the next 10 weeks, whether the government’s argument passes muster—or if Google is right that it should not be held liable under antitrust law. If the government wins, Google may have to break apart many of its subsidiary properties, like YouTube and Android, from its search business; a Google victory, meanwhile, would represent a significant setback for the Biden administration’s efforts to smack down Big Tech companies under existing antitrust statutes.
What Google is hoping to avoid is the immediate fate of the last defendant in a Big Tech antitrust trial: Microsoft, which ultimately settled with the government and saw its ambitions dim following its 1990s heyday. (These days … it’s more than fine.) What did the first few days of the trial look like? Don’t Google it; just read below.
The core allegation from the DOJ goes something like this: From the early 2000s onward, as Google made its plays within the emerging internet-search-engine market, it explicitly planned to make use of its financial advantages—its billions and billions of dollars—so as to ensure not only success but ubiquity.
Much of the evidence presented by the government consists of internal Google communications going back decades. The company’s chief economist, Hal Varian, made note in 2003 of the fact that Microsoft planned to include its custom search software within its Windows operating system. Varian told his colleagues that this ‘poses a serious threat,’ and they appeared to lay out a counterstrategy in the following years: making Google the default on as many web-browser homepages as possible by disbursing as much money as possible to those very companies. One example: Google began licensing with Apple in 2002 to incorporate its tech into the Safari browser, and started to share ad revenue as part of this license in 2005, conditioning the money flow on exclusivity privileges for Google. Two years later, when Apple wanted to offer a Safari screen asking users whether they preferred Google or Yahoo to be their default search, Google threatened to yank the revenue-sharing agreement. It later pulled a similar move with Samsung and AT&T, to which it pays billions of dollars a year so as to make Google the default search on Android smartphones. When the two mobile carriers had tried to create a separate program allowing phone owners to search for information across their already-downloaded apps, sidestepping any need for Google functions therein, the search giant changed up its contracts with both companies to condition them away from implementing that alternative. Such actions, the DOJ says, ‘diminish[ed] general search rivals’ ability to compete.’
The fact that Google, a company worth $1.7 trillion, offers billion-dollar revenue lines to these corporations, utilizing funding amounts generally unavailable to search-engine startups (and garnered, the government argues, by using its Apple/Samsung default status to rake in ad surcharges), means that those clients can’t write Google off so easily. In turn, as Forbes notes, the DOJ stated in 2018 that ‘Apple devices generated about half of Google’s revenue.’ The administration has since added that such default contracts account for a whopping 50 percent of everyday Google searches.
Plus, as academic expert Antonio Rangel testified on Thursday, Google clearly understood the incumbency advantage granted by default status in others’ browsers. As Bloomberg characterized Rangel’s take: ‘Getting prominent real estate on a web browser or mobile phone discourages people from switching to rival search engines. … Often consumers don’t even realize they are making a choice by default and they don’t know how to change it.’ As such, DOJ lawyers declared, Google benefited from ‘a feedback loop that cemented its dominance‘ thanks to all the ‘additional advertising revenue and search data’ gathered along the way, as the Wall Street Journal put it.
Google’s defense was that the money and agreements were immaterial; what made the difference is that its search engine was superior (the key word here being was). Rangel cited a 2020 decision by Brave software to make the tracker-blocking search engine DuckDuckGo its default in four European countries, finding that a ‘sizable number’ of consumers stuck with DuckDuckGo. As a counterexample, Google’s lawyers mentioned that when Microsoft made Bing the default search option on the company’s Edge browser, ‘the overwhelming majority of Microsoft computer software users preferred Google,’ according to the Journal, because Microsoft had ‘failed to innovate.’ The same was true for Mozilla and its Firefox browser, which made Bing its search default only to see users flock to Google instead. With this case, Google’s lawyer claimed, the government was running interference for Microsoft and Bing (neglecting to mention smaller search engines) because it wished to ‘forc[e] people to use inferior products‘ in favor of a dubious competitive argument.
As for those multibillion-dollar contracts? Those were all fairly obtained and negotiated, Google argued. The potentially damning stuff in those emails consisted of ‘snippets’ of internal deliberations presented ‘out of context‘ in court, and besides, as Varian himself said in court, he doesn’t remember those communications anyway.
For all the comparisons between this trial and the historic government antitrust case against Microsoft in 1998, it hardly seems to strike anyone involved with U.S. et al. v. Google that if Microsoft had ‘failed’ in search efforts, it may have been in part because its own antitrust case forced Microsoft to shift its business practices early on in a way that Google had not been forced to. One takeaway could be that the government should stay away from tech companies; another could be that the government should trust-bust all tech companies in an equal-opportunity manner.
One question from Mehta pertained to the actual data behind Google’s claims. Company lawyers said in court that its browser-default contracts aren’t anti-competitive because Safari and other browsers still ‘promote’ other search websites, and it doesn’t take much effort—’literally four taps‘—to switch from Google to one of those options if so desired. (Rangel, however, testified that it actually took up to 10 steps to get out of Google’s default setting on the Android 12 smartphone.) The judge then asked: How many people have actually switched from their default search pages, whether on Edge or Firefox or elsewhere? Google’s lawyer responded that such data was unavailable, and that even if the company did have this data, it wouldn’t be trustworthy because the switching process is easy and arbitrary enough to diminish the relevance of such tracking. (As the New York Times’ Steve Lohr observed: ‘Really? In a digital world where every click is tracked?’)
That wasn’t the only form of data at dispute in this trial. As Bloomberg points out, Hal Varian has often suggested over the years that Google’s pioneering, powerful algorithm is what makes it the type of superior product that crowds out competitors, and that this is far more pertinent to Google’s competitive edge than the stashes of search-and-click-garnered data (on users, ads, publication traffic, queries, trends, and so, so much else) that it holds thanks to market dominance. But, the Justice Department says, this line of thinking has been repeatedly undercut by fellow Google employees in internal communications, which demonstrates that these data troves are essential for Google’s control. And because of the default agreements, Google receives 16 times more data on average than Bing; in a fairer search market, this data could be distributed more easily among competitors, allowing each of them the opportunity to improve their software accordingly.
But it’s not as if Google thinks sharing is caring: State attorneys general have also alleged here that the company unfairly blocked Microsoft and Bing from getting access to its SA360 marketing program. Google’s legal team retorts that opening up such tricks of the trade is simply ‘not gonna happen’—an odd argument to make in light of Google’s willingness to share other inventions over the years with competitors, such as the Transformer machine learning model that paved the way for outsider apps like ChatGPT and Artifact, as well as its myriad open-source projects.
Another literal data point: Google’s own company logs. Reliant as it is on evidence scoured from Google workplace servers, the government has stated that the company ‘hid and destroyed documents because they knew they were violating the antitrust laws,’ pointing to messages that alluded to auto-disappearing chats as well as words and phrases that Googlers instructed one another to refrain from using: scale, lock, bundle, market share, and still others. The reason for this? The company wished to ‘be sensitive about antitrust considerations,’ as Varian reportedly wrote in a 2003 memo.
Speaking of those inventions: Another Google argument is that it’s not just a search engine but a juggernaut with formidable competitors in various other sectors. Google Shopping has to face off with Walmart, Google Travel with Tripadvisor and Expedia, Orderfood.google.com with DoorDash and UberEats. In contrast with the government’s position that Google’s empire is held together in large part through a monopoly in the ‘general search‘ market, never mind the encroachment of apps like Reddit, ChatGPT, and TikTok, or the in-house search capabilities exclusive to sites like Amazon. The way Mehta interprets general search—a sector Google dominates to the tune of 80 percent—and whether it includes other websites’ non-Google-linked internal search engines will be a key determinant here. In other words, Google’s ‘not a monopoly’ branding has the DOJ asking questions that Google professes have already been answered.
Ref: slate
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