US vs. Google
The Justice Department claims the search giant abused its power.
This morning’s episode of The Daily, “U.S. v. Google,” is a fascinating preview of a lawsuit that I was somehow unaware was underway, claiming that the tech behemoth not only has a monopoly on search but is illegally abusing that power. It features Dave McCabe and expands on an article he co-reported with Cecilia Kang last week in the NYT headlined, “In Its First Monopoly Trial of Modern Internet Era, U.S. Sets Sights on Google.”
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.
This case troubles me in a number of ways. First, while Google is clearly far and away the dominant search engine—as McCabe points out, its name has long since become a verb—it’s rather dubious that it has monopoly power. Microsoft’s Bing and Yahoo are both well-resourced alternatives, along with minor competitors like DuckDuckGo. Second, if it’s illegal to enter into a contract with Apple and Android to make Google the default search engine, then haven’t Apple and Android broken the law, too? Third, and most importantly, it seems outrageous to me that the weight of the Justice Department is being used to charge illegal conduct on a novel theory. If we won’t know whether Google’s actions were illegal until after a judge spends ten weeks hearing arguments, how in the hell was Google supposed to know whether their actions were illegal?
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.
Here, I think the complaints have merit. That’s clearly an abuse of a dominant market position that harms competitors and in a manner likely invisible to the average user of the product.
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.
But there’s no law against this, right? It’s fairly standard for companies to pay for product placement. And, if I were inclined to prefer Bing, Yahoo, DuckDuckGo, or the like instead of Google, I could change that setting in very little time. Indeed, it’s easier to do that than it is to download Google Chrome onto my iPhone and make it, rather than Apple’s Safari, my default browser. Ditto installing Google Maps when Apple’s inferior (but less so than it used to be) Maps comes pre-installed.
“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.
I’m still baffled by the notion that Microsoft did anything wrong by making Internet Explorer the default browser. Again, Apple does the same thing with its MacBooks and iPhones and I’ve managed to switch to my preferred products easily enough. And, indeed, while I used Internet Explorer quite a bit, I switched to Mozilla’s Firefox and then Google’s Chrome a very long time ago with little difficulty.
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.”
[…]
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.
I’m persuadable that the old standard is outdated in a world where the customer is actually the product. But here’s a novel idea: Change. The. Damn. Law.
The Sherman Act, passed in 1890, and the Federal Trade Commission Act and the Clayton Act, both passed in 1914, comprise the core of US anti-trust law. There have been subsequent tweaks, notably the Robinson-Patman Act of 1936 and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, but none materially impact this case. It’s probably time for Congress to revisit the concept for the Information Age.
But, again, it’s just baffling to me that we’re spending vast resources to prosecute a novel theory. It’s a core tenet of American law—indeed, the English Common Law from which it was derived—that people should be able to know whether their actions are illegal at the time they’re taken.
I agree. Also, I’d prefer the Government not be disrupting the convenience of Google. People like my brother who are more freaky about privacy than I am do not seem to have any problem finding DuckDuckGo.
Google’s product has steadily deteriorated. It used to be that no one went beyond page one of search, but to avoid the ads you now have to start on page two. Same with Google Maps which has become ever more frustrating if you’re looking for a business. In the past I’d have defended them, but they are abusing their power and I think it is way past time the government came in to balance the tech oligarchy.
It is a very well-established principle in anti-trust law that companies can’t just use their profits to subsidize other business activities to gain an unfair competitive advantage.
In fact, that’s the same kind of behavior that led to the break-up of AT&T.
By paying smartphone manufacturers, Google used its existing profits to keep consumers away from alternative products. Their legal department must have known there was a risk that this would clash with anti-trust regulations. They pushed the legal envelope regardless.
The DoJ’s theory is far less novel than you assume.
@Michael Reynolds: I don’t disagree with any of that, although I still prefer them to the competition. I just think the FTC issuing regulations makes more sense than a DOJ lawsuit.
@drj: I’m certainly no expert in antitrust law. But the NYT report and the discussion on The Daily certainly give the impression that this could go either way.
What MS was convicted of, and got the judge to decide that breaking up the company was the only remedy that would guarantee the problem wouldn’t recur, was that the Internet Explorer HTML rendering engine was part of the operating system. This gave IE significant performance and other advantages over browser engines that had to run exclusively in user space. By the time of the trial other parts of the Windows OS had become dependent on having the IE engine run in OS space, not user space.
If Google offers search for free, how is it minting tons of money off it?
I do know the answer, but choose to be Socratic about it.
@Kathy: Are you implying something about the user being the product? Remember the heady days of, “Don’t be evil.”?
@James Joyner:
Well, it can be fine line between spending money to help yourself and spending money to actively hurt your competitors in a competitive environment. (The first thing is fine, the second not so much.)
Doesn’t mean that the DoJ’s approach is “novel” in any meaningful sense.
I mean, this is just transparent bullshit and a (very) lame attempt to find something “unprecedented” to criticize:
Because it isn’t exactly the biggest mystery what will happen to consumer choice and value after antitrust behavior has first succeeded in eliminating all meaningful competition.
Let’s face it, “We will only gouge the consumer after we managed to eliminate our competitors,” is a pretty ridiculous argument.
@gVOR10:
Not quite. I’m implying the customers are not the people using search, but the companies and people who pay Google to advertise in search.
It’s not something I’ve given much thought to, or know much about, but it does seem more vigorous enforcement of antitrust laws makes for a better balance between too few companies controlling too much of a given market vs the market being diluted into too many small companies.
James, the entire thrust of a centuries worth of anti-trust legislation and litigation is that if company has an overwhelmingly dominant position in a market, then actions that are legal for a non-dominant company are not legal for them. In your comments you seem to be eliding that.
Also, whether or not people who use the search engine have access to alternatives doesn’t enter into the anti-trust designation at all. They are not customers! As stated elsewhere, they are the product! The customers, i.e. those who write checks to Google, don’t have any alternatives. Talking to the Marketing guy here who handles our internet efforts, all of his time and all of the money we allocate for it is spent on ensuring that our product comes up first on Google when customers search for products like ours. In fact, we send considerable money to Google to ensure our results are first when the user searches for one of our products by company name and product! If we didn’t pay, Google would put someone else at the top who did pay. I’ve never heard anyone in our company or the consultants and SRO firms we use mention our Bing, Yahoo or DuckDuckGo results, because in the grand scheme of things they are way too small to merit a seconds worth of attention.
Google has really slipped down the rathole and has become well-nigh unusable for me. I can still use Google Scholar sometimes and get some good search results, but otherwise….it’s turned into crap.
@Kathy: It’s usually pretty simple to figure out who a company’s customers are, and therefore who they might abuse with a monopolistic policy: who gets an invoice from them? People simply searching the search engine don’t pay Google anything, so are obviously not their customers. Companies that want to have their results show up on that first page, and preferably high on it, are Googles customers.
@MarkedMan:
There seems to be a distinction between “consumers” and “customers.”
The former is the general public. People who search Google and shop at Amazon. The latter are those who pay Google and get the invoices. The thing is that antitrust seems to be directed at protecting consumers but not customers.
That’s wrong, stupid, and short sighted to boot.
I’m surprised they aren’t going after the ad network. Google used its dominant position in search to bolster its ads network/product, harming both its competitors (who don’t have access to serving ads) and its users (who don’t have access to new and exciting ads? And for whom search results are now a complete intertwined mess of ads)
Consider an alternative where other companies can handle the ads for a search. Chaos, briefly, and then ads being better identified and limited in size because Google doesn’t want search results completely buried under Facebook’s terrible ads as that would steer people to Bing.
And then there’s the ad auctions themselves, where advertisers (including Google) are bidding on showing an ad. Google has an unfair advantage because the servers for bidding are collocated with the auction servers, giving them X ms more time to calculate a bid and an ad. This seems harder to quantify the harm, but it’s definitely there.
And then there are the ads suggestion tools, which have access to historical search data.
Probably not, because Apple and Android were responding to potential coercion. Evidence may out their potential collusion. I wouldn’t assume they won’t be fined later.
What’s novel? A straightforward reading of antitrust basics suggests Google cannot use its dominanant position in search to muscle out other search engines. If it did so, then it broke the law. Doesn’t seem particularly controversial. Indeed, the post admits as much:
This also applies to search. If Google used it’s dominanant position in search to further entrench itself the market — like coercing Apple or Android to the detriment of other search engines — that seems like antitrust violation.
It’s not an antitrust violation for DuckDuckGo to do what Google did, because DuckDuckGo does not have overwhelming market share. Antitrust specifically constraints the most powerful companies. In the same way only an officer of the US who engages in insurrection has violated the 14th Amendment, not Joe Schmoe off the street.
What’s the counter? That Google does not dominate it’s search competitors? That search (which generates big revenues) is not a market? I doubt either will fly in court, as neither is true. But maybe.
At first glance, it seems Alphabet/Google’s first best defense is “Android and Apple did this on their own, not at our behest.” And if that’s true, evidence should show that.
Would the DOJ have brought this case against such a powerful and capable defendant if they didn’t have the goods? Maybe. But a potential antitrust violation here doesn’t seem all that confusing or shocking.
@Kathy: I would say that “search on Google” and “shop at Amazon” are not as similar as you’d like to imagine. The people who are shopping on Amazon are aware that Amazon carries specific products and product lines (even though it seems like they sell everything, they don’t), are buying products more than services, and do get invoiced for them.
For the record: I buy some products online but almost never through Amazon, though Amazon pick up locations are changing that gradually. I still usually check Amazon last when shopping online and only after all other options have been exhausted.
@Michael Cain: Thanks; I was going to make the same point. The courts didn’t rule against MS for “making Internet Explorer the default browser,” they ruled against them for making IE the only browser that could actually be fully functional under Windows, and making other Windows applications only work when paired with IE.
@DK:
Search itself does not bring in any revenue. It’s the ad network that brings in revenue. Any money generated by search is funny money shifted around — one part of the company paying another part, with no competition and prices set internally.
Google uses their dominance in search to cement their dominant ad network. The Google position would be that search and ads are inseparable, and of late they have worked to “innovate” on new ways to make search and ads intertwined, mostly to the detriment of the search user.
This is incredibly similar to Microsoft working to get IE into every nook and cranny of their OS (which was an effort to control search, and then ads). It’s also been replicated with Bing and the other search engines.
You could introduce competition at the ad network level (with the ad network paying a bit for each search, and users being able to select their ad network — possibly even a paid “no ads” ad network run by a third party).
They would have to jump through a few hoops to make this separation, and avoid their monopoly power in search being used to support their other business, and will do everything to claim that this is one business. We impose restrictions on monopolies all the time, however, specifically to prevent them from expanding into other businesses, and this seems reasonable. (We would then fight over what is the default ad network, and I would suggest randomization)
It’s worth noting that Google’s price-per-click model, and the estimated value auction (your bid is weighted by expected click through rate) changes what advertising even looks like. Display ads to bring brand recognition are greatly reduced (think of the meaningless Coke ads on tv). Whole lines of business are being shut out by Google.
ETA: We would also end up with a Patriot Liberty Network that serves up ads to My Pillow, gold coins, unproven penis extender pills, and right wing conspiracy theories. So, it might be a horror show.
@Gustopher:
Okay, if we want to be pedantic. Six in one hand, a half dozen in the other.
Either way, Google Search is an indelible and inextricable linchpin in a massive revenue-generating market, and Alphabet will likely have a tough time arguing otherwise (if indeed that’s an intended defense).
@Kathy:
I agree with the thrust of what you are saying, but that’s the real. Ofconsumer protection laws, not anti-trust
@MarkedMan: “realm of consumer protection laws”
Sigh.
As pretty as that paragraph sounds, it is wrong. What Google is charged with – paying for placement – is something that is ONLY illegal if you already have a monopoly. So no. That’s not the question we are attempting to answer. Not remotely.
I’m not a fan of pay for placement. It robs me, the consumer, of choices. It’s also ingrained in our trade culture. And it’s illegal when a monopoly does it. I don’t question that Google has a monopoly on search. I would rather pay for placement got a much broader look, and have the brakes applied a lot earlier.
For the record, I use Google Search every day. I typically use it for the purpose of help with programming, to find out how some command or construct I don’t use much works. “How do I figure out what process is using port 80” is a question I will type into google. Often I will get an answer immediately, without even clicking on a link.
I expect that searches for “hawaiian vacation” will be riddled with ads, and that won’t make a good experience. Also searching for information on certain celebrities goes sideways in odd ways.
And yet, I use it every day and it helps me every day. Still. After 24 years.
@DK:
Coming in from the side, I don’t think it’s pedantic at all to correct a very common misconception about where Google gets their money. Google gets paid for ad placement and for promoting specific businesses in their search results. If there were a search engine that people preferred, those ads on Google wouldn’t be worth nearly as much — but Google doesn’t get paid for good search results. They get paid for ads.
@DrDaveT:
I disagree, because I don’t believe it’s a common misconception. I think the very few people who bother to ever think about Google’s revenue know how search results are connected to ads.
To me, it’s as pedantic as correcting someone saying “Traditional automakers sold a lot of cars to consumers this year” with “Well, actually, traditional automakers sold a lot of inventory to dealers, who then sold the cars to consumers, because franchise law prevents compet–” Okay, cool, you got my point.
@Jay L Gischer:
Interestingly we have no trouble with this concept in the physical world. Starbucks buys the best land on the busiest corner for their newest store and we all say “yep – great location, smart business”.
@DK: Before retirement, I worked for a very, very large competitor to Google. It was often pointed out to our customers that their “Docs” and other ‘productivity’ applications were owned by a company that makes its money from advertising, not licensing.
The whole “you are the product” line comes to mind with their business model.
I work at at an institution that has Ecosia as its default search engine. If you do highlight text right-click search from a browser, that’s what you get.
It was selected as a partner for its environmental commitment.
It is a worthy cause
It is also, a lot of the time, hopeless.
On a comments board in one IT suite, the message was scrawled “Ecosia makes me want to go home and burn a f@cking tree!”
Students, was the opinion of the IT office; I happen to know it was a senior lecturer, who’s a committed environmentalist, LOL.
It genuinely is that annoying.
Most people learn to keep a google tab permanently open, with a shortcut in the bar.
Only rival that seems to come close to Google is Bing, IMO.
Duck Duck is iffy.
Google only falls down on on stuff that might be commercial, then it gets ad-stuffed.
It’s other weakness is on any topic that might be recently newsworthy, it promotes recent relevance massively.
Best work-round is a link to Advanced search, and cut off the past 5 years.
The “More questions” section is massively annoying when you do this, though, because it drops time and geographic limiters.
@DK:
You are assuming that there is one business when there are two.
Google wants you, and more importantly the regulators, to make the same assumption.
It’s the very crux of how they maintain and expand their monopoly power — hardly pedantic.