The United States Department of Justice (DOJ) and a group of state attorneys-general have taken technology giant Google to court in Washington, accusing it of exploiting its dominance of the internet search market to lock out competitors and prevent innovation.
It’s the biggest US antitrust case in a quarter of a century, and Google is fighting to protect its stranglehold on around 90 per cent of the global internet search business.
“This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” the DOJ’s lead litigator Kenneth Dintzer says.
With the civil trial now into its second week, let’s take a look at what both sides’ arguments have been, and what could happen next.
What is Google accused of doing?
The US government claims Google has rigged the market in its favour by signing deals to make its search engine the default on many different devices, thereby making competition more difficult.
The DOJ filed its lawsuit against Google in 2020, and alleged the company had used its internet search dominance to gain an unfair advantage. It called Google “the gatekeeper of the internet”, and “a monopolist”.
Government lawyers say Google spends billions of dollars each year to be the default search engine on web browsers such as Apple’s Safari and Mozilla’s Firefox.
“Google pays more than $US10 billion ($15.5 billion) per year for these privileged positions,” litigator Mr Dintzer said.
“Google’s contracts ensure that rivals cannot match the search quality ad monetisation, especially on phones … Through this feedback loop, this wheel has been turning for more than 12 years. It always turns to Google’s advantage.”
Mr Dintzer said Google was also dominant because of the billions of searches it processed each day, which are used to improve future searches and create advantages over rivals.
He also cited an internal Google document that called its arrangements with device makers and telecommunications companies an “Achilles Heel” for rival search engines.
Government lawyers have also claimed tactics used by Google have prevented Apple from developing a search engine of its own.
Mr Dintzer has claimed that Google deleted documents to keep them out of court proceedings, and sought to hide others under attorney-client privilege.
“They destroyed documents for years,” he said. “They turned history off, your honour, so they could rewrite it in this court.”
What has Google said in its defence?
Google says it dominates the search market because its products are better than those of its competitors. It also argues that users can switch the default search engine on their devices relatively easily.
Despite dominating the search market, the company says it faces a wide range of competition from rivals such as Microsoft’s Bing, as well as social platforms like Instagram, TikTok and Reddit, but improvements to its services mean users keep coming back.
“There are lots of way users access the web other than default search engines, and people use them all the time,” said attorney John Schmidtlein, who is representing Google.
In a statement before the trial began, Google described the DOJ’s lawsuit as “deeply flawed”.
The company’s president of global affairs, Kent Walker, wrote that Google and its parent company Alphabet planned to show that its agreements with other companies “reflect choices by browsers and device makers based on the quality of our services and the preferences of consumers”.
He said Google was not the only company that paid other companies to have their web browser available on other devices.
“In short, our success comes down to the quality of our products, not the quantity of our contracts,” Mr Walker said.
He also pointed to Microsoft making Bing the default search engine on Windows, and claimed many Windows users still chose to search with Google.
“In fact, ‘Google’ is the number one search query on Bing worldwide. Contrary to the DOJ’s theory, people know they have choices, and they make them,” he said.
“We respectfully disagree with those who want to change antitrust law to promote the welfare of competitors rather than consumers.”
Who has testified in court so far?
The trial’s first witness was Google chief economist Hal Varian.
The DOJ’s Mr Dintzer produced a 2003 memo in which Mr Varian had urged Google employees to be cautious about how they discussed competition with Microsoft.
“We should be careful about what we say in both public and private,” the memo said, adding that references to things like “cutting off their air supply” should be avoided.
Chris Barton, who worked for Google between 2004 and 2011, testified that he made it a priority to negotiate for Google to be the default search engine on mobile devices, with carriers and phone manufacturers being offered a share of ad revenue.
But he pointed out that Google wasn’t the only company trying to secure the status of a device’s default search engine.
Antonio Rangel, a behavioural economist from the California Institute of Technology who testified for the US government, said that switching default search engines on a devices wasn’t always easy, and consumers were often reluctant to change their behaviour.
Mr Rangel said he used a phone running Android 12 to examine the process of replacing Google with Bing as the default search engine, and found it took 10 steps.
“That is considerable choice friction,” he said.
In response, Google’s lawyers shared data that showed users would use Google’s search engine when it was pre-installed on their devices, and would switch away from Bing or others they preferred less.
Google executive James Kolotouros testified that Google’s goal in signing contracts with telcos and Android device makers was to compete with Apple and to give users a predictable experience.
Google is pushing for discussions of how it prices its online advertising to be held in closed court, which means the public and reporters must leave the room — that’s something the DOJ has objected to, citing public interest in the case.
Brian Higgins, an executive with US telco Verizon, has also given testimony about his employer’s decision to pre-install Google’s Chrome browser with Google search on its mobile phones. After about 30 minutes, his testimony was closed for the next two hours.
Who else is expected to testify?
Some top executives from Google, its parent company Alphabet, and senior figures from other technology companies are also expected to testify.
Alphabet CEO Sundar Pichai, who took over from Google co-founder Larry Page four years ago, is likely to be among those to speak in court.
Senior Apple executive Eddy Cue may also be called to the stand, according to court documents.
What happens next?
The trial is expected to go for 10 weeks, but US District Judge Amit Mehta is not expected to issue a ruling until early 2024.
If he decides Google broke the law, it could be ordered to stop any practices found to be illegal, or may be ordered to sell some of its assets.
Another possible outcome is that Google could be forced to stop paying Apple and other companies to make Google the default search engine on their devices, which could mean a hit to Alphabet’s bottom line.
The DOJ trial started just a few weeks after the 25th anniversary of the first investment in Google — a $US100,000 check from Sun Microsystems co-founder Andy Bechtolsheim, which allowed Google’s founders to kickstart their company.
Alphabet is now worth around $US1.7 trillion ($2.6 trillion), with most of its money coming from $US224 billion ($348 billion) in annual ad sales partially fed by the Google Search engine.
Google has faced legal action over alleged anti-competitive behaviour in the past. In 2022, Europe’s top court agreed with EU antitrust regulators that the company had abused its dominance, imposing a fine of €4.125 billion ($6.126 billion) for using its Android mobile operating system to quash rivals.
Google is also facing a separate DOJ lawsuit, announced in January 2023, which accuses it of monopolising digital advertising technologies.
Could the antitrust trial against Google have wider implications?
The US DOJ’s lawsuit against Google is likely to have major implications for Big Tech, which has been accused of crushing or buying up competition.
The last major Big Tech antitrust trial in the US was against Microsoft in 1998, when the US government accused the company of forcing computer manufacturers which relied on its popular Windows operating system to also use Microsoft’s Internet Explorer web browser.
In that case, Microsoft was found to have acted unlawfully, but an appeals court partially overturned the judgement and the two parties reached a settlement in which Microsoft agreed to change some of its practices.
The Microsoft trial is credited with opening space for companies like Google to find a place in the market, and several people who worked on the Microsoft investigation are now part of the DOJ’s team in the Google case.
In 1974, there was also a lawsuit against US telecom AT&T, which led to the company being broken up in 1982, paving the way for the modern US mobile phone industry.
The Google trial potentially has political implications, too.
Bruce Wolpe, a senior fellow at the United States Studies Centre, told the ABC’s Afternoon Briefing there was “a lot at stake”, as the trial has support from across the political aisle in the US.
“The conservatives — the Republicans — are after Big Tech because they think they’re too liberal. Democrats are after Big Tech because they think they’re too big. So there’s a convergence point here, and right now, going after Big Tech is a bipartisan activity,” he said.
“There are several other companies — Meta, Amazon — under antitrust scrutiny as well. This will be a 10-week trial, and will change the course, potentially, of how Big Tech is regulated in Washington.”
ABC/wires