Google and Apple are fierce competitors. But a user doing an online search on an iPhone or Mac with Safari (Apple’s browser) is presented with Google search results because of a long-standing agreement between the two companies. A federal court in Washington D.C. will start hearing arguments in the case on September 12. Justice Department prosecutors have charged Google with illegally exploiting its dominant position in search services. Google will defend itself, stating that the company is being penalized for its success.
Google (an Alphabet company), is known for its programmers, engineers and salesforce. But now we’ll see how good its lawyers are. The company recently reached a preliminary agreement to avoid a lawsuit related to monopolistic practices in the Android app store. It’s also facing another lawsuit concerning alleged abuse of its power in the digital advertising market. The outcome of the trial commencing this week could have unpredictable consequences and shape precedents for future cases involving internet giants.
The Justice Department, in its lawsuit, compared the case to the AT&T breakup in 1974 and the Microsoft case in 1998, which charged the company with abusing the market dominance of its Windows operating system to impose its Internet Explorer browser. The judge initially ruled to split up Microsoft, but after an appeal, the company reached an agreement with the government. Whether the upcoming Google trial will make history like the AT&T and Microsoft anti-trust cases will largely depend on its outcome. The Justice Department’s lawsuit against Google alleges that the company illegally stifled competition in the world of online search and is seeking a ruling to end these practices and requiring the company to restructure accordingly. It also calls for the adoption of any additional measures, both temporary and permanent, deemed necessary and appropriate to restore competition in the affected markets.
Google has plenty of room to maneuver in this trial. Judge Amit P. Mehta, an Obama appointee, will preside over the case and deliver a verdict that can be appealed in lower courts, as well as the Supreme Court. Currently, the trial is scheduled to last 10 weeks, during which numerous witnesses will be called to testify. It’s likely that Alphabet CEO Sundar Pichai will also take the stand.
The Justice Department charges that Google has used anticompetitive tactics for many years to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising. Google has entered into exclusionary agreements, including tying arrangements, and engaged in anticompetitive conduct to lock up distribution channels and block rivals. “Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet. That Google is long gone. The Google of today is a monopoly gatekeeper for the internet, and one of the wealthiest companies on the planet,” reads the text of the complaint.
The lawsuit was filed in October 2020 during the Trump administration and was later consolidated with lawsuits from other states. Over the past three years, statements have been collected from approximately 150 witnesses, producing a summary that exceeds five million pages. Recently, Google successfully had certain charges dismissed involving its handling of the Android operating system, interactions with mobile phone manufacturers, and promotion of the search engine within the Google Assistant. However, the core of the case remains intact.
Google tipped its hand about its defense in a recent blog post by Global Affairs President Kent Walker. “As we’ve said from the beginning, this lawsuit is deeply flawed,” said Walker. “We plan to demonstrate at trial that our Search distribution agreements reflect choices by browsers and device makers based on the quality of our services and the preferences of consumers. Making it easier for people to get the products they want benefits consumers and is supported by American antitrust law. In sum, people don’t use Google because they have to — they use it because they want to.” The company argues that there are more ways than ever to search for information. “You may look for recommendations on TikTok, Reddit or Instagram, find music and podcasts on Spotify, ask ChatGPT a question, or shop on Amazon. In fact, it’s reported that over 60% of Americans start product searches on Amazon.”
Walker’s lengthy post on Google’s blog contains animations showing that it’s easy to change default search engines: two clicks on Safari desktop and four taps on Safari mobile. Other search engines like Bing and Yahoo! also pay Apple to be featured in Safari, and compete with Google to become the default tool. “Apple’s leaders have said they choose Google because it’s ‘the best.’ Importantly, our browser agreements are not exclusive,” writes Walker.
The Department of Justice maintains that: “Largely as a result of Google’s exclusionary agreements and anticompetitive conduct, Google in recent years has accounted for nearly 90 percent of all general-search-engine queries in the United States, and almost 95 percent of queries on mobile devices.” In January, Attorney General Merrick Garland announced another lawsuit against Google, alleging that the company’s plan to assert dominance in online ads has been to neutralize or eliminate rivals through acquisitions. The Federal Government’s suit explicitly requested that Google’s online advertising business be split up through divestments to promote competition. The case is not expected to go to trial until 2024.
The European Union has slapped Google with the three highest fines it has ever imposed: a record $4.4 billion (€4.1 billion) fine in 2022 for anti-competitive practices in search services; a $2.57 billion (€2.4 billion) fine in 2021 for favoring their own products in Google searches; and a fine of almost $1.6 billion (€1.5 billion) in 2019 for abuses in the digital advertising market. All told, the fines amount to over $8.5 billion (€8 billion).
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