WASHINGTON (CN) — After a nearly six-month break in a landmark antitrust trial accusing Google of holding an illegal monopoly over internet searches, the Justice Department delivered closing arguments Thursday.
The federal government, along with 35 states, the District of Columbia, Guam and Puerto Rico, say the tech giant has shelled out billions to get other tech companies to make Google the default search engine on devices and snuff out competitors.
U.S. District Judge Amit Mehta dedicated the first of two scheduled days of arguments to the question of whether Google’s conduct had created market conditions over the past 15 years that made it nearly impossible to compete, let alone dethrone, Google in internet searches.
After this week’s arguments the Barack Obama appointee will decide whether Google’s actions violated antitrust laws. If he rules against the tech giant, he will hold a second bench trial to decide the appropriate remedy, which could include ordering Google to sell off parts of the company, enjoining problematic business practices or imposing fines.
Mehta’s decision will primarily be based on whether the federal government and states can prove their case based on a legal test derived from U.S. v. Microsoft Corp., a 2001 landmark antitrust case that found Microsoft gained a monopoly over operating systems by making Internet Explorer the default browser on Windows computers.
The test requires proof that Google has gained monopoly power in a relevant, clear market (internet searches), proof of monopoly power, anticompetitive effects and barriers to entry for new competitors.
Justice Department attorney Kenneth Dinzter argued that not only is Google dominant in the general search market — it has a 89.2% market share across all internet searches, and has held over 70% since 2009 — but it also acts like a monopoly.
Key to his argument was Google’s exclusivity deal with Apple. In 2021 Google paid approximately $26.3 billion to be the default search engine on the Safari browser.
In return, Google pays Apple 36% of the ad revenue made from searches on Safari — that figure was kept under wraps during trial until a witness slip-up — which Dintzer and William Cavanaugh of firm Patterson Belknap say is a key step in a feedback loop.
Cavanaugh, representing the states’ case, described the exclusivity deals as the “fruit of the poisonous tree” that allows Google to foreclose 50% of all search queries. Through its default agreements — Google has default deals on Android devices and the Firefox and Opera browsers — Google gains more searches, more data, higher quality searches and more ad revenue, all of which pave the way to even more default agreements.
Quoting the testimony of Sridhar Ramaswamy, CEO of would-be search competitor Neeva, Cavanaugh said such deals “freeze the ecosystem in place” to keep Google on top. Neeva took the stage at trial as the only example of a new entrant to the search market — one the plaintiffs argue was forced out by Google.
But Google attorney John Schmidtlein of Washington firm Williams & Connolly repeated a common refrain Thursday that Google has rightfully and legally earned its dominant position in the search marketplace because it is the best product.
“The [default] payments are the reflection of competition,” Schmidtlein said, rejecting the assertion made by Ramaswamy in his testimony.
Schmidtlein said if Mehta were to rule against Google, he would not be protecting the competitive process, rather he would be rewarding an inferior competitor such as Microsoft’s Bing search engine.
Mehta was unconvinced that the exclusivity deals, particularly with Apple, can be described as pro-competitive, noting that the Apple deal lasts for five years — with the option to extend to 10 years. How could such a deal be in Apple’s interest, Mehta asked, if there were a chance that a better product could enter the market in the future?
He added that Microsoft’s CEO of Advertising and Web Services, Mikhail Parakhin, testified that he approached Apple to make Bing its default search engine, offering 122% of the revenue compared to Apple’s 36%. However, Parakhin testified that Microsoft would only be able to invest more in improving Bing after a deal had been reached, which Apple later declined due to its deal with Google.
Mehta asked whether that example was proof that Google’s position in the market creates a disincentive for competitors to invest in search products because they cannot compete with Google. Those conditions are not what the Sherman Act is intended to protect, Mehta said.
Arguments will resume Friday with a focus on the states' argument that Google holds a monopoly over search advertising.
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