In First Tech Antitrust Trial in Decades, DOJ Takes on Google

REUTERS/Arnd Wiegmann/File Photo
A logo is pictured at Google’s European Engineering Center in Zurich, Switzerland July 19, 2018

For more than a decade Google’s rivals have argued the company’s sharp-elbowed tactics helped cement its search engine’s No. 1 status. The Justice Department will finally take Google to court over these allegations Tuesday, in a landmark trial that marks the department’s first antitrust case against a major tech company in more than 20 years.

Filed in 2020 under the Trump administration, the case – U.S. et al v. Google – focuses narrowly on the company’s popular search engine, alleging Google used the tool’s 90 percent market share to illegally throttle competition in both search and search advertising.

But the trial has more expansive implications for the internet giant’s business ambitions. It is part of a broad reappraisal in Washington of the common wisdom that the internet is open by nature and therefore can self-regulate through free-market competition. It reflects a sense of urgency among antitrust enforcers that, without action, Silicon Valley giants will transplant their established market dominance into the next generation of technology, potentially stifling innovation in futuristic fields such as artificial intelligence.

Technologists say the arrival of advanced generative AI signals an inflection point: a chance for new players rise to the top, or for the established victors to extend their lead. This case – and a follow-up case filed in January by the Justice Department – may play a role in determining the tech landscape for the coming decade and beyond.

“The Google case is one in a series of cases,” said Blair Levin, a former tech policy official with the Federal Communications Commission. “It’s a movement, not against an individual company, but a sector, and it is international in nature.”

Over the next ten weeks, the Justice Department and a group of state attorneys general will argue in a D.C. court that Google has illegally abused its monopoly power to run roughshod over rivals, inking deals to ensure dominance that include paying Apple to make Google search the default option on iPhones.

“Google pays billions of dollars each year to distributors – including popular-device manufacturers such as Apple, LG, Motorola, and Samsung . . . to secure default status for its general search engine,” the Justice Department’s complaint said.

The case was filed under the Trump administration in 2020 and rushed out the door to ensure it would be part of Attorney General William P. Barr’s legacy, according to two people familiar with the matter, who spoke on the condition of anonymity to discuss internal matters within the department. The Biden administration’s DOJ has since filed a second antitrust case against Google, focused on its market dominance in advertising technology.

Google will argue that its singular status is because users prefer its service, and that it drives innovation, rather than stifling it. “The number one search query on Bing worldwide is ‘Google,’ which tells you something about the fact that most people actually prefer using the Google search engine,” Google’s President of Global Affairs Kent Walker said in an interview, referring to Microsoft’s less-popular search rival.

While the court case focuses on Google’s search businesses, the outcome could affect whether the company can leverage its core product to dominate new sectors, such as AI, in coming years.

The Justice Department has used the Sherman Antitrust Act of 1890 – the law prohibiting anti-competitive conduct invoked against Google – only sparingly against American high-tech companies, wary of weighing on innovation. But the Department has interceded at key moments, and even with limited explicit penalties, these probes have reined in industry giants through what antitrust scholar Tim Wu calls the “policeman at the elbow” effect.

Though the DOJ dropped its 1969 lawsuit against IBM 13 years after it was filed, antitrust experts argue it curbed Big Blue enough to allow for the rise of Microsoft. By 2001, Microsoft had become the industry’s lumbering giant, and the Justice Department filed antitrust charges. The case was settled, but some lawyers say it clipped Microsoft’s wings enough that Google sailed past it to become king of the mobile era.

Google’s rivals say it has already abused this dominant status to crowd out competition in search. Kamyl Bazbaz, vice president of public affairs of DuckDuckGo, a privacy-focused search engine, said it takes an onerous 15 steps to choose DuckDuckGo as the default option on a smartphone running Google’s Android operating system.

“Even though DuckDuckGo provides something extremely valuable that people want and Google won’t provide – real privacy – Google makes it unduly difficult to use DuckDuckGo by default,” he said.

Meanwhile, the tech giant has argued it is impossible to disconnect its businesses from one another: Its search engine is now deeply integrated with its most futuristic research areas, including its generative AI technology that competes with ChatGPT and its image-recognition function, Google Lens.

This case joins Biden administration actions aimed at curbing the powers of Big Tech. The Federal Trade Commission has filed an antitrust suit against Meta and sued Amazon for allegedly tricking millions of customers into enrolling in Prime. It has sought to block major tech companies such as Microsoft from acquisitions that could make them bigger and stronger.

Open Markets Institute Executive Director Barry Lynn, a veteran antitrust activist and an early mentor of FTC Chair Lina Khan, recalled finding few sympathetic ears when they pushed for antitrust enforcement against Google in the 2000s.

“People just thought we were insane,” he said. “Google was the best thing since sliced bread.”

Under the Obama administration, the FTC probed allegations of anticompetitive behavior in Google’s search business, but closed the case in 2013 without launching a formal investigation. Google’s critics now call it a missed opportunity.

“It’s clear the decision by the FTC to not proceed 10 years ago has not aged well,” said Luther Lowe, senior vice president of public policy for the reviews platform Yelp, who has long been a sharp critic of Google’s business practices. “The consumer web has been deoxygenated. There are fewer start-ups. The market is more calcified.”

Prosecutors have remained tight-lipped on what penalties the DOJ would seek to impose on Google if it prevails. In its 2020 complaint, the DOJ said it was seeking “structural relief as needed to cure any anticompetitive harm,” a broad term that could include breaking up the company, according to antitrust experts. Walker said he didn’t believe the Justice Department is seeking to break up Google through this case.

Two earlier cases suggest potential models for remedies. To appease antitrust authorities in the European Union, Google rolled out a “choice screen” in 2019, allowing users to select their preferred search engine from a list instead of being defaulted to Google.

Microsoft’s 2001 settlement with the Justice Department ended without a breakup of the company, which prosecutors had sought. Instead, Microsoft agreed to remedial measures, such as pledging it would not forbid clients using Windows to work with other software companies.

Regulators may also be wary of breaking up industry leaders if it might stymie innovation, as competition with China intensifies. One of the few times a federal antitrust suit has been used to chop up a tech company was the 1982 breakup of AT&T. While the dismantling of “Ma Bell” into the “Baby Bells” unleashed competition for telephone services, some scholars point to it as the beginning of the decline of Bell Labs, AT&T’s legendary R&D unit, which is credited with inventing the transistor (the building block of a computer), the laser, satellites, solar cells and the fax machine.

Walker argued that Google’s scale and deep pockets allow it to do similar fundamental research in the modern day, such as early research in AI algorithms that could not be immediately commercialized.

“The ability to do that comes from the Bell Labs equivalent: the ability to have computer-science researchers and PhDs thinking about the next generation of tools,” he said. “That is a real benefit. And we want to be careful as we think about the benefits of traditional American antitrust law.”

Colorado Attorney General Phil Weiser, who has helped spearhead a coalition of states in joining the Justice Department’s lawsuit, said the anticompetitive harm of Google’s conduct looks clearer with the passage of time.

“In the 1990s, there was this view of the internet – it was such a dynamic, wide-open, competitive area that was just going to bring goodness to the world,” he said. “Today, 2023, the world looks very different. At this point, we see a lot of harms.”

Cat Zakrzewski and Cristiano Lima contributed to this report.