Google will defend itself in court today against the government’s claims that it stifled competition by creating an online monopoly – in one of the biggest antitrust cases of the century.
The trial, already underway, began at 9:30 a.m. with opening statements from both sides – with the Justice Department being the other principle.
A veteran DOJ lawyer who was part of the legal team in the government’s last major monopoly case began arguments by alleging that the company abused its dominance in search through deals with wireless carriers and smartphone makers.
Lead trial attorney Kenneth Dintzer claimed the deals resulted in their engine being the first thing users see when they turn on their phones and browsers, and said his team had documents “that capture exactly” what Google did and purportedly show how executives attempted to circumvent federal anti-monopoly laws.
A 30-year veteran of the department, he showed the court a 2007 presentation in which a Google engineer allegedly said obtaining default search positions on devices from companies like Apple, LG and Samsung could be a “powerful strategic weapon” for the be the company’s business – and an “Achilles heel” for rivals.
The Justice Department’s case is based on allegations that Google knowingly orchestrated these deals with the ultimate goal of manipulating the market and eliminating its competitors.
Google will defend itself in court today against the government’s claims that it stifled competition online by creating an online monopoly in what will be one of the largest antitrust cases in recent memory
“Google unlawfully maintained a monopoly for more than a decade,” Dintzer claimed on Monday, before handing the floor over to state and territory lawyers who also sued Google in 2020, alleging the company abused its monopoly power in search.
Their lawsuit, led by Colorado, is being reviewed alongside that of the Justice Department and makes additional allegations against Google.
Their lawsuit alleges that the way Google structures its search results page harms competition by prioritizing the company’s own apps and services over content from third-party sites, as well as other web pages, links and reviews.
The Justice Department’s top litigator, Kenneth Dintzer, began the argument Tuesday by alleging that the company abused its dominance by cutting billions of dollars in shrewd, allegedly illegal deals with wireless carriers and phone makers
The US government adds that Google’s Android operating system, in particular, entered into anti-competitive agreements with device manufacturers, as they required smartphone manufacturers to pre-install other Google-owned apps such as Gmail, Chrome or Maps without having the opportunity to do so to remove.
Google, meanwhile, counters that these practices are entirely within the scope of federal law – specifically the Sherman Act of 1890 – and that it faces a range of competition from sites like Bing, which links to competitors like Amazon and Yelp
The claims come as 1.72 Trillion continues to dominate about 90 percent of the Internet search market since it was founded by two friends in Silicon Valley in 1998.
A hint of what will happen in the next ten weeks: It is the first major government monopoly case in a quarter century and the first in the age of the modern Internet.
“This lawsuit goes to the heart of Google’s dominance over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist,” said former Attorney General William Barr when the lawsuit was first filed in October 2020.
His deputy, Jeffrey A. Rosen, pointed to previous antitrust cases such as the one against Microsoft in 1998, which involved allegations that the company illegally grouped its products in a way that stifled competition and forced people to buy them to use.
Google’s headquarters is pictured in Mountain View, California. The company is facing allegations that it did business with wireless carriers and phone makers that unfairly made its search engine the first image of what users see when they turn on their devices or open their web browser
Google argues that it faces broad competition from search engines like Bing, even though it controls about 90 percent of the Internet search market
He also brought up what has been called the Ali-Frazier of the telecommunications battles of the last century, when the U.S. Department of Justice leveled with AT&T in 1974 and split the old American Telephone & Telegraph into the new, seven regional Bell Operating Companies (RBOC )s – and the much smaller, new AT&T.
“As with its historic antitrust lawsuits against AT&T in 1974 and Microsoft in 1998, the Department is once again enforcing the Sherman Act to restore the role of competition and open the door to the next wave of innovation,” the then-acting AG said at the time.
“This time in important digital markets.”
The Sherman Act prohibits nefarious transactions to create or maintain a monopoly to suppress competition
A 144-page lawsuit filed by 36 states and the District of Columbia in the U.S. District Court for the Northern District of California alleges that Google violated the Sherman Act, the federal law that prohibits monopolistic business practices.
The Sherman Act prohibits nefarious transactions designed to create or maintain a monopoly by restricting free competition.
The law was famously used to break up Standard Oil in 1911 and to break up the AT&T monopoly in 1982, colloquially known as “Ma Bell.”
In 2001, Microsoft survived a Sherman Act lawsuit and settled with the U.S. Department of Justice without dissolving.
Aside from the historical significance of these trials, they set a somewhat dubious precedent for the Silicon Valley company.
In the Microsoft case – in which officials argued that the then-high-profile company had illegally maintained its monopoly in the PC market through legal and technical restrictions on manufacturers and users from uninstalling Internet Explorer – the judge ruled in favor of the Justice Department .
In a landmark ruling, Judge Colleen Kollar-Kotelly said that Microsoft – by denying its users the use of competing apps such as Java or Netscape – was violating antitrust laws and had “an oppressive thumb on the scale of competitive prowess.”
Now, decades later, the similarities between that case and the new case against Google are strikingly similar — and lawyers hired by the government are seeking a similar outcome.
“This case was about a monopolistic technology platform, and the government won,” Rebecca Haw Allensworth, a professor at Vanderbilt Law School, told NPR on Tuesday morning, hours before Judge Amit Mehta Dintzer for his opening statement.
“And so everyone saw this as a kind of blueprint for how we could enforce the laws against the current tech giants,” the professor, who specializes in antitrust law, added.
“This is a real test of whether this theory works or not.”
However, several members of the Justice Department’s Google case team, including University of Michigan Law School graduate Dintzer, also worked on the Microsoft investigation.
On Tuesday, the lawyer demonstrated his experience by quickly getting to the heart of the case and talking about the multi-billion dollar agreements with companies like Motorola, Apple and Samsung that will see Google pay billions to become their default search engine.
The trial comes just a few weeks after the 25th anniversary of the company’s first investment – a $100,000 check that allowed backers Larry Page and Sergey Brin to set up shop in a Silicon Valley garage
“This feedback loop, this wheel, has been turning for more than 12 years,” he said, arguing that these agreements were part of an endless cycle that culminated in Google’s current dominance.
“And it always benefits Google.”
Speaking before a packed court and District of Columbia District Judge Amit Mehta, Dintzer continued to hint at some of the evidence that would be presented in the next few days, including documents that he said support Google’s alleged conspiracy.
District Judge Amit Mehta is presiding over the trial, which is scheduled to take place over the next ten weeks
At one point, he showed a slide from a 2007 presentation in which a Google engineer reportedly said that standard search contracts with companies like Apple were paramount to the company’s success.
Dintzer also gave a taste of how the indictment will portray the relationship between Google and Apple – as officials seek to stop the search giant’s payments to the tech company and other companies that ensure Google’s default placement on their devices.
Calling Google something of a tyrant aware of its undeniable dominance, the lawyer said Google was so determined to secure standard placement that executives had specifically told Apple that without “standard placement” on its devices it would not receive a share of sales would share.
Shortly afterward, Dintzer also claimed that Google had worked diligently to ensure that Apple could not redirect searches to its Siri assistant product.
“Your honor, this is a monopoly,” he told Mehta.
The lawyer further claimed that Google’s standard agreements with other smartphone makers and browsers, similar to the agreement with Apple, are the key to its current monopoly power.
To accomplish this, the company’s executives knowingly hid documents from antitrust regulators by involving lawyers in discussions about the deals only to have their contents protected by attorney-client privilege, he said.
The trial comes just a few weeks after the 25th anniversary of the first investment in the company – a $100,000 check from Andy Bechtolsheim of Sun Microsystems that allowed backers Larry Page and Sergey Brin to hunker down in a garage in the to settle in Silicon Valley.
Today, Google’s parent company, Alphabet, is worth $1.7 trillion and employs 182,000 people. Most of the money comes from $224 billion in annual advertising sales, which flow through a network of services anchored by what is by far the world’s most popular search engine.
Google could be hampered if the process ends with concessions that undermine its power. One possibility is that the company could be forced to stop paying Apple and other companies to make Google the default search engine on smartphones and computers.
Or the litigation could cause Google to lose focus. This is what happened to Microsoft after its antitrust showdown with the Justice Department.
Distracted, the software giant struggled to adapt to the impact of internet searches and smartphones. Google used this distraction to grow from its startup roots into an imposing powerhouse.