In its first monopoly trial of modern internet era, US sets sights on Google

The Justice Department has spent three years over two presidential administrations building the case that Google illegally abused its power over online search to throttle competition. To defend itself, Google has enlisted hundreds of employees and three powerful law firms and spent millions of dollars on legal fees and lobbyists.

On Tuesday, a judge in US District Court for the District of Columbia will begin considering their arguments at a trial that cuts to the heart of a long-simmering question: Did today’s tech giants become dominant by breaking the law?

The case — US et al v. Google — is the federal government’s first monopoly trial of the modern internet era, as a generation of tech companies has come to wield immense influence over commerce, information, public discourse, entertainment and labor. The trial moves the antitrust battle against those companies to a new phase, shifting from challenging their mergers and acquisitions to more deeply examining the businesses that thrust them into power.

Such a consequential case over tech power has not unfolded since the Justice Department took Microsoft to court in 1998 for antitrust violations. But since then, companies like Google, Apple, Amazon and Meta, which owns Facebook and Instagram, have woven themselves into people’s lives to an even greater degree. Any ruling from the trial could have broad ripple effects, slowing down or potentially dismantling the largest internet companies after decades of unbridled growth.

The stakes are particularly high for Google, the Silicon Valley company founded in 1998, which grew into a $1.7 trillion giant by becoming the first place people turned to online to search the web. The government has said in its complaint that it wants Google to change its monopolistic business practices, potentially pay damages and restructure itself.

“This is a pivotal case and a moment to create precedents for these new platforms that lend themselves to real and durable market power,” said Laura Phillips-Sawyer, who teaches antitrust law at the University of Georgia School of Law.

The case centers on whether Google illegally cemented its dominance and squashed competition by paying Apple and other companies to make its internet search engine the default on the iPhone as well as on other devices and platforms.

In legal filings, the Justice Department has argued that Google maintained a monopoly through such agreements, making it harder for consumers to use other search engines. Google has said that its deals with Apple and others were not exclusive and that consumers could alter the default settings on their devices to choose alternative search engines.

Google has amassed 90% of the search engine market in the United States and 91 per cent globally, according to Similarweb, a data analysis firm.

Fireworks are expected at the trial, which is scheduled to last 10 weeks. Google’s CEO, Sundar Pichai, as well as executives from Apple and other tech companies, will probably be called as witnesses.

Judge Amit P. Mehta, who was appointed by President Barack Obama in 2014, is presiding over the trial, which will not have a jury, and he will issue the final ruling. Kenneth Dintzer, a 30-year veteran litigator for the Justice Department, will lead the government’s arguments in the courtroom, while John E. Schmidtlein, a partner at the law firm Williams & Connolly, will do the same for Google.

The jockeying over the trial has already been intense. The Justice Department and Google have deposed more than 150 people for the case and produced more than 5 million pages of documents. Google has argued that Jonathan Kanter, the Justice Department’s head of antitrust, is biased because of his earlier work as a private lawyer representing Microsoft and News Corp. The Justice Department has accused Google of destroying employees’ instant messages that could have contained relevant information for the case.

Kent Walker, Google’s president of global affairs, said in an interview last month that the company’s tactics were “completely lawful” and that its success “comes down to the quality of our products.”

“It’s frustrating — maybe it’s ironic — that we’re seeing this backward-looking case and really unprecedented, forward-looking innovation,” he said.

The Justice Department declined to comment.

Google’s search engine was created by Sergey Brin and Larry Page when they were students at Stanford University in the 1990s. Their technology was widely praised for serving up more relevant results than other web search tools. Google eventually parlayed that success into new business lines including online advertising, video streaming, maps, office apps, driverless cars and artificial intelligence.

Rivals have long accused Google of brandishing its power in search to suppress competitors’ links to travel, restaurant reviews and maps, while giving greater prominence to its own content. Those complaints brought scrutiny from regulators, although little action was taken.

In 2019, under President Donald Trump, the Justice Department and the Federal Trade Commission decided to mount new antitrust investigations into tech companies as part of a broad crackdown. The Justice Department agreed to oversee inquiries into Apple and Google.

In October 2020, the government sued Google for abusing its dominance in online search. In its lawsuit, the government accused Google of hurting rivals like Microsoft’s Bing and DuckDuckGo by employing agreements with Apple and other smartphone makers to become the default search engine on their web browsers or be preinstalled on their devices.

“Two decades ago, Google became the darling of Silicon Valley as a scrappy start-up with an innovative way to search the emerging internet,” the Justice Department said in its lawsuit. “That Google is long gone.”

Google’s actions had harmed consumers and stifled competition, the agency said, and could affect the future technological landscape as the company positioned itself to control “emerging channels” for search distribution. The agency added that Google had behaved similarly to Microsoft in the 1990s, when the software giant made its own web browser the default on the Windows operating system, crushing competitors.

A group of 35 states, Guam, Puerto Rico and the District of Columbia also filed a lawsuit in 2020 accusing Google of abusing its monopoly in search and search advertising to illegally wedge out competitors. That case will be tried alongside the Justice Department lawsuit, although Mehta threw out many of the states’ key arguments in a ruling last month.

In January, the Justice Department filed a separate antitrust suit against Google, accusing it of abusing its monopoly power in advertising technology. The company faces two other lawsuits from states that accused it of abusing monopolies in ad tech and for blocking competition in its Google Play app store.

For decades, judges have generally ruled against companies in antitrust cases only when their conduct hurts consumers, particularly if they have raised prices. Critics have said that lets companies like Google — which provides internet search for free — off the hook.

Google’s Walker said the case was a moment for the court to double down on that standard.

“American law should be about promoting benefits for consumers,” he said. “If we move away from that and make it harder for companies to provide great goods and services for consumers, that’s going to be bad for everyone.”

Monopoly trials can change the direction of industries. In 1984, under pressure from the Justice Department, AT&T split itself into seven regional telecom companies. The breakup transformed the telecommunications industry by making it more competitive at the dawn of the mobile phone era.

But the effects of the government’s antitrust battle with Microsoft in the early 2000s were less clear cut. The two sides eventually settled after Microsoft agreed to end certain contracts with PC makers that blocked rival software makers.

Some tech executives said the Justice Department’s actions made Microsoft more cautious, clearing the way for startups like Google to compete in the next era of computing. Bill Gates, a Microsoft founder, has blamed the hangover from the antitrust suit for the company’s slow entry into mobile technology and the failure of its Windows phone. But others have argued that the settlement did little to increase competition.

Ultimately, the Google trial will test whether antitrust laws written in 1890 to break up sugar, steel and railroad monopolies can still work in today’s economy, said Rebecca Allensworth, a professor at Vanderbilt University’s law school.

“The Google trial is a big test for the government’s entire antitrust agenda because its theory of monopolization is very much in play with many big tech companies,” she said.