Landmark Google trial opens with sweeping DOJ accusations of illegal monopolization

Originally Published: 12 SEP 23 11:20 ET Updated: 12 SEP 23 12:18 ET Brian Fung, CNN

(CNN) — US prosecutors opened a landmark antitrust trial against Google on Tuesday with sweeping allegations that for years the company intentionally stifled competition challenging its massive search engine, accusing the tech giant of spending billions to operate an illegal monopoly that has harmed every computer and mobile device user in the United States.

In opening remarks before a federal judge in Washington, lawyers for the Justice Department alleged that Google’s negotiation of exclusive contracts with wireless carriers and phone makers helped cement its dominant position in violation of US antitrust law.

The Google case has been described as one of the largest US antitrust trials since the federal government took on Microsoft in the 1990s, and involves some similar arguments about the tying of multiple proprietary products. The multi-week trial is expected to feature witness testimony from Google CEO Sundar Pichai, as well as other senior executives or former employees from Google, Apple, Microsoft and Samsung.

The effects of Google’s alleged misconduct are vast, DOJ lawyer Kenneth Dintzer told the court.

“This case is about the future of the internet, and whether Google’s search engine will ever face meaningful competition,” Dintzer said, adding that Google pays more than $10 billion a year to Apple and other companies to ensure that Google is the default or only search engine available on browsers and mobile devices used by millions.

Also anticompetitive, the Justice Department said, are Google’s contracts to ensure that Android devices come with Google apps and services — including Google search — preinstalled.

The deals guarantee a steady flow of user data to Google that further reinforces its monopoly, the US government said, leading to other consequences such as harms to consumer privacy and higher advertising prices.

“This feedback loop, this wheel has been turning for 12 years, and it always turns to Google’s advantage,” Dintzer said. The practice ultimately affects what consumers see in search results and prevents new rivals from gaining scale and market share, he added.

For Google’s opening statement, attorney John Schmidtlein said that Apple’s decision to make Google the default search engine in its Safari browser demonstrates how Google’s search engine is the superior product consumers prefer.

“Apple repeatedly chose Google as the default because Apple believed it was the best experience for its users,” he said.

The Google case “could not be more different” from the historic Microsoft litigation at the turn of the millennium, Schmidtlein continued.

Where the Microsoft case revolved around that company’s alleged harms to Netscape, a small browser maker, the Google case is based on claims that Google search has harmed a much larger and more powerful entity: Microsoft and its Bing search engine, Schmidtlein said.

“Google competed on the merits to win preinstallation and default status” on consumer devices and browsers, he insisted, attacking Microsoft as a failed search engine developer.

“The evidence will show that Microsoft’s Bing search engine failed to win customers because Microsoft did not invest [and] did not innovate,” Schmidtlein added. “At every critical juncture, the evidence will show that they were beaten in the market.”

And Schmidtlein argued that forbidding Google from being able to compete for default status on browsers and devices would lead to its own harms to competition in search, stating that contracts ensuring that Android devices come with certain apps preinstalled such as Google Maps and Gmail also promotes competition — against Apple.

“Google’s Android agreements are important components of a business model that has sustained the most important competitor to Apple for mobile devices in the United States,” Schmidtlein said.

Google has previously said that consumers choose Google’s search engine because it is the best and that they prefer it, not because of anticompetitive practices.

But DOJ prosecutors said Tuesday that they plan to present evidence in the case that Google knew what it was doing was illegal and that the company “hid and destroyed documents because they knew they were violating the antitrust laws.”

“The harm from Google contracts affects every phone and computer in the country,” Dintzer said.

Kent Walker, Google’s president of global affairs, and Republican Congressman Ken Buck from Colorado were in attendance for the opening.

The trial marks the culmination of two ongoing lawsuits against Google that started during the Trump administration.

In separate complaints, the Justice Department and dozens of states accused Google in 2020 of abusing its dominance in online search but were eventually consolidated into a single case.

Google’s search business provides more than half of the $283 billion in revenue and $76 billion in net income Google’s parent company, Alphabet, recorded in 2022. Search has fueled the company’s growth to a more than $1.7 trillion market capitalization.

“This is a backwards-looking case at a time of unprecedented innovation,” said Google President of Global Affairs Kent Walker, “including breakthroughs in AI, new apps and new services, all of which are creating more competition and more options for people than ever before. People don’t use Google because they have to — they use it because they want to. It’s easy to switch your default search engine — we’re long past the era of dial-up internet and CD-ROMs.”

The trial may also be a bellwether for the more assertive antitrust agenda of the Biden administration.

At the time the lawsuit was first filed, US antitrust officials did not rule out the possibility of a Google breakup, warning that Google’s behavior could threaten future innovation or the rise of a Google successor.

Separately, a group of states, led by Colorado, made additional allegations against Google, claiming that the way Google structures its search results page harms competition by prioritizing the company’s own apps and services over web pages, links, reviews and content from other third-party sites.

But the judge overseeing the case, Judge Amit Mehta in the US District Court for the District of Columbia, tossed out those claims in a ruling last month, narrowing the scope of allegations Google must defend and saying the states had not done enough to show a trial was necessary to determine whether Google’s search results rankings were anticompetitive.

Despite that ruling, the trial represents the US government’s furthest progress in challenging Google to date. Mehta has said Google’s pole position among search engines on browsers and smartphones “is a hotly disputed issue” and that the trial will determine “whether, as a matter of actual market reality, Google’s position as the default search engine across multiple browsers is a form of exclusionary Conduct.”

In January, meanwhile, the Biden administration launched another antitrust suit against Google in opposition to the company’s advertising technology business, accusing it of maintaining an illegal monopoly. That case remains in its early stages at the US District Court for the Eastern District of Virginia.

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