Google and DOJ attorneys begin closing antitrust arguments

Lawyers for the U.S. Justice Department and Google yesterday began their closing arguments in an ongoing antitrust trial, which comes nearly nine months after it began and more than three years after its filing in 2020.

The high-stakes case taking place in U.S. District Court centers on whether Google broke U.S. antitrust laws to maintain its monopoly. That requires the DoJ — and a group of state attorneys general involved as co-plaintiffs — to not only show Google has a monopoly on search but also prove the giant’s actions harmed competition and stifled innovation.

Overseeing the trial is U.S. Judge Amit P. Mehta, who challenged arguments on both sides while asking attorneys about a range of related topics. While Mehta was skeptical of Google’s claims that vertical-specific search — like Amazon for shopping and ESPN for sports — counted as direct competition, he also poked holes in the DoJ’s claims that competing with Google was too costly. Two examples discussed at length were startups like DuckDuckGo and Neeva, which both sought to win over users by improving search quality and boosting user privacy.

According to Mehta, the average person wouldn’t think Google and Amazon have the same business model with one focused on ads and the other focused on commerce. He also asked whether there’s a trade-off between search quality and privacy.

The day covered a number of key topics core to the case including the search market landscape, search quality, alternatives options for users and the impact on competition across industries. While the DoJ alleged Google acted illegally to maintain dominance, the search giant argued there is still room for competition. Google also argued the quality of its search engine has allowed it to stay on top. However, lawyers for the DoJ said Google amassed market share by through paying Apple and Samsung to be their default search engine on browsers while also starving rivals of enough the scale needed to improve quality.

“Google keeps wanting to make this case about Microsoft and about Bing, but it’s about the entire search industry,” said Kenneth Dintzer, the Justice Department’s chief litigator. “There’s no meaningful sign that any of this is going to change…It’s the marketplace that is being harmed by the freeze that’s been put on it.”

While Thursday focused on defining the search market and Google’s dominance, today’s day in court will focus on the search advertising market. However, some advertising issues already are in play. Google’s lawyers asked why companies like Yelp and TripAdvisor would spend billions of dollars a year on Google if they were competing for the same market. However, the DoJ argued that prices have risen even if search quality hasn’t. (Google is also scheduled for a separate antitrust trial in September related to digital ads.)

“The products produced by each are different,” said Google lawyer John Schmidtlein. “They go to predict because that’s where the customers are. And they need that to function. The converse isn’t true. That’s why they are different markets. They have fundamentally different purposes.”

Closing arguments come days after newly unsealed court documents made some facts in the case public. For example, one previously redacted exhibit said Google paid Apple $20 billion in 2022 to be the default search engine for Apple’s Safari browser. Another exhibit shows a 2019 email from Microsoft CTO Kevin Scott to CEO Satya Nadella and co-founder Bill Gates, that gives a glimpse into MIcrosoft’s reasoning for its $1 billion investment in OpenAI that same year. In the email, Scott said he was “very, very worried” about being “multiple years behind the competition” when it came to training large language models.

“We have very smart ML people in Bing, in the vision team, and in the speech team,” Scott wrote. “But the core deep learning teams within each of these bigger teams are very small, and their ambitions have also been constrained, which means that even as we start to feed them resources, they still have to go through a learning process to scale up.”

Although Mehta also noted how generative AI could change the future of search, he said that’s out of the scope of the case at hand: “Nobody said a purely AI-driven search couldn’t succeed tomorrow. But my decision is about today.”

The attorneys also discussed the role of Google being the default search engines with browsers like Safari and Firefox. While the DoJ said Google closed the main channel with its deals, Mehta said the government will have to prove exclusive defaults have led to blocking the competition. He also questioned whether Google’s 90% market share is proof that it’s preventing others from competing.

Observers inside and outside the courtroom said the DoJ and state AGs made strong arguments, but also noted it’s still hard to see how the judge might rule. Vidushi Dyall, director of legal analysis at Chamber of Progress — a tech industry trade group — told Digiday that Mehta seemed to doubt the DoJ’s argument that Google hasn’t innovated enough in search.

“Judge Mehta has been very engaged in weaving in technical and business complexities of search in his framing of the issues,” Dyall said via email. “He was asking both sides tough questions but something that jumped out at me were his questions directed to the DOJ on how he can be expected to determine what is ‘good enough’ or draw some kind of arbitrary goalpost.”

What happens next

It could be weeks, or months, before Mehta makes a decision in the case. However, if the court decides to ban Google from making exclusive deals to be the default browser, some think it could bring a new wave of opportunity for browsers, users, advertisers and adtech providers. Adam Epstein, co-CEO of Admarketplace, a search advertising marketplace, said enabling search engine interoperability could let browsers choose search engines on a query-by-query basis. That could lead to more innovation and more ways of pricing ads.

“When you move the auction from being run by Google to being run by the browser, that’s a sea change shift for how things are now,” Epstein told Digiday. “It really moves the locus of control from Google to the browser themselves and opens up a tremendous amount of competition and tremendous amount of experimentation – and that’s been missing.”

https://digiday.com/?p=543830

More in Media

daily newsstand

Media Briefing: Why some publishers are resurrecting their print magazines

Nylon and Complex are bringing back print, but see more opportunity than just pure ad revenue.

Publisher strategies: Condé Nast, Forbes, The Atlantic, The Guardian and The Independent on key revenue trends

Digiday recently spoke with executives at Condé Nast, Forbes, The Atlantic, The Guardian and The Independent about their current revenue strategies for our two-part series on how publishers are optimizing revenue streams. In this second installment, we highlight their thoughts on affiliate commerce, diversification of revenue streams and global business expansion.

How sending fewer emails and content previews improved The New Yorker’s newsletter engagement

The New Yorker is sending newsletters less frequently and giving paid subscribers early access to content in their inboxes in an effort to retain its cohort of 1.2 million paid subscribers and grow its audience beyond that.