U.S. v. Google LLC: An overview of the landmark antitrust case and its impact on consumer privacy, A.I., and the future of the internet.

By William Simpson

 

I. Intro

The ongoing antitrust case against Google alleging anticompetitive conduct relating to the company’s search engine could, in the near term, result in a breakup of the company or, alternatively, indicate that existing antitrust law is ill-suited to engage outsize market shares in the digital economy.[1] On a broader scale, this case could have major effects on consumer privacy, A.I., and the character of the internet going forward. The consequences could be, in a word, enormous.

 

II. Background

 

In October 2020, the Department of Justice (DOJ) filed a complaint against Google, alleging that Google violated the Sherman Antitrust Act[2] when it:

• Entered into exclusivity agreements that forbid preinstallation of any competing search service;
• Entered into tying arrangements that force preinstallation of its search applications in prime locations on mobile devices and make them undeletable;
• Entered into long-term agreements with Apple that require Google to be the default general search engine on Apple’s popular Safari browser and other Apple search tools; and
• Generally used monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization.[3]

The DOJ’s complaint concludes that such practices harm competition and consumers, inhibiting innovation where new companies cannot “develop, compete, and discipline Google’s behavior.”[4] In particular, the DOJ argues that Google’s conduct injures American consumers who are subject to Google’s “often-controversial privacy practices.”[5]

In response, Google refutes the DOJ’s argument, deeming the lawsuit “deeply flawed.”[6] “People use Google because they choose to,” says a Google spokesperson, “not because they’re forced to or because they can’t find alternatives.”[7] Challenging the DOJ’s claims, Google asserts that any deals that it entered into are analogous to those a popular cereal brand would enter into for preferential aisle placement.[8]

Many commentators have likened this case to a lawsuit brought against Microsoft over 20 years ago on similar antitrust grounds.[9] Indeed, there are many analogs between the two.[10] In United States v. Microsoft Corp., the Court of Appeals for the District of Columbia found that Microsoft violated § 2 of the Sherman Act when Microsoft imposed restrictive licenses to prevent equipment manufacturers from installing and promoting alternative web browsers;[11] cut exclusive deals with internet access providers to ensure that Microsoft’s web browser—Internet Explorer—was the default or only browser available for distribution;[12] established agreements with Apple to bundle Internet Explorer with Apple’s operating system;[13] hindered the portability of Java applications to and from the Microsoft operating system;[14] and pressured Intel to deter cross-platform software development.[15] The appellate court reasoned that Microsoft’s conduct was anticompetitive because it protected its monopoly over the web browser and operating system markets from competition in a manner not attributable to the superiority of Microsoft’s products.[16] Ultimately, the appellate court vacated the district court’s remedial order due to procedural defects, inadequate reasoning in support of the order, and a shift in Microsoft’s liability.[17] Upon remand to district court, the parties opted to halt litigation and enter into a consent decree that imposed restrictions and regulations on Microsoft for a period of five years.[18]

In comparing the two cases, antitrust lawyer Gary Reback claims, “[i]f the government’s allegations are to be believed, Google is doing exactly what Microsoft did in many respects.”[19] Others are not so sure. Attorney John Schmidtlein, who represents Google, contends that the fact patterns of the two cases “could not be more different.”[20] Where the Microsoft case involved harms against the small web browser maker Netscape, the Google case cites harms to none other than Microsoft and its search engine, Bing.[21] Harms aside, the defense that alternate products were available (if not easily accessible) was unsuccessful for Microsoft at the turn of the millennium, and the DOJ thinks the same should be true for Google today.[22]

 

III. The Google trial thus far.

The trial got underway September 12, with opening statements and a host of high-profile witnesses taking the stand during the DOJ’s case-in-chief. Most notably, Microsoft CEO Satya Nadella testified October 2, asserting that Microsoft has attempted to break Google’s hold on Apple by offering the iPhone maker “billions of dollars to switch the search default from Google to Bing.”[23]  In corroborating testimony, Jonathan Tinter, a Microsoft business development executive, said that Microsoft was willing to go into the red in order to make this offer to Apple.[24] In other words, Microsoft was willing to lose money to make its search engine on Apple’s web browser, Safari, the default option—an indication of how important the default position truly is. Even so, Nadella admitted that “the most queried word on Bing is ‘Google.’”[25] This admission aligns with Google’s position that Apple is simply opting for the search engine which best serves its customers.[26]

Testimony notwithstanding, the DOJ has introduced some damaging evidence, including a 2017 note written by Vice President of Finance at Google, Michael Razak, in which Razak compared Google’s search business to selling drugs or cigarettes.[27] In particular, the note states that “search advertising is one of the greatest business models ever created. There are certainly illicit businesses that can rival those economics, but we are fortunate to have a great business.”[28] How the judge might weigh this evidence is yet to be seen, and in fact, Judge Amit P. Mehta has given little indication as to where his sympathies lie in this bench trial.[29] For now, he’s asking “questions about how search engines work, [and] the role that data plays in the future of search,” especially regarding training A.I. models.[30] With these details in mind, it’s vital to consider the impact this pending trial may have on consumer privacy, A.I., and the internet at large.

IV. Privacy

The ties between antitrust and consumer privacy are admittedly nascent, but nonetheless significant. Especially in the tech sector, where greater market share means greater access to data, the correlation between competition and privacy appears impossible to ignore. In fact, “[a]s the biggest players in the Big Tech and social media space continue to expand their power and dominate their respective markets, users have suffered significant encroachments to their privacy as these tech behemoths have effectively mined their data.”[31] Referring to U.S. v. Google LLC, Professor Thomas Campbell, formerly of the FTC, indicates that “‘the main point [of the case] is the benefit of having a search engine that protects your privacy is lost.’”[32] This claim rings especially true for search engine DuckDuckGo, “which has been trying to compete with Google as a privacy-preserving alternative,” but is relegated to the 10% market share which Google does not control.[33] Under these conditions, not only do consumers lose access to privacy-preserving alternatives, but dominant players are unincentivized to offer competitive privacy protections, a practice which only ossifies their control of the market. According to the DOJ argument, “Google’s contracts help Google maintain its search monopoly because its scale contributes to its effectiveness: The more user data it has, the better its search results are.”[34]

If greater access to data means better services, that in turn presupposes greater market share. In fact, the relationship between privacy and scale seems to be mutually reinforcing, with privacy harms ensuring greater scale, and vice versa. A win for Google in the antitrust case would likely exacerbate this situation.

V. Artificial Intelligence Concerns

This interplay between privacy and scale presents similar issues in the context of A.I., where data collection is crucial for training A.I. models. During the Google trial, Mr. Nadella’s testimony indicated as much: “Despite my enthusiasm that there is a new angle with A.I., I worry a lot that this viscous cycle . . . could get even more vicious.”[35] Moreover, the Microsoft CEO expressed that he was “worried that Google would strike deals to exclusively use content online to train it’s A.I. tools.”[36] Namely, Google could use its dominance as a search engine to the advantage of its generative A.I.—Bard—and other A.I. tools. The more user queries one has, the more data users put into one’s apps and services, the better a large language model trained on this dataset will perform.[37] Drawing on this logic, better performance leads to more users, which in turn provides a legal justification for domination in the market. In short, the same feedback loop exists in the A.I. context that is present in the search dispute currently being litigated. Should Google preserve its search dominance through a win in the present antitrust suit, there will be fewer obstacles to keep it from cornering the A.I. market as well.

VI. The Future of the Internet

Considering the monopoly share that Google has established, concerns around user privacy in relation to market share, and the implications of generative A.I. based on the swaths of user queries Google receives, there are major implications for the internet going forward. After all, search engines are integral to how the internet works.[38] Because of their dominance as a search engine, Google can specify prices for advertisers, who are forced to pay what Google is charging with few competitors to speak of.[39] In addition, consumers are tied to Google because they have no other viable alternatives.[40] Finally, web browser creators like Apple will choose the highest quality service as the default for their web browsers.[41] Wielding control of this trifecta—advertisers, consumers, and browser creators—Microsoft CEO Nadella feels “[t]he internet is really the ‘Google web.’”[42] Many individuals, including Kenneth Dintzer, DOJ lawyer, feel the stakes of the Google case are truly critical. Expressing these mutual concerns, Dintzer says that “[t]his case is about the future of the internet, and whether Google’s search engine will ever face meaningful competition.”[43] Similarly, Harold Feld, senior VP of Public Knowledge, a group which advocates for an open internet, wonders ‘‘[i]f the DOJ loses, is there any way that a court is going to apply the antitrust laws to these new business models and new technologies?”[44]

The answer to this question and the scope of the Google case’s impact remains to be seen. Even so, the outcome of the case will dictate whether Google determines that scope, or someone else.

 

VII. What next?

Google has yet to present its argument, which could entirely alter the trajectory of the case. Indeed, Schmidtlein claims that “[t]he evidence will show that Microsoft’s Bing search engine failed to win customers because Microsoft did not invest [and] did not innovate. At every critical juncture, the evidence will show that they were beaten in the market.”[45] Even when the trial wraps, appeals are almost certain. In fact, the case may drag on for years—with the “possibility that Google may eventually win, or settle with the US government to avoid a breakup, as Microsoft did.”[46]

In truth, this case might be difficult for the government to win.[47] Antitrust cases traditionally turn on increases to consumer prices, whereas here less particularized harms have been alleged.[48] Nevertheless, the threat of antitrust suits and growing regulatory scrutiny could constrain future growth of all major tech companies or cause them to think twice about acquiring smaller players.[49] At the very least, as Judge Mehta explains, the trial will determine “whether . . . Google’s position as the default search engine . . . is a source of exclusionary conduct.”[50] This may sound like a straightforward conclusion, but the answer to this question will nonetheless have major implications for how privacy standards, A.I., and the internet develop going forward—and who exactly will lead that development.

[1] Sara Morrison, What Google’s trial means for the company – and your web browsing, Vox, (Oct. 3, 2023), https://www.vox.com/technology/2023/9/11/23864514/google-search-antitrust-trial.

[2] 15 U.S.C. §§ 1-38.

[3] Justice Department Sues Monopolist Google for Violating Antitrust Laws, Off. Of Pub. Aff. Dep’t of Just. (Oct. 20, 2020), https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws.

[4] Id.

[5] Shirin Ghaffary & Rani Molla, Why the US government is suing Google, Vox, (Oct. 20, 2020), https://www.vox.com/recode/21524710/google-antitrust-lawsuit-doj-search-trump-bill-barr.

[6] Id.

[7] Id.

[8] Id.

[9] Brian Fung, Landmark Google Trial opens with sweeping DOJ accusations of illegal monopolization, CNN (Sept. 12, 2023), https://www.cnn.com/2023/09/12/tech/google-antitrust-lawsuit-government-trial-duplicate-2/index.html.

[10] Ironically, some argue the Microsoft lawsuit hobbled Microsoft to the extent that it allowed start-ups like Google into the technology market in the first place. See Morrison, supra note 1.

[11] United States v. Microsoft Corp., 253 F.3d 34, 59-64 (D.C. Cir. 2001).

[12] Id. at 67-71.

[13] Id. at 72-74.

[14] Id. at 74-77.

[15] Id. at 77-8.

[16] Id. at 62, 71, 73-74, 77-78.

[17] Id. at 107.

[18] Microsoft Signs Consent Decree with U.S. Government to Settle Antitrust Case, Microsoft (Nov. 2, 2001), http://news.microsoft.com/2001/11/02/microsoft-signs-consent-decree-with-u-s-government-to-settle-antitrust-case/.

[19] Morrison, supra note 1.

[20] Fung, supra note 8.

[21] Id.

[22] Morrison, supra note 1.

[23] Id.

[24] Hard Fork, Google’s Trial Heats Up + How to Wear A.I. + It’s Our Birthday!, N.Y. Times, at 05:53 (Oct. 6, 2023), https://www.nytimes.com/2023/10/06/podcasts/hard-fork-google-trial.html?.

[25] Morrison, supra note 1.

[26] Id.

[27] Hard Fork, supra note 23 at 16:52.

[28] Id.  at 17:04.

[29] Id. at 09:08.

[30] Hard Fork, supra note 23 at 09:15.

[31] William Reiss & Matthew Geyer, Antitrust Law As A Tool Against Privacy Abuses, Robins Kaplan LLP (May 5, 2022), https://www.robinskaplan.com/-/media/pdfs/publications/antitrust-law-as-a-tool-against-privacy-abuses.pdf?la=en.

[32] Ghaffary, supra note 4.

[33] Morrison, supra note 1.

[34] Ghaffary, supra note 4.

[35] David McCabe & Cecilia Kang, Microsoft C.E.O. Testifies That Google’s Power in Search Is Ubiquitous, N.Y. Times (Oct. 2, 2023), https://www.nytimes.com/2023/10/02/technology/microsoft-ceo-testifies-google-search.html#:~:text=Microsoft%20C.E.O.-,Testifies%20That%20Google%27s%20Power%20in%20Search%20Is%20Ubiquitous,landmark%20antitrust%20case%20against%20Google.&text=David%20McCabe%20and%20Cecilia%20Kang%20cover%20tech%20policy%20from%20Washington.

[36] Id.

[37] Hard Fork, supra note 23 at 22:25.

[38] Morrison, supra note 1.

[39] Id.

[40] Id.

[41] Ben Winck, DOJ fights uphill battle; Google a losing one,  Reuters (Sept. 12, 2023), https://www.reuters.com/breakingviews/doj-fights-uphill-battle-google-losing-one-2023-09-12/.

[42] McCabe, supra note 34.

[43] Fung, supra note 8.

[44] Morrison, supra note 1.

[45] Fung, supra note 8.

[46] Ghaffary, supra note 4.

[47] Winck, supra note 40.

[48] Ghaffary, supra note 4.

[49] Id.

[50] Fung, supra note 8.