The main US arguments against Google – 10/26/2023 – Market

Since September 12, the Justice Department and a group of state attorneys general have questioned more than 30 witnesses in an attempt to prove that Google violated antitrust laws, in a historic monopoly trial that could affect the power of the technology industry.

The United States government is wrapping up its side of the case, setting the stage for big tech to present its defense starting this week.

In the process, big tech adopted as its main tactic to claim that innovation — and not restrictive contracts, supported by billions of dollars in payments to industry partners — explains its success as the internet search giant. Its competitive advantage, the company says, is brilliant people working tirelessly to improve its products

Two main points emerged in the government’s accusations: what Google did to illegally maintain its search and advertising monopolies and how these practices harmed consumers and advertisers. We present the main arguments below.

How Google maintained its dominance in online search

Company paid billions of dollars to Apple to eliminate competition

On the first day of the trial, the Justice Department said Google had paid Apple and other technology platforms more than $10 billion a year to become the default search engine on the iPhone and other devices.

It was perhaps the most important piece of evidence to support the government’s central argument — that Google broke the law by using multibillion-dollar contracts to be the default search engine across the internet in order to maintain its monopoly. The staggering value of the settlements had not been revealed until then and helped the Justice Department set the tone for the trial.

The value of US$10 billion has been very relevant since then. The Justice Department called several witnesses who said deals to make Google the default search engine made competition impossible.

Microsoft CEO Satya Nadella said he has tried to persuade Apple to change its default search to Bing almost every year — and failed. DuckDuckGo said it was nearly impossible for consumers to discover its competing search engine because of Google’s agreements.

The Justice Department also displayed internal Google documents in which employees reflected on the power of these standards to keep competitors at bay. The company argued that anyone can easily change the default search engine on Apple’s Safari or other browsers.

Google’s size makes it impossible for others to compete

The Justice Department also addressed the idea that Google’s enormous scale distorts the competitive landscape, keeping even successful competitors out of the search engine business — which only strengthens Google.

“This feedback loop, this wheel, has been turning for more than 12 years,” said Kenneth Dintzer, the Justice Department’s lead attorney, in his opening statement. “And it always turns in Google’s favor.”

Nadella, who was one of the government’s key witnesses, called the internet the “Google web” and said that even his company, Micrasoft, had failed to make a dent in Google’s search dominance.

In a landmark moment, Judge Amit Mehta, presiding over the case, asked Sridhar Ramaswamy, a former Google executive who later founded a competing search engine called Neeva, why Google made payments to Apple and others.

“Payments make the ecosystem exceptionally resilient to change,” Ramaswamy responded.

How Google’s Search Dominance Hurts People

Google prevents consumers from having access to choices.

Government lawyers said Google’s dominance in search resulted in a lower-quality product delivered to consumers.

In one example, the government said that if Google had to compete more with other search engines, consumers could have access to services that were more respectful of their personal privacy. Today, Google tracks users to target them with ads that boost its profits, government lawyers said.

To emphasize its point, the government called Gabriel Weinberg, CEO of DuckDuckGo, to testify. DuckDuckGo claims to collect less user information than Google.

Weinberg said his company has struggled to get its search engine in front of users because of Google’s control over default search engine configuration.

DuckDuckGo had sought deals with companies including Apple and Mozilla, maker of Firefox, to be the default search engine in the browsers’ private modes, he said. But the companies had contracts with Google that were “the key element preventing us from doing a deal with them,” he said.

Google argued that it is constantly improving its search engine, adding features to improve the experience for consumers.

Google uses its dominance in search to exert power over online advertising

Google’s power in search has allowed it to gain market influence from ads that appear alongside links that appear in response to a user’s query, the government said.

Joshua Lowcock, who was an executive at an ad-buying company when he testified, said from the witness stand that his company had, over a period of several years, put Google’s share of search at more than 88 percent and Bing’s share at more than 88 percent. just over 6%.

This dominance made Google’s search ads attractive to the company’s customers and limited the usefulness of Bing’s ads, he said.

This allows Google to increase ad prices

During testimony, the Justice Department questioned Google officials about the possibility of inflating search ad prices, since marketers have limited options if they want to spend their money elsewhere.

Jeff Hurst, Expedia’s former chief operating officer, cited the experience of Vrbo, its vacation rental website, as evidence of Google’s power to raise prices without offering more value to advertisers.

In 2015, Vrbo spent $21 million on Google search ads, generating about 500 million online visits to Vrbo, Hurst said in the deposition. In 2019, Vrbo was paying approximately $290 million to Google for search advertising for a similar volume of traffic as four years earlier.

“We spend a lot more on Google for no additional benefit,” Hurst said.

A Google lawyer noted that both Expedia and Vrbo have grown and prospered since 2015, and Expedia has changed its strategy to focus more on generating traffic directly from the mobile apps of its core businesses, Expedia, Vrbo and Hotels.com.