The fate of Google's search business now rests in the hands of Judge Amit Mehta as final arguments concluded in the landmark trial on Friday.
The Justice Department and the plaintiffs made their final arguments Thursday on Google's alleged anticompetitive conduct in the general search market, and on Friday they focused on alleged misconduct in search advertising. Google came under fire (separately) for failing to retain chat messages that the DOJ believed might be relevant to the incident.
The government is trying to show that Google has locked down a key distribution channel in the general search engine market, preventing potential competitors from growing into a serious threat. It is said to have made deals with mobile phone manufacturers and browser companies to use it as the exclusive default search engine. If a judge agrees that Google has successfully excluded competition from that market, he or she may consider the government's claims about the search advertising market as evidence of anticompetitive conduct.
In his brief, DOJ attorney Kenneth Dintzer said the last major technology monopoly decision was: USA vs Microsoft, Google ‘fits like a glove’. John Schmidtlein, Google's lead litigator on the case, disagreed. in microsoftHe said manufacturers were forced to make deals and customers were spoon-fed with inferior products they did not want. “Google won with a great product,” he said.
“The significance and significance of this case is never lost on me,” Mehta said as he concluded his court case on Friday. “It’s not just for Google, it’s for the public.”
A decent replacement for Google Ads
If Google were to charge higher prices for ads, would there be a suitable alternative for advertisers to avoid? The answer to that question could tell us a lot about whether the DOJ holds the monopoly that Google claims it created through an agreement that it should be the default search engine for a variety of browsers and devices. Google says it has a variety of alternatives for advertisers. The government does not agree to this.
Mehta appeared to sympathize with the government's argument, but acknowledged that Google's alternative is a powerful advertising company in its own right. Amazon, for example, is not an inferior substitute for Google when it comes to advertising, Mehta said. Unlike wrapping sandwiches in newspaper instead of cellophane, “if you shift advertising dollars from Google to Amazon, you're not wrapping your ads in newspaper,” Mehta said.
However, Mehta later differentiated advertising platforms like Facebook and TikTok from Google. People who search on Google have a clear idea of what they are looking for and state it almost verbatim in their search terms. Social media platforms often have to infer such intent through indirect signals.
In 2017, Google experimented over several weeks and discovered that it could increase prices by 5 to 15 percent and still increase revenue.
In 2017, Google experimented over several weeks and discovered that it could increase prices by 5 to 15 percent while still increasing revenue. “Google can decide what margin they want to get. So they’re running an experiment to say, ‘If we just increase it by 15%, how much will that decrease our revenue?’” Mehta told Schmidtlein: “That’s something only a monopoly company can do, right?” Schmidtlein disagreed and said it's fair to run pricing experiments to see if you're charging the right price.
Mehta noted that “there is no evidence that Google is researching competitors’ prices” for that purpose. Schmidtlein replied that it was not that simple. Because ads are sold through complex auctions, not even Google has full insight into the pricing mechanisms behind them. This isn't just like a Coca-Cola representative walking through a grocery store to look at Pepsi prices.
Ad interruption on Bing
The plaintiffs, the attorneys general of 38 states led by Colorado and Nebraska who filed the lawsuit along with the DOJ, also allege that Google intentionally dragged its feet when building certain features of its search engine marketing tool, SA360. SA360 helps advertisers manage their ads across a variety of platforms, including Google as well as competitors like Microsoft's Bing.
The state says Google has already implemented SA360 features for Google Search ads, but has lagged behind in building SA360 features for Bing ads.
“This evidence is a bit tricky for Google,” Mehta said, noting the significance of Google having initially said somewhat publicly that it “wasn't going to play the popular game” when it came to SA360. Google could have chosen to exclude Microsoft from the tool from the beginning, but “they didn’t make that choice,” Mehta said.
This tool hasn't been available in almost five years since Microsoft requested it. “How can it not be inferred that it is at least anti-competitive?” Meta asked.
deleted chat
What is delaying the entire case is the issue of whether Google intentionally deleted or did not retain documents that could have been used as evidence in this trial.
Google has a default “turn off history” policy for chat, leaving it up to employees to decide when to turn it on for relevant conversations. The DOJ's Dintzer said the document destruction claims were “clear and, frankly, breathtaking.” “There is no doubt about it,” he added. Executives added, “We had conversations with history intentionally turned off.”
“Google’s retention policy leaves a lot to be desired,” the judge said, adding, “It’s surprising that the company leaves the decision of when to preserve documents up to its employees.”
“Google’s retention policy leaves a lot to be desired.”
Soon after, Dintzer's slide deck paused at a slide that simply said “This is wrong.” Justice Department lawyers pointed out that Google has never apologized for the withheld documents or promised never to do so again in the future. He said it was essential for the court to impose sanctions that showed the risk of destroying the documents was not worth it. The Justice Department is asking Mehta to draw adverse inferences against Google on all elements of the case for which he believes the plaintiffs do not have sufficient evidence. This means the judge assumed that deleted chats would be bad for Google, revealing anti-competitive intent behind agreements with manufacturers and browsers. The DOJ also wants Mehta to take the sabotaged chats as a sign of anti-competitive intent.
Google attorney Colette Connor said the company's lawyers informed the state of Texas (one of the plaintiffs) about its retention policy early on. Dintzer even said the disclosure came months after the lawsuit was put on hold, and that if the DOJ had known, he “definitely” would have taken action.
Mehta doesn't seem to buy Google's defense. “It’s interesting that Google has been very careful about advising employees about what not to say. “Maybe after seeing what happened with Microsoft,” he said. The company advised to avoid expressions such as ‘market share’ in employee training. (bloomberg legal You mentioned that this is common practice in large companies.)
It's now up to Mehta to decide what to do with the missed chats. He did not provide a timeline for his decision, but in the meantime, Google and the DOJ are preparing for a second antitrust showdown over advertising technology in the fall.