The Google Case
This post is meant to explain the Google lawsuit for non-lawyers (and lawyers too), and then give a rough evaluation of the merits, based only what is known publicly. A basic knowledge of the facts is assumed.
Google is accused of violating Section 2 of the Sherman Act, a law passed in 1890 that makes it illegal to “monopolize, or attempt to monopolize” a market or industry.
That law makes it illegal to either obtain a new monopoly, or maintain an existing monopoly, through “exclusionary” or anticompetitive conduct. The two parts of the case, for the Justice Department will be proving that (1) Google has monopoly power, and (2) that it used that power to exclude competitors.
The Justice Department’s accusation is that Google made exclusionary deals with Apple, among others, to make Google their default search engine. In other words, that Google paid off Apple to favor it over any would-be competitor (say, DuckDuckGo, or Bing).
By (strong) analogy it would be as if, say, Budweiser were the beer monopolist, and they paid off every beer store and bar to stock their beer exclusively. And therefore made it near impossible to buy craft beer.
(But wait — don’t beer brands do that? Or at least soft-drinks makers? For example, isn’t Coca-Cola the exclusive provider of soft drinks to McDonalds? The answer is that, if Coca-Cola were a monopolist (it isn’t), and if it locked up a majority of the outlets, it too would be violating the antitrust laws).
Google will, naturally enough, contest every part of the case, beginning with the claim that it has monopoly power. (Its main law firm will probably be Wilson Sonsini, and its main lawyer Susan Creighton, but I’m not 100% sure about that).
Depending on the measurement, Google has an estimated 88% of general search, as compared with Bing, DuckDuckGo, and Yahoo. That number is a tough one to get around. But by my guess, Google will say that general search is not a “market,” because the users searching aren’t actually buying anything. It is true that “search advertising” (the market wherein advertisers bid to reach Google’s users) involves payment. But Google will say that “search advertising” is too narrow to be a real market, because Google faces vigorous competition in digital advertising from Amazon, Facebook, and everyone else in the universe.
Google will pay an economist, perhaps David Evans, to say that the prices of digital ads reflect competition between Google and others, as opposed to a monopoly power. In other words, Google will admit it is has power in digital advertising, but not monopoly power, so there is no case here.
My instinct is that this part of the case is going to be hard for Google to win. In court it will be a battle of expensive economists, and I’m not sure what evidence they will deploy. But at bottom, the idea that Google is just some kind of small fry, or I guess medium fry, doesn’t strike me as particularly plausible.
The conduct alleged is the “exclusive deal,” which is a classic antitrust offense, and the same one that got Microsoft in so much trouble. Google will, I imagine, say that the deal wasn’t, in fact, exclusive or exclusionary, because you could always install another browser. It wasn’t, therefore, like my example of the bar that only carries Budweiser, but more like a bar with a sign that said, “featuring Budweiser,” but where you could always order something else if you really wanted to.
(Why didn’t anyone then? In other words, why was the default so sticky? Justice will say, because a default is a de facto exclusive. Google will say, they didn’t switch because our search engine is, in fact, the best, so no one wanted to switch.)
In another twist on the argument, maybe Google will find a way to say that the agreement with Apple just doesn’t reflect the assertion of monopoly power. For one thing, it was arguably Apple that drove this deal, as opposed to the exclusive deals in the Microsoft case, where Microsoft was the one coercing others into exclusivity.
This raises the hardest fact for the Government and the greatest distinction between this case and Microsoft. In the 1990s, Microsoft was also accused of making sure its product Explorer was everywhere and its rival, Netscape, nowhere. It was accused of forcing third-party distributors (ISPs, computer makers, etc.) to replace Netscape with Explorer, on the pain of losing Microsoft’s all important operating system.
But in this case there’s very little evidence that Apple, Samsung or whomever strongly wanted to use the great Bing search engine, only to have Google bribe them not to. Instead, they were glad to use Google search, thought it was the best, and were happy to have the money as well. That’s what you call a tough fact. It suggests that there is something quite different about the dynamic that could come out in various doctrinal ways.
I haven’t touched on what antitrust lawyers call the “pro-competitive justifications,” that is, the reasons that Google and Apple thought they needed to do these exclusionary deals. My guess is that Google will try and link it to the point above — that it wasn’t about killing competitors, but all about giving users what they wanted: simplicity and the best search engine.
The government, in response, may argue that Google’s search engine is only “the best” because they’ve prevented competition, and thereby prevented anyone from getting sufficient search volume to create a search engine that is as good. This is a long-standing debate in the search world — is it volume that makes an engine good, or the fine-tuning of the algorithm?
At bottom, what favors the Government is that their case is simple, and every box is ticked. It is about as straightforward as an anti-monopoly case can be. And they have a pretty simple message. If Google really was as good as they say they were, why did they need to pay Apply billions for nearly 50% of their mobile traffic? And, in the end, doesn’t that just lock up too much of the market?
What favors Google is the strong fact that their search engine is almost universally thought of as the best (other than by the privacy-inclined). They can also claim, in reasonably good faith, that everything they did was in the interest of trying to give users a good experience.
Myself, I don’t know who will win, and at some level it is surprising that Google hasn’t managed to settle this. While I’m not fan of bigness, I do admire and respect what Google has built. But I can’t help thinking that, if Google really is so great, why not settle the case and prove it, by competing without the exclusive contracts?