Explainer: Why is the US suing Google for antitrust violations?

USU Ventures AG

11/09/2023 11:00

By Mike Scarcella
       Sept 11(Reuters) - The U.S. Justice Department and a
coalition of state attorneys general on Tuesday will begin a
blockbuster antitrust trial in Washington, alleging that
Alphabet's  GOOGL.O  Google unlawfully abused its dominance in
the search-engine market to maintain monopoly power. 
    Here is an explainer on the key issues in the case. 
    
    WHAT IS THE GOVERNMENT'S LEGAL THEORY?
    The U.S. and its state allies contend Google unlawfully
stifled competition by paying billions of dollars to Apple
 AAPL.O  and other business partners to ensure its search engine
would be the default on most phones and web browsers.
    The government's lawsuit, filed in 2020 in federal court,
alleges these deals were intended by Google to be
"exclusionary," denying rivals access to search queries and
clicks, and allowing Google to entrench its market dominance.
         Google has grabbed a 90% market share in search in the
U.S. in recent years, according to government estimates. The
government said the browser agreements — steering billions of
web queries to Google every day — have resulted in less choice
for consumers and less innovation. 
         
  
    WHAT DOES GOOGLE SAY IN ITS DEFENSE?
    Google sees things much differently. The company, which
maintains that it did not violate antitrust law, said in a
January court filing that its browser agreements were
"legitimate competition" and not "illicit exclusion." 
        The agreements did not prevent rivals from developing
their own search engines or stop companies such as Apple and
Mozilla from promoting them, Google argues.
    Rather, the makers of phones and web browsers set Google
search as their default because they wanted to deliver the
"highest quality" experience for their customers, Google claimed
in its January filing.
    Google also claims mobile users can switch easily if they
want to use another search engine.
        
  
    WHAT DOES THE LAW SAY?
        It's generally not illegal for a business to make an
arrangement with one customer that excludes others. Such
exclusive deals indeed are common, and they don't garner much
regulatory scrutiny when a company lacking market power can't
meaningfully affect competition.
    But exclusive deals can violate antitrust law if a company
is so big or powerful that it prevents rivals from entering the
market, and can't prove that its curbs on industry competition
are outweighed by a positive effect on consumers.
    The Justice Department has the burden to show that Google's
business deals harmed competition for search. Google will have
its own chance at the non-jury trial, after the government makes
its case, to argue its deals benefit consumers.
    
        WHAT HAPPENS IF GOOGLE LOSES?
    The U.S. and state allies are not seeking a monetary
penalty, but rather an injunction barring Google from continuing
the alleged anticompetitive practices.
        Such an order could have significant business
implications for Google. For example, the government said in its
lawsuit that the court could break up the company as a fix.
    More broadly, the Justice Department may argue that it wants
to stop Google from leveraging its alleged search monopoly to
making exclusive deals in newly emerging markets, including
artificial intelligence.
    The case is widely seen as one of the biggest challenges to
tech industry power since the DOJ sued Microsoft in 1998 over
its market dominance for personal computers. The trial court in
that case found Microsoft unlawfully tried to block rival
browser Netscape Navigator. Microsoft later reached a settlement
that left the company intact.
    The Google trial at the U.S. District Court for the District
of Columbia is expected to last about 10 weeks. The judge would
not be expected to rule until sometime in 2024. 
         
    WHO IS PRESIDING OVER THE CASE?
    U.S. District Judge Amit Mehta was appointed to the bench in
2014 by then- President Barack Obama after a career as a private
lawyer in Washington.
        He has overseen several major antitrust disputes. In
2015, Mehta blocked Sysco Corp's $3.5 billion merger with U.S.
Foods.
    Mehta recently presided over the trial of Peter Navarro, the
former Donald Trump adviser who was convicted on Sept. 7 of
contempt of Congress. Mehta in May sentenced Oath Keepers
founder Stewart Rhodes to 18 years in prison for his role in the
Jan. 6, 2021, assault on the U.S. Capitol.

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 (Reporting by Mike Scarcella; editing by Amy Stevens and Diane
Craft)
 ((Mike.Scarcella@thomsonreuters.com;))