Is the ‘king of search’ too dominant? Inside US lawsuit against Google.

The Explainer

The Google search engine is so dominant that its name is a verb recognized by dictionaries: to “google.” Competitors’ names, such as Bing and Yahoo, don’t have a similar popular meaning. 

That lexical edge reflects something else, according to the U.S. Department of Justice: an illegal grip on the search engine market. On Tuesday, the largest U.S. antitrust suit in 25 years kicked off in federal court, with prosecutors charging that Google has used its market power to intimidate its industry partners, block its direct competitors, and stifle innovation in a foundational internet technology.

The lawsuit comes as icons of American Big Tech – Google, Meta, Apple, Microsoft, Amazon – are grappling with the vast technical challenge of ChatGPT and other artificial intelligence advances. Ripples from the suit’s outcome could help shape the tech business landscape as it enters the new AI era.

“It’s potentially very big,” says Daniel Rubinfeld, a professor of law at New York University who was an assistant attorney general and consultant to the Justice Department during its Microsoft antitrust suit in the late 1990s.

What do prosecutors accuse Google of doing?

Google’s market position is not just dominant – it is overwhelming. Currently, Google accounts for around 90% of the search engine market worldwide. The Justice Department, along with state allies, charges in its lawsuit that Google reached and maintained this position by abusing its market power and becoming a monopoly in its corner of the online world.

Specifically, prosecutors in federal court on Tuesday claimed that Google unlawfully stifled competition by paying upward of $10 billion a year to Apple and other business partners to ensure its search engine would be the default setting on most phones and web browsers. Prosecutors alleged these deals were designed to be “exclusionary” – in other words, intended to block consumers from even gaining access to competing search engines.

From the start, Google was aware of the market-warping power of these arrangements, said prosecutors, citing an internal company document that called them an “Achilles heel” for Microsoft, Yahoo, and other search engine producers.

Prosecutors say Google further rigged the market by requiring its search engine be bundled with its Android smartphone software if manufacturers of phones or other devices want full access to the Android app store.

“This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” Kenneth Dintzer, the Justice Department’s lead litigator, said at the opening of the trial in Washington.

What is Google’s defense?

In contrast, Google says that its business practices are unremarkable and accepted, akin to cereal or soda companies’ paying for shelf space at local supermarkets. 

Google lawyers on the trial’s first day also emphasized that the company does indeed face competition, not just from deep-pocketed direct foes such as Microsoft, with its Bing search engine, but also from indirect competitors such as websites Amazon and Yelp, where consumers can find information, comparing products or even entire stores. Google may be the default browser on many devices, but it is easy to change that setting and opt for a competitor, the lawyers say.

The reason more users don’t change is that Google is the best search product in the market, updated by constant tinkering, said the firm’s lawyers on Tuesday. 

What the government is trying to do is hinder Google’s ability to compete, “all in the hopes that forcing people to use inferior products in the short run will somehow be good for competition in the long run,” said attorney John Schmidtlein, a partner at the law firm Williams & Connolly, which is representing Google.

What are the stakes?

The Google court trial begins only a few weeks after the 25th anniversary of the first outside investment in the company, which provided founders Larry Page and Sergey Brin enough money to set up shop in a Silicon Valley garage. 

Today, Google’s corporate parent, Alphabet, is a giant of the Silicon Valley economy. It employs 182,000 people and is worth $1.7 trillion. Its main income stream is $224 billion in annual advertisement sales from a network of digital services anchored by its search engine.

If Google loses, its wealth and stature would likely wane. The Justice Department and its allies say they are not seeking monetary penalties, but bans on what they claim are the company’s anti-competitive practices. This could hobble the firm at a time when some industry experts predict the entire ecosystem of the internet could change due to the rise of AI-generated content and services.

The case more generally is also a wrestling match between Big Tech and Big Government. Many lawmakers from both sides of the aisle worry that a handful of giant corporations now have too much influence over our increasingly online lives. Can laws written for older eras help control the wild river of the internet? Or has technology progressed to the point where it is almost impossible for regulations to work? 

Could the past be prologue?

In some ways, the Google case is an echo of an older lawsuit – the 1998 antitrust complaint filed by the Justice Department against Microsoft.

That suit accused Microsoft of forcing computer makers that relied on its then-dominant Windows operating system to also feature Microsoft’s Internet Explorer web browser, just as internet traffic was exploding.

“They sound very similar when you look at them very broadly, from a legal point of view,” says Professor Rubinfeld of New York University. “In terms of actual substance, they’re quite different because the world has changed in 25 years.”

Back then, Microsoft was by far the biggest redwood in the tech forest, while today Google is one among a number of giants. Microsoft founder Bill Gates was a household name in a way today’s tech CEOs generally are not, with the possible exception of Elon Musk.

A federal judge found Microsoft guilty of antitrust violations. Eventually, the administration of President George W. Bush struck a deal with the firm, under which Microsoft agreed to allow more open competition for PC software providers.

Among the small firms that took root in this newly open environment was Google. Now it is the established firm perhaps looking to maintain its position and defend itself from more flexible upstarts.

“The fact that Google was, and I think still is, very creative, doesn’t mean they’re necessarily immune from antitrust liability,” says Professor Rubinfeld.