On Tuesday, the US government commenced a 10-week trial to ascertain whether tech giant Google is unlawfully abusing its dominance in the search engine market to eliminate competition and maintain its monopoly.
For some observers, the trial began at a Washington DC court is being looked at as the “most consequential trial over tech power in the modern internet era”, The New York Times reported.
While the lawsuit that triggered this trial was brought by former President Donald Trump’s Justice Department (DoJ), the DoJ under President Joe Biden has not only supported the lawsuit but also gone so far as to file a second one against Google in January, albeit with a focus on its advertising technology.
What is the US government’s case against Google?
In the present case, the DoJ along with a coalition of 37 states, contends that Google is illegally stifling competition by making payments worth $10 billion annually to Apple and Mozilla Firefox, among others, to ensure its place as the default search provider on smartphones and web browsers.
Originally filed in 2020 in a federal court, the government’s lawsuit states that these deals were intended to be “exclusionary” as they denied Google’s rivals access to search queries and clicks, consequently allowing Google to entrench its monopoly.
Adding that Google holds a 90 per cent market share among search engines in the United States, the suit alleges that these “browser agreements” resulted in steering billions of queries towards Google each day, which led to consumers having fewer choices.
How has Google responded to these allegations?
Denying that it had illegally used these agreements to exclude its competitors, Google said that it had simply provided a superior product.
As per a January court filing, Google contended that its “browser agreements” were a part of legitimate competition and not illicit exclusion. In its 51-page filing, Google said that the court should discard the DoJ’s case in part as the agreements with Apple and others allow them to promote rivals, like Microsoft’s Bing search engine.
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“Requiring Google not to compete vigorously — or requiring browser developers to alter their product designs and provide a worse experience for their customers — would turn competition law on its head,” the filing reads.
It also maintained that people are now finding new ways to search for information online. For instance, searching on Amazon for shopping directly, Instagram for entertainment, etc.
What is the legal position?
According to Bill Baer, a former top antitrust official at the Justice Department who spoke to The NYT, this case is a “test of whether our current antitrust laws — the Sherman Act, written in 1890 — can adapt to markets that are susceptible to monopolization in the 21st century.”
The Sherman Act of 1890 is the main legislation that governs competition law regulation in the US. It protects trade and commerce against unlawful restraints and monopolies and is enforced by the DoJ.
Broadly, Section 1 covers agreements and states that “every contract, combination in the form of trust or other- wise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal”. Punishment for violating this provision includes a fine not exceeding five thousand dollars and imprisonment not exceeding one year, at the court’s discretion.
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Although it is “generally” not illegal and quite common for businesses to make arrangements with one customer while excluding others, such deals do not attract regulatory scrutiny when involving companies without any market power. However, such exclusive deals can violate antitrust laws if companies are so powerful that they can prevent rivals from entering the market without proving that the limited competition is outweighed by a positive effect on consumers, a Reuters report said.
What happens next?
Significantly, the final decision in this case rests with Justice Amit P Meta of the US District Court, who was appointed by former US President Barack Obama in 2014 and has overseen several antitrust trials. It is also the federal government’s first monopoly trial since its antitrust trial against Microsoft 25 years ago.
In that case, Microsoft was similarly accused of using its massive market power to unfairly eliminate its competition in the arena of personal computers. However, in that case, the trial court ruled that Microsoft unlawfully tried to block its rival browser, Netscape Navigator. After this, Microsoft reached a settlement that allowed it to keep its company intact.
The trial is expected to last 10 weeks and will feature testimonies from Google CEO Sundar Pichai as well as executives from Apple, the BBC has reported.
If the ruling ends up in favour of the DoJ, an injunction could be passed against Google, preventing it from continuing with its alleged anti-competitive practices. One of the directions suggested by the government department in its lawsuit was breaking up the tech giant into smaller fractions.
Recently, Google settled another case over its app store brought by US states. Besides this, the company is also facing a federal lawsuit over its advertising business. Similarly, Google has found itself in troubled waters in both Europe and India, where it has been fined billions in monopoly cases.
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What happened in India?
India’s competition regulatory body, the Competition Commission of India (CCI), last year ordered Google to change its anti-competitive conduct in the Android ecosystem and fined Google Rs 1,338 crore, or 161.95 million dollars, for anti-competitive practices. Following this, Google filed an appeal before the National Company Law Appellate Tribunal (NCLAT), but it did not succeed.
In March, the NCLAT upheld the CCI’s 130+ crore penalty on Google for antitrust violations while largely confirming its findings from last October that said Google abused its market dominance in the Android ecosystem. It held that mandating pre-installation of its entire Google Mobile Suite — a family of key Google apps and services such as Google search, Chrome browser, YouTube, Google Maps, and Gmail — amounted to “imposing unfair conditions on OEMs,” or original equipment manufacturers, which is an “abuse of dominant position” by the company.
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Eventually, Google moved the top court in June against the NCLAT order. However, the matter is still to be decided.