Google lawsuit: salute in battle to rein in big tech

After months of political understanding in Washington, the opening shot was eventually fired in a battle to rein in Big Tech.

In a complaint against Google this week, supported by Republican attorneys-general of 11 US states, the Justice Department ended years of inactivity on behalf of US antitrust authorities.

The complaint was backed by company opponents. It has come at a time when there is rare bipartisan political support for action. And it illustrates a careful legal strategy designed to maximize the odds of success, while also serving as the first part of a broader legal campaign against the rest of Google and Big Tech.

The desire of officials in Washington to actually take on Big Tech will only become apparent after the electoral battle between Donald Trump and Joe Biden. But widespread political support in Washington for this week’s action helped set the stage for other cases against large technology companies. The Federal Trade Commission is investigating Facebook in several states as well, and those involved in that case expect it to be filed before the end of the year. Federal investigators have also opened investigations at both Amazon and Apple.

Barry Lynn, founder of the Washington-based Open Markets Institute, says, “We’re looking at the occasion of a century to see what the political economy of the United States should look like.”

The Google lawsuit is not an ambitious attempt to lengthen the boundaries of antitrust law, which some critics of the digital giants expected. Instead, the DoJ has opted for more limited and traditional retaliatory action that many lawyers believe has a better chance of winning.

Senator Josh Hawley became a witness at Google’s online ad hearing. The Department of Justice complaint serves as the first part of an extensive legal campaign against Google and the rest of Big Tech © Chip Somodevilla / Getty Image

Sridhar Ramaswamy, a former advertising head at Google who is launching a new search engine, was among those who welcomed the limited nature of the case. “One of the real fears I have is that how we get the word out is a choice, so that people can ever consider us?” He says. American action is “straight and narrow, and a really important matter. It gives me heart.”

Network effect

Much criticism from politicians from Google and other large tech companies has centered on how they increase the power of their platforms. In a comprehensive report by a House of Representatives subcommittee last month, the companies were accused of intentionally cutting off competitors from their major search engines, app stores and e-commerce sites for their other services.

In contrast, DoJ’s Salute Salute aims at a far more limited issue: Google works to ensure its search engine features prominently to users. These include paying billions of dollars to Apple and others to make it the default search engine on most smartphones. It is also accused of using a series of contractual arrangements to ensure that it positions the poll on a phone running its own Android operating system.

Google turned its search engine into a focal point of an array of widely used and self-reinforcing services, since moving from Maps to Gmail, there are also serious questions about how any legal case can loosen its grip is. One official from a Google rival expressed disappointment: “It’s too late.” The case is unlikely to reach court before 2022. With a possible appeal, the relief could go away for years, even if America had to win.

Sridhar Ramaswamy, former head of advertising at Google, says that the US action against the group is 'straight and narrow, and a really important case'.

Sridhar Ramaswamy, former head of advertising at Google, says that US action against the group is ‘straight and narrow, and a really important case’ © Noam Galai / Getty

By limiting himself to company contracts, this may be the closest thing to an open and closed case, says Gary Reback, an anti-American antitrust lawyer who spent years representing Google fighting companies in Brussels and Washington Spent.

“If they would have gone after other parts of Google’s business, they would have been stuck in such questions as how they should define a market driven by Google,” says Jean Kimelman, a senior senior official in the Department of Justice. “For example, with advertising, there will also be questions about whether Facebook should be counted as a competitor, or whether part of the business dealing with advertisers should be counted aside from working with publishers. needed.”

Google, for its part, called the lawsuit a “deep defect”. According to the DoJ, the case is closely based on the agency’s successful antitrust action against Microsoft two decades ago. But Google rejects the comparison.

Today’s users can switch between search engines much more easily than users of Microsoft’s Windows software, choosing a web browser other than Internet Explorer, the company argues. It adds that, unlike Microsoft, it did not impose exclusive contracts that forced distributors to close their rivals.

Kent Walker, Google’s senior vice president of global affairs, compares the hefty sums paid to finding distributors – a sum of $ 30bn globally last year – to the manufacturers of breakfast cereals at the best shelf space in a supermarket Pay to receive.

According to opponents, it fails to reflect the reality of how people use modern digital services, and switching to a search engine is not the same as reaching for a different brand of cornflakes on a lower shelf. “The reality is that 99 percent of the people are not going to change their lapses,” Mr. Ramaswamy says.

Google has turned its search engine from Maps to Gmail to the center of an array of widely used and self-reinforcing services, raising serious questions about how any legal matter can loosen its grip

Google has turned its search engine from Maps to Gmail into the focal point of an array of widely used and self-reinforcing services, raising serious questions about how any legal matter can loosen its grip © Via Olivier Douilleri / AFP Getty

Instead of occupying just a slice of prime shelf space, Google has guaranteed its search engine almost ubiquitous performance. “It’s like they bought every store in the neighborhood,” Mr. Rebek says. The combined effect of all their contracts is a textbook case of trying to block opponents, saying that if consumers could switch so easily but chose to use Google anyway, it would make for the best placement Why would you pay such a huge amount?

However, some antitrust experts say that it is unlikely that a court will try to stop a block that looks like an open commercial system. It appears that Apple and other companies have full rights to auction default positions in their devices, says law professor Randall Picker of the University of Chicago, saying that it would not be “an easy case to win”. For the DoJ.

Political moves

Further lawsuits against Google are almost certain to follow. A group of state AGS, which have had parallel investigations and who have not been involved in the DoJ’s case, said on Tuesday that they plan to file their case in the coming weeks, and it will likely be linked to the federal government . .

As the pre-trial period continues, most observers expect the case to be more extensive. Advertising technology may yet come under scrutiny, as Google may practice placing its own products – such as Google Travel and Shopping – at the top of search results.

“It wouldn’t be surprising to see additional suits filed by the state’s AGS or DOJ,” says Michael Cades, director of competition policy at the Washington Center for Equitable Growth.

Facebook's Mark Zuckerberg heard the video's opposition to the House Judiciary subcommittee.  The Federal Trade Commission is investigating the group with several states

Facebook’s Mark Zuckerberg heard the video’s opposition to the House Judiciary subcommittee. The Federal Trade Commission is investigating the group with several states © Graeme Jennings / AP

If Washington’s legal strategy to take on Big Tech is beginning to come to mind, the timing of the first legal action has confused many. Coming just two weeks before the presidential election, it left many questions as to whether the matter was raised to maximum political effect. By pre-empting the results of separate investigations by states, it has also robbed regulators of the chance to present a more united front.

Some people involved in the state’s AG case still felt they had work to do. “They were only a few weeks away from getting ready,” the person said. “The only reason to push the button now was to pull it out before the election.”

The progress of the case can now change the outcome of the election. Compared to other senior Democrats, Mr. Biden has said relatively little about what he thinks of corporate power in the technology industry; And some worry that he will continue Barack Obama’s friendly attitude toward Silicon Valley.

However, others believe that Mr. Biden does not want to appear weak in dealing with corporate power when compared with Republicans, and will pursue the case.

“I would expect a new administration to have its own people in charge to deal with such high-profile and important lawsuits,” Mr. Kimelman says. “It will take time, but there is no reason not to continue it.”

For Mr. Reback, the most important question is whether future leaders aggressively push for severe sanctions against tech companies, or if they compromise in return for relatively minor behavior changes, as in George W. Bush White House did it with Microsoft in 2001.

Amazon employees work at a distribution station in New York.  Federal investigators have also opened investigations into both Amazon and Apple

Amazon employees work at a distribution station in New York. Federal investigators have investigated both Amazon and Apple © Johannes Eisele / AFP via Getty

Ryan Shores, Associate Deputy Attorney-General, would not say what results he wanted, but insisted this week: “Nothing is on the table.”

The condition on Wall Street was that any action would be limited, and shares of Google’s parent, Alphabet, did not lose value. A similar case in Europe, launched in 2016, led to relatively small contract changes, as well as a move to give users a choice of search engines. Neither measure has done anything to weaken Google’s grip on search.

Buying Google’s best shelf space would be a more drastic step. But given the huge payout currently, it may provoke widespread opposition. As a Google official says, this will not go down well with many companies that benefit from existing systems – starting with Apple, but including other handset manufacturers, browser companies and mobile network operators that share Google’s advertising revenue, Service in exchange for its promotion.

According to some enemies of Google, this leaves a break-up as the easiest way to create a more open search market. Europe’s failure to rein in Google after fighting a single battle suggests that this is the only sanction that will work, says lawyer Thomas Vinje, whose complaint prompted Brussels to arrange for Android.

“The only effective measure would force Google to split Android,” he says. “Separate company will not have incentive to leverage Android to leverage search.”

Roger McNamee, a Silicon Valley investor and former colleague of Facebook, says it is “too early to know” yet whether Google or other tech companies in Washington will get political support to break up. The most harsh critic.

But while the endgame may still be years away, this week’s lawsuit shows that the US antitrust has undergone some profound changes. “Laissez-faire, a low-touch policy giving way, has existed for the last 40 years,” says McNamee. “The question is, how far will they go?”

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