The government’s allegations against Google include claims of illegal measures taken to protect communications regarding payments to companies like Apple. On the second day of a landmark antitrust trial with far-reaching implications for the tech industry, the Justice Department sought to demonstrate how Google aggressively promoted the use of its search engine, propelling it into a $1 trillion search and advertising behemoth.
The government’s initial witness, former Google executive Chris Barton, was grilled about billion-dollar deals struck with mobile carriers and other entities that solidified Google as the default search engine. Barton, who worked at Google from 2004 to 2011, noted a significant increase in Google executives’ efforts to secure default status with mobile carriers during his tenure, recognizing the potential of handheld devices and early smartphone versions. The government contends that Google’s dominance in search has allowed it to establish monopolies in certain online search advertising sectors, with Google generating revenue primarily through advertising, given that its search services are free.
The government asserts that Google’s subsidiary, Alphabet Inc, annually paid $10 billion to wireless companies like AT&T, device manufacturers like Apple, and browser providers like Mozilla to maintain its search engine’s market share near 90%. Google leveraged revenue-sharing agreements with mobile carriers and Android smartphone manufacturers to make its search the default and exclusive option. According to Barton, if Microsoft’s Bing were the default search engine on an Android phone, users would have a “difficult time finding or changing to Google.” Barton, who claimed responsibility for leading Google’s partnerships with mobile carriers such as Verizon and AT&T, estimated that these deals “drive hundreds of millions in revenue.”
Antonio Rangel, a California Institute of Technology professor specializing in neuroscience and behavioral biology, was also called by the government to discuss the significant influence that defaults have on consumer behavior. Rangel stated that search engine defaults create a substantial and robust bias toward the default option, whether it’s Google or Microsoft’s Bing, with a stronger effect observed on mobile devices compared to personal computers.
Hal Varian, Google’s chief economist, acknowledged the importance of scale, which relates to the number of search queries received by Google but resisted characterizing it as the sole factor. He also discussed the significance of certain search queries, like those related to tennis racquets, in effectively targeting advertising and increasing ad revenues.
The trial has brought to light allegations that Google took illegal actions to protect communications related to payments made to companies like Apple. In response, Google’s attorney, John Schmidtlein, argued that the government’s accusations are unfounded, asserting that Google’s search engine’s popularity is a result of its quality and that the payments to partners are fair compensation.
This legal battle holds immense implications for the Big Tech industry, which has faced allegations of acquiring or stifling smaller competitors. Tech companies have defended themselves by emphasizing that their services are either free (as in Google’s case) or affordable (as in Amazon.com’s case). Notable antitrust trials in the past include the cases against Microsoft in 1998 and AT&T in 1974. The 1982 breakup of AT&T is credited with laying the foundation for the modern cell phone industry, while the Microsoft case is seen as opening up space for companies like Google on the internet. If Google is found to have violated the law, U.S. District Judge Amit Mehta, presiding over the case, will determine the appropriate remedy, which could range from ordering Google to cease unlawful practices to mandating asset sales. Throughout the trial, Judge Mehta has occasionally interjected with clarifying questions to gain a deeper understanding of the topics under discussion.