Google makes lots of money but has had a miserable year in court, and its judicial travails are far from over.
By Eva Dou
Monopoly charges of that magnitude are a rarity. Google is one of only a handful of corporate giants to be taken to court since the 1970s under federal monopoly law. For decades since, U.S. officials have treated high-tech companies gingerly, leery of damaging the nation’s economic engines and of punishing exemplars of innovation and free enterprise.
The string of cases against Google suggests an end to that reluctance, reflecting instead a shift toward heavier oversight as concerns have grown across the political spectrum over tech giants throwing their weight around.
“This is more ’50s-style antitrust,” said Tim Wu, a legal scholar who helped craft the Biden administration’s antitrust approach. “This is the judiciary thinking about how you shake up innovation and make things happen.”
Every case is different, of course, but the few comparable precedents suggest that a judge’s thinking about how to foster innovation through antitrust law isn’t always the last word, with unpredictable developments in politics and business also holding sway.
Judges in San Francisco and Washington are now mulling what so-called remedies to impose on Google to restore competition in the markets for app stores and online search. A decision on the app store is expected first from Judge James Donato of the U.S. District Court for the Northern District of California, after court hearings ended last month in the case filed by Epic Games.
In the much broader search case, filed by the Justice Department, Judge Amit P. Mehta of the U.S. District Court for the District of Columbia has already ruled that Google’s conduct was illegal and monopolistic, and is now preparing to determine what remedies to impose. On Friday, Mehta scheduled remedy hearings for next spring and said he would rule next summer.
The Justice Department’s other Google case, aimed at its online advertising business, will begin trial on Monday in Alexandria, Va., leaving Google to fight federal prosecutors in two courts at once.
The internet giant has already gotten off on the wrong foot with Judge Leonie M. Brinkema of the U.S. District Court for the Eastern District of Virginia. The judge upbraided Google in a hearing last month for deleting files sought by Justice Department prosecutors in the case, calling it “absolutely inappropriate” and “a very serious problem for Google in terms of how much credibility the Court will be able to apply” to Google’s witnesses.
As the judges deliberate, the prospect exists of political wild cards. Antitrust cases have been affected in the past by changing presidential administrations or intervention by senior officials in other departments.
The Justice Department dropped its years-long effort to break up Microsoft in 2001 after George W. Bush became president, settling its antitrust case with the company instead. Bush had expressed concerns about a Microsoft breakup on the campaign trail in 2000, saying he was worried about the future of the company as an “engine of change.”
Decades before that, defense officials stalled efforts to dismember AT&T in the 1950s, with the defense secretary telling the Justice Department that breaking up the company as it supplied defense technologies like radar during the Korean War would be “contrary to the vital interests of the Nation.” Antitrust enforcers finally prevailed against Washington’s security hawks and other doubters in 1974, when they brought a monopoly case that ended in 1982 with a consent decree for the breakup of AT&T.
The November election comes against the backdrop of the Biden administration having filed a slew of lawsuits, not only against Google but also against Amazon, Apple, Meta and other tech giants.
Vice President Kamala Harris has taken a populist stance on the campaign trail, pledging to continue President Joe Biden’s work of holding big corporations accountable. But she also has ties to Silicon Valley companies, starting in her early career days in California. A top Harris adviser, Karen Dunn, is leading Google’s defense in the antitrust trial beginning Monday in Virginia. Her campaign did not respond to a request for comment.
Harris’s opponent, Donald Trump, was president when the Justice Department filed its case against Google’s search business. As a candidate, he has pledged to reduce hurdles for businesses, though he posted on Truth Social in July that authorities should “go after Meta and Google,” accusing the companies of censorship.
While there is bipartisan agreement that Big Tech companies have grown immensely powerful and require more oversight, economic nationalism is also on the upswing, with both major political parties advocating for building up strong tech champions to rival China.
Aside from the political uncertainties, the course of business developments is also impossible to foresee. Antitrust crackdowns have sometimes had unexpected consequences many years down the road, said Rob Atkinson, founder of the Information Technology and Innovation Foundation. He points, for example, to the government requirement in the 1950s for AT&T to license its transistor patents to other companies at a low cost, as part of an agreement to settle antitrust concerns. The move leveled the global playing field, allowing for the rise of new Asian electronics players that eventually outcompeted some U.S. incumbents.
“A small Japanese company at the time called Sony got it,” Atkinson said of the transistor patent. “There was no way that Sony could have afforded the market price.”
Google was founded in 1998, as an offshoot of a web-indexing project nicknamed “BackRub” that Larry Page and Sergey Brin had begun a couple of years earlier as PhD students at Stanford University. Google’s search engine worked far better than its rivals, and as its business took off, it made headlines for making decisions on principle, such as pulling out of the China market in 2010 over censorship and encouraging employees to spend 20 percent of their work hours on passion projects. The company adopted the motto “Don’t be evil.”
But Google soon began drawing criticism from smaller rivals, too, which complained that it used sharp-elbowed tactics and exploited its advantage in the search engine market to take over related sectors. Google launched the Android operating system in 2007, and its Chrome browser and Google Play app store in 2008. Chrome holds two-thirds of the global browser market, and Android accounts for some 70 percent of the global smartphone market.
Google’s parent company Alphabet is now the world’s fourth-largest company, with a market capitalization of $1.9 trillion. It retired its “Don’t be evil” motto in 2015, changing it to “Do the right thing.”
The most serious possibility facing Google is a court-mandated breakup of its business. Legal experts say chances of a divestiture may be higher in the advertising case in Virginia, if the court determines Google’s advertising operations violate the law, as that unit is an ancillary one built up largely through acquisitions.
“Divestiture of adtech-related activities seem in some sense like a more prominent possibility,” said Phil Verveer, a former Justice Department antitrust attorney.
It would probably be trickier for prosecutors to convince the judge of a breakup in the search case, said Doug Melamed, a Stanford Law visiting fellow who previously worked at the Justice Department as it prosecuted its antitrust case against Microsoft. In an earlier Microsoft case, an appeals court urged caution in splitting up “unitary” companies that had grown naturally instead of through acquisitions.
“There would have to be very unusual circumstances and compelling proof to justify a divestiture remedy involving an organically grown company,” Melamed said.
But even if Google is not broken up, it stands a good chance of facing court orders that will prohibit it from continuing business practices it used to maintain its leading market share, such as purchasing default placement for its search engine on electronic devices. If its revenue is crimped, Google will find it more challenging to keep up with rivals like Apple, Microsoft and Amazon in expensive research and development projects.
Whatever constraints are mandated, previous cases suggest that once they are imposed, Google might face challenges staying at its industry’s cutting edge. After AT&T’s breakup in 1982, the company gradually lost its place altogether among the ranks of the most innovative U.S. companies. AT&T’s storied R&D unit, Bell Labs — previously been one of the most technologically advanced U.S. companies, with a long list of inventions including the transistor, laser and solar cell — is now a unit of the Finnish company Nokia.
Microsoft also went into decline after the Justice Department filed antitrust charges against it in 1998. The then-dominant software company became cautious and ended up missing the boat on the mobile era, scrambling for years to catch up again as new contenders like Google sailed ahead.
Now, though, it’s bigger than Google again.
