Google is said to have abused its market power in search engines. Both the US Department of Justice and virtually all US states made this accusation in 2020. Google does not deny its search engine monopoly, but the allegations of unlawful obstruction of it do competition. After years of inspection of documents and various court applications, the proceedings are now reaching the floor of the Federal District Court in the US Capital District of Columbia. This won’t happen quickly either.
Ten weeks of negotiations are planned. At the opening on Tuesday, Hal Varian, an economist who works at Google and was invited as a witness, had to answer questions. The representatives of the US Department of Justice confronted him with various emails and other documents from Google’s archives, which are intended to show how important it was for Google to be preset on the home page of browsers and that Varian had already filed internal antitrust proceedings many years ago Difficulties and the use of certain expressions warned.
Ahead of the trial, the Justice Department accused Google of deleting internal communications and thus evidence. Varian has to come back on Wednesday. There are no jurors in the proceedings, which means it is up to the judge to decide which party was able to convincingly present which facts. His verdict could not come until the new year.
The two lawsuits
Originally there were two lawsuits in the same US federal district court: one by the US government and eleven US states (USA et al v Google et alRef. 1:20-cv-03010) and one of virtually all other US states and some US territories (Colorado et al v Google et al, Ref. 1:20-cv-03715). The only US state not to participate in any of the claims is Alabama.
The allegations are similar, but only partially congruent. The fact that Google has over 90 percent market share of general search engines is neither controversial nor frowned upon. The question is how the data company has maintained this monopoly over many years – through its competitive performance or through illegal measures to hinder competition? Unsurprisingly, Google thinks its search engine is just so much better and is therefore enormously successful in the advertising market. Market power is to blame for Microsoft, which has invested too little in its search engine Bing, which is why Bing is left behind in the competition for users and thus advertising budgets.
The differences between the lawsuits, to the extent that they are still being negotiated, lie particularly in the market definitions, i.e. the question of exactly which competition Google is said to have hindered. The Colorado lawsuit relates to the market for advertising on general search engines, while the federal lawsuit relates to the market for advertising on search engines in general – not only on general search engines such as Google and Bing, but also on specialized search engines such as the large ones Run web shops or large online travel agencies. Amazon.com now generates more than $10 billion in quarterly advertising sales.
In addition, both lawsuits also cite the market for text-based advertising on general search engines (i.e. a certain part of the market for advertising on general search engines), as well as the market for general search engines in general (the search performance itself, not the advertising spaces offered there). The federal district court in Washington, D.C., consolidated the two lawsuits into one case, now known as USA et al v Google et al (ref. 1:20-cv-03010).
The federal plaintiffs have their turn for the first five weeks, after which the representatives of the state lawsuit have the stage for three weeks. Finally, Google has secured two weeks in which it will try to refute the allegations.
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The plaintiffs must show that Google’s actions harmed competition and ultimately harmed consumers. Measures to the detriment of competitors alone would not constitute a legal violation. If the plaintiffs succeed in doing this in court, Google could still argue that its anti-competitive measures are also competitive and justified, for example because they would have made its offering more efficient or more popular. Conversely, plaintiffs may seek to undermine Google’s arguments, or perhaps show that the harm to consumers outweighs the benefit of the pro-competitive elements.
Google’s controversial measures
Essentially, it’s about measures that Google has taken. On the one hand, the data company has paid billions of dollars to have its search engine preset in the popular browsers Firefox (Mozilla) and Safari (Apple). At the same time, Google paid mobile network operators to have Google preset as the search engine on the devices they marketed. Users can change this at any time, but they rarely do so.
On the other hand, Google restricts the freedom of choice of manufacturers of Android devices such as cell phones, tablets, car entertainment devices and smartwatches: If they want to install just one Google app, they have to install a total of at least eleven Google apps, including the Google search app , the Google Chrome browser with a preset search engine and the Google Play app store. In addition, a search mask for Google’s search engine must be prominently placed on the device’s home screen so that users have this search engine right in front of them. The manufacturers don’t get any money from Google for this.
They get money through a second contract: If manufacturers or network operators undertake not to install any apps from other search engines at the same time and also not to point out the existence of other search engines, they receive a share of the advertising revenue from Google that accrues from search queries on its search engine. However, manufacturers can only conclude this deal if they also accept the conditions for installing the eleven Google applications.
It is also about search engine marketing software that Google provides for booking advertising on various search engines. Google is said to have implemented new features for advertising bookings for competing sites later or not at all.