Stage is set for showdown in US vs Google

Google pays billions of dollars each year to Apple, Samsung Electronics and telecommunications giants to illegally maintain its spot as the top search engine, the US justice department told a federal judge Thursday.

DoJ attorney Kenneth Dintzer didn’t disclose how much Google spends to be the default search engine on most browsers and all US mobile phones, but described the payments as “enormous numbers”.

“Google invests billions in defaults, knowing people won’t change them,” Dintzer told judge Amit Mehta during a hearing in Washington that marked the first major face-off in the case and drew top DoJ antitrust officials and Nebraska’s attorney-general among the spectators. “They are buying default exclusivity because defaults matter a lot.”

Google’s contracts form the basis of the DoJ’s landmark antitrust lawsuit, which alleges the company has sought to maintain its online search monopoly in violation of antitrust laws. State attorneys-general are pursuing a parallel antitrust suit against the search giant, also pending before Mehta.

A trial isn’t expected to start formally until next year, but Thursday’s hearing was the first substantive one in the case — a daylong tutorial where each side laid out its views on Google’s business.

The Google antitrust suit, filed in the waning days of the Trump administration, was the federal government’s first major effort to rein in the power of the tech giants, which continues under President Joe Biden. The White House on Thursday hosted a roundtable with experts to explore the harm major tech platforms can wreak on the economy and children’s health.

Google’s attorney, John Schmidtlein, said the DoJ and states misunderstand the market and focus too narrowly on smaller search engine rivals like Microsoft’s Bing and DuckDuckGo. Instead, Google faces competition from dozens of other companies, he said, including ByteDance’s TikTok, Meta Platforms, Amazon.com, Grubhub and additional sites sites where consumers go to search for information.

‘Tough competition’

“You don’t have to go to Google to shop on Amazon. You don’t have to go to Google to buy plane tickets on Expedia,” he said. “The fact that Google doesn’t face the same competition on every query doesn’t mean the company doesn’t face tough competition.”

Having fresh data on user search queries is key to a search engine’s success, lawyers for the DoJ, the states and Google all agreed. Google controls the most popular browser, Chrome, and the second most popular mobile operating system (in the US), Android.

In his presentation, DoJ’s Dintzer focused on the mechanics of Google’s search engine and how its default contracts have hemmed in potential rivals. On mobile, Google contracts with Apple, smartphone makers like Samsung and Motorola Solutions, most browsers and the three US telecoms carriers — AT&T, Verizon Communications and T-Mobile US — to ensure its search engine is set as the default and comes preinstalled on new phones, Dintzer said. Microsoft’s search engine, Bing, is the default on the company’s Edge browser and Amazon’s Fire tablets, he said.

Read: Pichai says Google ‘pro-competitive’ as antitrust suits loom

Google’s contracts make it the “gateway” by which most people find websites on the Internet, which has allowed it to prevent rivals from gaining the scale that would be needed to challenge its search engine, Dintzer said. “Default exclusivity allows Google to systemically deny rivals’ data.”

Google’s Schmidtlein said the company has contracted with Apple and browsers like Mozilla since the early 2000s. DoJ and the states haven’t explained why those deals are now problems, he said. The revenue-sharing deals that Google offers to browsers are essential to companies like Mozilla, he said, because they offer their products to users for free.

Read: Google, AWS slam Microsoft over ‘harmful, unfair’ cloud changes

“The reason they partner with Google isn’t because they had to; it’s because they want to,” Schmidtlein said. The company “had extraordinary success and was doing something incredibly valuable. Competition on the merits is not unlawful.”  — Leah Nylen, (c) 2022 Bloomberg LP

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