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Monday, April 22, 2024

Biggest antitrust trial in decades: Google vs. the US

Starting Tuesday, Google faces a significant challenge to its dominant search engine as federal regulators initiate the largest US antitrust trial in 25 years. Over the next 10 weeks, federal attorneys and state attorneys general will seek to demonstrate that Google manipulated the market by making its search engine the default choice across various platforms and devices.

A ruling by US District Judge Amit Mehta is not expected until early next year. If Google is found to have violated the law, another trial will determine the necessary actions to curb the California-based company.

Key figures from Google, including executives from its parent company Alphabet Inc., as well as representatives from other major tech firms, are anticipated to testify. Alphabet CEO Sundar Pichai, who took over from Google co-founder Larry Page four years ago, is among the expected witnesses. Court documents also suggest that Eddy Cue, a high-ranking Apple executive, may be called to testify.

Almost three years ago, during the Trump administration, the Justice Department initiated an antitrust lawsuit against Google. The lawsuit alleged that Google had exploited its dominance in internet search to gain an unfair competitive edge. Government attorneys claimed that Google engaged in a form of payola by paying billions annually to secure its position as the default search engine on devices like the iPhone and web browsers such as Apple’s Safari and Mozilla’s Firefox.

Regulators also contended that Google unlawfully tilted the market in its favor by requiring device manufacturers to bundle its search engine with its Android software for smartphones to gain full access to the Android app store.

In response, Google argued that it faces significant competition despite holding roughly 90% of the internet search market. The company maintained that its competitors include search engines like Microsoft’s Bing and websites such as Amazon and Yelp, where users can seek advice on purchases or recommendations.

From Google’s perspective, ongoing enhancements to its search engine have made it the go-to choice for users searching the internet, a habit so ingrained that “Googling” is synonymous with online searches.

The trial begins shortly after the 25th anniversary of Google’s first investment – a $100,000 contribution from Sun Microsystems co-founder Andy Bechtolsheim, which enabled Larry Page and Sergey Brin to start their venture in a Silicon Valley garage.

Today, Google’s parent company, Alphabet, is valued at $1.7 trillion and employs 182,000 people. The majority of its revenue comes from $224 billion in annual ad sales across a network of digital services anchored by its ubiquitous search engine, which handles billions of queries daily.

The antitrust case against Google by the Justice Department has parallels to its 1998 case against Microsoft. In the past, regulators accused Microsoft of compelling computer manufacturers to feature its Internet Explorer browser alongside its dominant Windows operating system, effectively quashing competition from the once-popular Netscape browser.

Notably, several members of the Justice Department’s team in the Google case, including lead litigator Kenneth Dintzer, had previously worked on the Microsoft investigation.

Depending on the outcome of the trial, Google may face constraints that reduce its dominance. One possible outcome is that Google could be compelled to cease payments to companies like Apple to maintain its position as the default search engine on devices.

Alternatively, the legal battle could lead to Google losing focus, similar to what happened to Microsoft after its antitrust case, as it struggled to adapt to the evolving landscape of internet search and smartphones. Google, however, capitalized on that distraction to transform from a startup into a formidable industry leader.

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