September 27, 2023
As DOJ's Google antitrust trial begins with opening arguments, here's what you need to know

Three years after the US Justice Department filed its landmark antitrust lawsuit against Google, the case finally went to trial yesterday, with opening arguments setting the stage for a historic legal battle.

The stakes are high for Google, and experts say the case could shape the future of online advertising depending on its outcome. (Here’s a primer on the matter with more background, what to expect, and potential impacts.)

This week’s hearing is taking place in parallel to a separate antitrust case filed by the DOJ earlier this year that focuses on the open web. (The first, focused on search markets, was filed by the Trump administration in 2020.)

In some ways, the opening arguments could serve as a crash course for anyone trying to learn about the intricacies of online advertising — or for advertisers who want to view the industry through a legal lens. (The case has also faced criticism for Google’s efforts to keep evidence private and prevent the audio feed of the hearing from being accessible after opening arguments.)

Here’s a summary of the arguments presented by lawyers for the Justice Department, a coalition of state attorneys general who joined the DOJ’s lawsuit, and Google’s own lawyers defending its dominance:

what is being alleged

At the heart of the case is whether Google violated US antitrust laws in its pursuit of dominance in the search market. On Tuesday, DOJ lawyers said Google paid Apple between $4 billion and $7 billion to become the iPhone’s default search engine in 2020 and now pays more than $10 billion for that coveted real estate. According to Kenneth Dintzer, deputy branch director of the DOJ’s Civil Division, the exclusive deals gave Google “a powerful strategic weapon” as the smartphone age led people to increasingly rely on mobile search.

“We rely on general search engines for our searches,” Dintzer said in his opening argument. “It’s one-stop shopping, the idea is that when you go to the supermarket, they’ve put together a bunch of different products to make it easier for you to choose them.”

Devices powered by Google’s own Android operating system were also part of the DOJ’s case, which included settlements related to the Google Play Store and Google Maps that power most Android devices. According to Dintzer, “Widgets and the browser are Google’s beaches.”

Google was accused of manipulating its search ad auction market by raising prices, which Dintzer said was “as if you go to an auction house and even though no one bids against you, the auctioneer keeps raising the prices. Is.” (The DOJ plans to have four advertisers testify about ad prices, but those witnesses have not yet been disclosed.)

“One of the most important things the court could take away is that Google has the ability to raise prices for ads,” Dintzer said.

State AG’s lawyers give 101 in online advertising

The group of state attorneys general is represented in the case by attorney Bill Cavanaugh, who gave the court a crash course in advertising topics like real-time bidding, conversion-level data and market funnels. He also pointed out that search advertising is attractive because marketers are trying to attract people to their websites. He also gave a preview of how evidence from the DOJ and state AGs will show how Google harmed competition like DuckDuckGo and Bing, as well as how other large advertisers were “deeply unhappy” with the performance of their ads.

“When you look at experiential marketing spend per visitor, it continues to grow,” Cavanaugh said. “And Google asks the court to ignore it because the queries and dollars in the advertising market have gone up. “But the evidence shows that Google is riding this wave, not causing it, and has excused itself for the harm it has caused to the competitive process.”

The privacy of Google’s advertising operations was also a key part of the DOJ’s initial argument. According to Dintzer, Google hid “thousands and thousands” of documents during the investigation of the case, showing that the company knew its agreements crossed antitrust lines: “They turned off the history so they could hide it.” Can write again in this court.”

defend one’s turf

John E. Schmidtlein, defending Google in the opening arguments, argued that Google’s dominance is the result of other giants like Microsoft focusing on growing their PC market rather than innovating with their Bing search engine.

Rather than advertisers and users suffering, Schmidlein said the main victim is Microsoft. Although Bing is the default search engine for computers running Microsoft Windows, he said he has data showing that Microsoft users prefer to search over Google.

“As a legal principle, US antitrust law should not prevent Google from competing simply because they are large,” Schmidtlein said. “This is anathema to American antitrust law.”

According to Schmidlein, U.S. antitrust law’s market definition applies to digital advertising overall – not just search advertising – and he added that “harming a competitor does not necessarily mean harming competition.”

Since browsers themselves are free, search advertising revenue is the primary way to finance innovation, Schmidtlein argued. He said that even though Google is the default search engine, users can easily switch to alternatives if they wish. However, when asked by the judge how often they switch, Schmidtlein said the company doesn’t have any data on it because Google can’t track it.

“There’s no greater competition than trying to get your product on one of these devices,” Schmidtlein said. “All these companies want to be the default.”

what comes next

The trial – now officially underway for the next 10 weeks – will be closely watched by tech giants, the wider adtech industry, advertisers and regulators as witnesses come forward and more evidence comes to light. Among those in attendance Tuesday were U.S. Rep. Ken Buck, R-Colorado. one in series of tweetsBuck accused Google of “pushing out rivals by becoming the default search engine in Apple and Android operating systems,” adding that breaking up Big Tech should be a bipartisan issue.

“Yet Google spends millions of dollars to block antitrust reform bills and buy off members of Congress,” Buck wrote. “It’s time for lawmakers to stop lining their own pockets and do what’s best for the American people. This case is a necessary first step.


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