Google is officially on the hot seat with the feds. So now what?
The Justice Department filed a landmark antitrust lawsuit against Google yesterday over the company’s anticompetitive practices, specifically around search. Federal prosecutors and 11 states charged Google with maintaining an illegal monopoly on online search through business deals and agreements that lock out competitors, like paying Apple billions of dollars to make Google the default search engine for iPhones, and other deals with browser makers.
It’s the most significant case against a Big Tech company in more than 20 years, since the one against Microsoft in 1998. I spoke with Charlotte Slaiman, an antitrust attorney and director of competition policy at Public Knowledge. She says it’s all about the defaults for now. The following is an edited transcript of our conversation.
Charlotte Slaiman: You’ve got the desktop and the mobile where people are doing searches. Google is the default. And economists have found that those defaults are really powerful in impacting which search engine users choose.
Molly Wood: It sort of sounds like a redux of the Microsoft antitrust case from the ’90s, right? This is ultimately about bundling and forcing consumers into this choice of your default?
Slaiman: Yes, there’s a lot of similarities with the Microsoft case.
Wood: Google is unquestionably dominant in search, [and] it seems like there may be some anti-competitive practices around the way they implement search. But, is that all?
Slaiman: That’s a question I’ve been wondering, myself. I was hopeful that we might see a case that would include some other areas I’m concerned about. In particular, Google is really powerful in display advertising. They represent publishers — the websites that are showing the advertisements — they represent advertisers, and they also own the auction where publishers and advertisers are bidding and making their decisions about which ad to run. And those concerns around the advertising technologies are not in this complaint at all. I think the reason the DOJ chose to focus on search is that it is a simpler place to start. But I am hopeful that if DOJ has facts indicating anti-competitive conduct in the ad tech space, that we might see an expanded complaint on those issues in the future.
Wood: Is it common for there to be kind of a stair-step approach to antitrust enforcement?
Slaiman: Yes and no. It’s common that a complaint would be brought and a lawsuit might finish up and a follow-on litigation might happen that incorporates the new precedent. But what I’m hopeful can happen here — because that process takes such a long time, waiting for this lawsuit to finish and then bringing another one — I would really hope that if there are indications, if there are sufficient facts to support a case, that the case could be brought now by state attorneys general who have signaled today that they are continuing to work on a case and that they might in the future work together with the DOJ. That might be an opportunity to expand the case to cover more issues. Or we may have a change of administration and DOJ could if they, for whatever reason, decided they wanted to amend the complaint, such as having new leadership of DOJ, they could amend the complaint to expand the case.
Wood: What else could potentially be in the case? There’s a parenthetical reference to consumer harm around privacy and data collection, but there’s not a lot in this case about data. Do you think that there could have been or should have been?
Slaiman: I think personal data, when we think about privacy and personal data, is more relevant to a case in the ad tech space. That’s where Google is collecting a ton of data about us and using it to push us to buy things. The data that’s really important in the search case is a little bit different, but it is still really important to Google’s power here. Google gets an incredible amount of data from learning what users click on when they do a particular search. If I search for a plumber, which plumber unpaid result am I clicking on? Google will send those results to the top of the page. That, and a lot of types of search, is a really effective way at predicting what other users will click on. Seeing what some users have clicked on, we can predict that other similar users will click on the same result. And that has made it really difficult for competitors to break into this market. Google has all of these default contracts. They have all of these exclusive deals that say they don’t give a default position to any of my competitors. And as a result, they can’t build up that click and query data that is so valuable.
Wood: What are the broader implications? What does this move now say about the political will to hold Big Tech companies accountable, where so far there’s been a lot of heat?
Slaiman: I think by filing this complaint, [the] DOJ has shown that the era of hands-off Big Tech is over. There will be oversight of dominant digital platforms, and it’s just a question of when.
Wood: And do you think that that will trickle into Congress as well?
Slaiman: Yes, Congress is already active here. Just a couple weeks ago, the House Judiciary Committee, the antitrust subcommittee, published a report that they have been working on very in-depth for over a year that is focused on competition in Big Tech. Google is a big part of it. They talk about the search concerns mentioned in this complaint, and they talk about the ad tech concerns. That report also includes a lot of concerns that people have about Facebook, about Amazon and about Apple, as well as Google. So I think Congress is absolutely on the case, and Congress is going to have a really important role to play here. The antitrust case will likely take a long time — antitrust cases often take many years, and then they can be appealed and more years pass — and I think we’re going to need broader remedies than those that can be achieved in one antitrust case against one company.
Wood: What might those look like?
Slaiman: This is an area that the complaint really leaves up for future discussion. It doesn’t go into any detail about the remedies that are needed. It’s also an area that I think, again, Congress can play a significant role. Thinking back to history, we have the Microsoft case that you mentioned, but there’s also the AT&T case. AT&T was another huge communications monopoly that was very powerful in many different lines of business, and it took the efforts of Congress and the courts, the Department of Justice and also the Federal Communications Commission, which is the agency that was tasked with regulating AT&T and telephone companies. They all had to work very hard to figure out all of the many pieces of remedy to try to create competition in that space, and we may see a similar thing here.
Wood: How strong do you think this case is? Is there anything to suggest, as it has been reported, that there was an internal deadline on this case, that it’s happening now, partly for political reasons?
Slaiman: I think the complaint that they’ve filed is strong. It’s possible, with more time, that they could have covered more of the concerns that I have about Google’s conduct. These processes are always very secretive — that’s not new to this administration — so we don’t know what other facts they might have at their disposal and what other concerns they might have been able to include in this complaint if they had taken more time. But it’s possible that there might have been more, in particular the ad tech concerns that could have been included.
Related links: More insight from Molly Wood
Google, by the way, said the case is “deeply flawed.” There are still some quibbles with the scope of this case pinging around the internet, but it’s worth noting, as I did yesterday on our evening show with Kai Ryssdal, that any antitrust case from the Department of Justice can have a major impact on a company’s business and business practices, either as a result of the actual case, like a breakup or some other order, or simply the long period of public scrutiny while the case is being litigated, and that can leave openings for competition to spring up.
The Electronic Frontier Foundation has a nice piece from last month. It actually argued that the DOJ should really go for the kitchen-sink approach in charging Google, but also has a nice history of other times that antitrust probes have led to competition in tech. It says IBM fought the feds for more than a decade starting in 1969, and that let Microsoft gain a toehold. Then, when Microsoft got sued in the ’90s, the scrutiny caused it to pull back on plans to crush a new upstart at the time, called Google. So no matter what, it’s a huge deal.
I also found it interesting to see just how much money Google pays to make its search engine the default all over the web and multiple devices. Its deal with Apple accounts for 15-20% of Apple’s global net income, according to the lawsuit. That’s a lot. One other thing I found interesting? The case notes that Google is going to try to become dominant on next-generation devices and platforms, like voice search in cars and in the home — on watches and smart speakers and televisions. And, at least me personally, I read that part as sort of a reason why Google won’t be dominant forever, because despite its ongoing efforts, at least right now, Amazon is crushing Google in the smart speaker market and embedding Alexa in many, many devices. And in what now appears to be a stroke of competitive genius, none of those Alexa gadgets use Google for search by default, which granted, sometimes makes them worse than useless, but I guess I now understand much better.
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