The U.S. Department of Justice and a coalition of state attorneys general started an antitrust trial against Alphabet’s Google on Tuesday 12 September. The trial comes three years after the Department of Justice began investigating and sued “Monopolist” Google For Violating Antitrust Laws. The lawsuit has been consolidated with a similar one filed by a coalition of 38 states, led by Colorado and Nebraska. It is the biggest tech monopoly trial since the Department of Justice challenged Microsoft in 1998.

From the plaintiff’s pre-trial brief:

Each day, people use their phones, computers, and tablets to search the internet. In the United States, nearly 90 percent of these searches rely on Google. Google also has durable monopolies in related markets for general search text ads and search ads with market shares of 88 and 74 percent, respectively. Google pays billions of dollars each year to maintain these monopolies by ensuring that it is the default search engine for iPhones, Android phones, and most third-party browsers, such as Mozilla’s Firefox.

Google’s use of contracts to maintain default status denies rival search engines access to critical distribution channels and, by extension, the data necessary to improve their products.

Google’s anticompetitive conduct harms consumers—even those who prefer its search engine—because Google has not innovated as it would have with competitive pressure

Google’s anticompetitive conduct harms advertisers as well, by allowing the company to raise prices and reduce ad quality

Market Definition & Monopoly Power

The relevant market comprises two dimensions: (1) the product market, which “identifies
the product and services with which the defendants’ products compete,” and (2) the geographic
market, which “identifies the geographic area in which the defendant competes.”

A firm has monopoly power if it has “the power to control prices or exclude competition.”
More precisely, a firm is a monopolist if it can profitably raise prices substantially above the competitive level.

The Argument

A – Plaintiffs Have Properly Defined The Relevant Markets

1. General Search Services Is A Relevant Product Market
2. General Search Text Ads And Search Ads Are Relevant Product Markets
3. The Relevant Geographic Market Is The United States

B – Google Possesses Monopoly Power In General Search Services And The Related Advertising Markets

1. Google Maintains A Dominant Share Of All Relevant Markets
2. General Search Services And The Related Advertising Markets Are Protected By Entry Barriers
3. Direct Evidence Of Google’s Monopoly Power
4. Google’s Purported “Need” To Innovate Does Not Cut Against A Finding Of Monopoly Power And Runs Counter To The Evidence

C – Google’s Contracts Constitute The Anticompetitive Conduct In The Relevant Search Advertising Markets

D- Google’s Maintenance Of Its Monopoly Causes Anticompetitive Effects In The Advertising Markets

1. Google Has Exercised Its Monopoly Power By Substantially Increasing Search Advertising Prices
2. Using Its Monopoly Power, Google Has Reduced Advertisers’ Ability To Manage Their Ad Campaigns And Control Their Ad Spend

E – The Anticompetitive Effects In This Case Outweigh Any Procompetitive Justifications

1. Google’s Defense that there is a competition for the browser contracts is illusory
2. Google’s Customer-Instigation Defense Also Fails, As Google’s Partners Sought More Flexibility
3. Any Product Quality Defense Does Not Excuse Google’s Use Of Restrictive Agreements To Lock Up Search Distribution
4. RSA Pass Through Is Similarly Not Pro-Competitive
5. The Android MADAs Do Not Offer A “Promotional Benefit”

Google’s Case

Google laid out its defense against the DOJ’s antitrust claims in another pre-trial brief. It suggests that the DOJ will be unable to prove that Google possesses “Monopoly Power in Properly Defined Relevant Markets”, and procced to review User-Side Market Definition, Ad-Side Market Definition, and Monopoly Power.

Plaintiffs’ proposed market for “general search services” includes only general search
engines such as Google, Bing, Yahoo!, and DuckDuckGo. It excludes specialized vertical
providers (SVPs) such as Amazon, Yelp, and Expedia, as well as other popular places users go to search for information such as TikTok and Instagram.

By defining the relevant market to include only general search engines, Plaintiffs distort the commercial reality that users routinely substitute other search providers for general search engines—such as Amazon when they shop, or Expedia when they travel—and thereby improperly exclude many of Google’s strongest competitors from the relevant market.

Beyond Searching

In January 2023, Justice Department Sued Google for Monopolizing Digital Advertising Technologies. Through serial acquisitions and anticompetitive auction manipulation, Google subverted competition in Internet Advertising Technologies.

In addition to both ongoing federal antitrust lawsuits against Google, it was reported in February 2023 that the DOJ is probing Google Maps in preparation for a potential third lawsuit. According to Politico, the probe focuses on the Google Automotive Services offering provided to automakers, which includes the Maps service, the Play store, and Google’s voice assistant. The probe also scrutinizes Google’s control of location data through Google Maps. What can we expect?

Even if the DOJ doesn’t succeed, though, Google’s life is getting harder. It faces another federal lawsuit against its ad technology practices. Importantly, the current case will show in more detail the search engine’s inner workings. They may not be illegal, but revelations may expose the extent to which Google goes to get data, and that may feel creepy, further souring public perception of the company and Big Tech in general. The government’s lawyers have their work cut out for them, but a DOJ loss won’t mean a Google victory.

Is it just history repeating itself or is it history repeating itself?

If I had to bet I would consider it very unlikely that, in the present geopolitical situation, with the US compiting against China, the US is going to severely limit the market power of its big tech companies, thought of course, the long run domination will critically depend of doing precesely this, just to increase the chance of real innovation.