Department of Justice v. Google

Introduction

On September 12, Google finally went to trial after three years since the Department of Justice and the Attorney Generals of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia filed an antitrust suit against Google for illegally monopolizing digital advertising technologies in October 2022. On November 16, the U.S. Government finished the evidentiary phase of the trial with a ruling to be announced sometime in 2024. The trial will have a significant impact on the tech industry, as it is the most significant antitrust lawsuit since 1998. Many companies wait anxiously for the result, fearing the potential implications of the lawsuit.

Why is Google being sued?

With a current market cap of $1.75 trillion, Google is the fourth-most valuable company in the world. It backs up the valuation with its immense web presence: Google, along with its search engine, captures 90% of ad revenue in the U.S. This is primarily due to Google’s agreements with Apple and Samsung; Google paid Apple $18 billion in 2021 and Samsung $8 billion over four year to be the default search engine on all their devices. This has led to numerous complaints from companies and individuals, which eventually made their way to the federal level. The Department of Justice accuses Google of illegally using partnerships with other companies to suppress rival search engines such as Microsoft Bing and DuckDuckGo:

“Filed in the U.S. District Court for the Eastern District of Virginia, the complaint alleges that Google monopolizes key digital advertising technologies, collectively referred to as the “ad tech stack,” that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers.” (Office of Public Affairs)

However, Google has claimed that its practices are legal and that it's the dominant search engine because people prefer using Google. The company also believes that the Department of Justice is unfairly targeting Google because of its popularity.

Microsoft’s Involvement

The trial will not have a jury; rather, U.S. District Judge Amit P. Mehta will precede the trial, and top executives such as Google CEO Sundar Pichai will testify in court. Most recently, on October 2, Satya Nadella, Microsoft’s chief executive, testified that Google has made it difficult for companies such as Microsoft to compete on the internet. Microsoft's involvement against Google is ironic, given that they lost an antitrust lawsuit in 1998. In the 1998 case of Microsoft v. United States, the judge ruled in favor of the government as it determined that Microsoft violated antitrust laws. Mehta may use this case as a reference, which may have an impact on the Google case.

Other Troubles

This isn’t the first time that Google has been challenged by a government. The European Union has already attempted to cap Google’s power. Last September, Europe’s General Court upheld an antitrust ruling against Google but reduced the record-breaking fine to $4.13 billion from $4.57 billion. Since 2010, the European Union has investigated several antitrust complaints against Google, but the current case will be the first federal-level lawsuit against Google in the U.S.

Why is this case so significant?

Collecting data on users has become increasingly important in the race for the best artificial intelligence. However, this comes at the expense of consumer privacy and choices. In order to perform well, computers need large amounts of data to train neural networks. For instance, ChatGPT uses search data to generate answers to questions. As of October, Alphabet stock is up year over year, but losing the case will likely result in a decline for Google in an extremely competitive environment, as well as cause large repercussions to data collection in the tech industry.