The year 1998 was a pivotal one in the history of technology: Apple’s introduction of the iMac helped set the company back on the path to success after it nearly went bankrupt earlier in the decade; Google was founded by two Stanford students, Larry Page and Sergey Brin; and Microsoft introduced Windows 98, an improved version of its popular computer operating system. That May, Microsoft also became the target of a historic antitrust lawsuit lodged by the Department of Justice and twenty states, accusing it of anticompetitive behavior in two domains: attempting to maintain its monopoly in computer operating systems and trying to monopolize a new market, that of Internet browsers.
At the time, residential Wi-Fi connectivity was rapidly expanding across America, and, in the quaintly titled “browser wars,” Netscape Navigator, a popular browser released by Mosaic Communications Corporation in 1994, fought Microsoft’s Internet Explorer for the growing class of Web-connected consumers. Microsoft, the D.O.J. alleged, had attempted to crush Netscape by making deals with Internet-service providers that prioritized Explorer access at Netscape users’ expense. The trial began that fall, and included seventy-six days of testimony that took place over more than eight months, during which a government witness alleged that a Microsoft executive had pledged to “cut off Netscape’s air supply” (which a Microsoft attorney denied). The government also showed a video deposition of
Bill Gates, then the company’s C.E.O., in which he was so evasive of many of the questions posed by David Boies, the Justice Department’s lead attorney, that people in the courtroom laughed. In 2000, the judge ruled in the government’s favor and ordered that Microsoft be broken up into two companies—one producing operating systems, another producing software. (In the end, the company was never disassembled—an appeals court reversed the breakup order—but an eventual settlement required Microsoft to drastically change some of its business practices.)
Although the case was much discussed within the tech industry and in the press, the Justice Department’s clampdown on anticompetitive behavior did not become the norm. Instead, for much of the past twenty years, Microsoft and other major tech companies have been allowed to expand as policymakers and regulators have struggled to confront the challenges posed by rapidly changing technology. This has only begun to change in the past half decade, as the effects of these companies’ dominance have come to be seen as negative by the public and by a new cadre of regulators, including
Lina Khan, the young legal expert known for her critiques of Amazon and who became the chair of the F.T.C. in 2021. On Tuesday, the most significant antitrust trial since the 1998 case is set to begin in Washington, D.C. The trial stems from a case that was filed in December, 2020, by the Justice Department and attorneys general of eleven states, alleging that, much as Microsoft did when seeking to establish Internet Explorer as most users’ browser of choice, Google has maintained its dominance of the search and search-advertising markets by arranging deals with smartphone manufacturers and the creators of Internet browsers that make Google
the default search engine almost everywhere a consumer might encounter one. Every year, it has been estimated that Google pays up to twelve billion dollars to Apple, and billions more to a number of other companies, including Samsung and Verizon, to make Google the default browser on their platforms. In some cases, the company’s agreements also prohibit its partners from preinstalling similar software made by its competitors.
According to the complaint, Google accounts for nearly ninety per cent of general search-engine queries in the U.S., a fact that led the government to dub the company a “gatekeeper for the internet.” As long as Google maintains its lock on this market, the complaint argues, it can take the billions in monopoly profits it makes and continue to share them with other companies in exchange for help maintaining its monopoly, in a potentially endless cycle. According to the government, Google’s current annual revenue is more than a hundred and sixty billion dollars, the majority of which is derived from search and search ads. With so many billions at stake, the company has been responding to the case aggressively: as its top lawyer
told the New York Times, dozens of staff lawyers and three law firms have been dispatched to prepare for the trial.
According to sources on Google’s legal team, the defense the company plans to present will rely on the idea that Google’s market dominance is the result of offering a superior product. Kent Walker, Google’s president of global affairs, made this point in a recent blog post, writing, “browser and device makers have a choice, and they choose Google.” Comparing Google’s current predicament to the case from 1998, the company argued that user preference was a key distinction: in Microsoft’s case, most users preferred to use Netscape, not Explorer, but, with Google, consumers are getting what they actually want. The company also plans to argue that it’s relatively easy to download another search engine, such as Bing or DuckDuckGo, if one doesn’t want to use Google, which many phones and computers use by default.
There are signs that Google faces a steep battle. For years, antitrust watchdogs considered trying to restrain the company’s growth, but failed, standing by as it bought out other tech companies (such as YouTube, which it acquired in 2006) and expanded into new businesses, including map applications, e-mail, mobile phones, and self-driving cars. This era has come to an end. By some estimates, Google is now the most investigated company in the world, with three antitrust suits launched against it in 2020 alone. One is the case initiated by the Justice Department that is going to trial this week. Another was filed by thirty-eight attorneys general, which alleged similar complaints, as well as additional allegations about Google making it hard for users to find more specialized search engines, such as Yelp, which lists restaurants and other businesses, and Expedia, which lists hotels and flights. (This case was later combined with the D.O.J. case; many elements of it were dismissed in early August.) A third case, filed by ten attorneys general, accused the company of using anticompetitive behavior in order to become the dominant company in the online-advertising market, allegedly employing some of the same kinds of strategies described in the search-engine case. This January, the Justice Department joined with eight other states to file a case over similar issues. Google has also faced multiple antitrust probes in Europe, where it has paid billions of dollars in fines. (In 2020, the online news site the Markup reported that Google’s parent company, Alphabet, had begun training its employees to mind their language. “Alphabet gets sued a lot,” one document read. “Assume every document will become public.” The company’s discouraged words and phrases included “market,” “barriers to entry,” and “Get ahead of competitors.”) (...)
The outcome of the Google trial similarly has implications that will go well beyond online advertising and search engines. In the past year, major tech companies and upstart competitors have been in a race to commercialize
new A.I. technologies, which offer transformative possibilities in many domains—including search. In a newly released
policy brief, Matt Stoller, the director of research at the American Economic Liberties Project, an anti-monopoly think tank, and his colleague Sahaj Sharda argue that, if the judge in the case leaves Google intact, the company’s continued dominance of the online-search market could stymie companies creating new search products that integrate novel A.I. technologies as these potential competitors conclude that it’s too difficult to try to break into the search market.
by Sheelah Kolhatkar, New Yorker |
Read more:
Image: Shira Inbar[ed. See also:
The Google Monopoly Trial as a Morality Play; and,
Big Tech On Trial (BIG):]
If you read my
earlier preview of the Google trial – or have been reading coverage of it elsewhere — you know how important this trial is. It could determine the future of artificial intelligence, search, newspapers, antitrust law, and innovation. It will set precedent for monopolization cases in a lot of other industries. And of course, the bad guys know it. The rumor is Google is putting together a war room with dozens of PR professionals to spin the outcome, and I’ve heard from reporters that they are being lavished with attention like never before. Dozens of media outlets are previewing the trial. As just one example, I was quoted in the New Yorker today
discussing its impact on the deployment of AI.
And Google’s PR team is already earning its pay, planting a
story in the New York Times by Steve Lohr about how Google isn’t the big bad guy that Microsoft was in the 1990s, and besides, these days no one really cares about this case. Lohr covered the Microsoft case, and seems singularly unaware that there in fact has been a much larger cultural argument about big tech and monopolies over the last ten years than there ever was around Microsoft.
But this coverage
matters, because the fight is as much about how the public and members of Congress understand the trial as it is the legal outcomes themselves.
In other words, this trial isn’t just important because of the potential outcome, but also because the public and lawmakers are paying close attention. We’re going to learn a lot about how the internet itself was shaped, advertising, the coercion and power plays in board rooms, the ugly deals between Google and Apple to divide up the world between them, and how billionaires fight with each other when all the money in the world is at stake. So regardless of the final verdict, the facts that come out at trial will help shape the future direction our elected leaders and judges take in addressing our increasingly monopolistic order. The point is, there’s a lot of bullshit in politics, but this trial is the big one, where the debates over big business that have gone on for years meet the law.
