WASHINGTON (CN) — The landmark antitrust trial over whether Google holds an illegal monopoly over internet search and search advertising came to a close Friday after a 10-week trial that stretched over eight months.
The case, the largest antitrust case since 2001 and the first in the modern digital age, puts the 19th-century Sherman Act to the test and could reshape the way Americans experience the internet.
“The importance and significance for this case is not lost on me — not only for Google, but for the public,” U.S. District Judge Amit Mehta said Friday following closing arguments. “Whatever the outcome … it will hopefully instill trust in the public.”
The exact timeline is unclear, but Mehta is expected to issue a ruling sometime in late 2024. If he rules against Google, he will hold another bench trial to determine the appropriate remedy, which could include enjoining practices deemed anticompetitive, imposing fines or even ordering the company to sell off problematic parts of its business.
Brought by the federal government, 35 states, the District of Columbia, Guam and Puerto Rico, the suit centers on Google’s dominance in the general Internet search market — where it holds 89.2% of the market share. But the tech giant’s dominance in search bleeds into other, related markets, specifically search advertising, in which the plaintiffs also argue Google holds a monopoly and acts accordingly.
Mehta, a Barack Obama appointee, scheduled two full days of arguments to question each party’s attorney on a legal test established in U.S. v. Microsoft. The test requires proof Google gained monopoly power in a clear market (search advertising), proof of monopoly power, anticompetitive effects and barriers to entry for new competitors.
Search advertising refers to the type of ads a user sees when entering a query to a search engine and can take the shape of text ads, video ads, image ads or “product listing ads.”
When searching for new shoes, for example, product listing ads appear: individual panels display the shoe, price, reviews and a direct link to purchase the item, whereas text ads, the most prevalent form of advertising on Google, link to stores like Nike or Footlocker.
Those shoe companies bid for higher placement on the Google results page. The government argues that Google's dominance over internet searches — and its exclusivity deals with Apple, Mozilla and Firefox — force companies to use Google's ad market, no matter the price.
Justice Department attorney David Dahlquist said Google has raised prices arbitrarily on ads without improving their quality. The company conducted experiments to find a price “one penny below the breaking point,” according to Adam Juda, Google vice president of product management, as cited in court documents.
One such experiment in 2017, known as “Gamma Yellow,” revealed that even a 20% price increase would have no effect on Google's number of users, a panel of whom testified at trial or in sealed depositions that they had little other choice in whether to keep advertising on Google.
“Its like being in the ring with a sumo wrestler with the lights turned off,” Dahlquist said, citing partially redacted testimony from an official at Angi, formerly Angie’s List.
Google’s arbitrary price hike, Dahlquist argued, wasn't made with any competitors in mind and was decided purely to increase revenue.
Judge Mehta noted that it's not illegal for a company merely to raise prices. He wondered if Google's ad rate hikes could be compared to a car company designing a new model with a V-6, rather than a V-4, engine — then releasing the newer, faster car at a higher price.
Dahlquist reassured Mehta that the plaintiffs weren't faulting Google for raising prices on its own, but for unfairly squeezing out its competition.
“In this world, Google is the only car manufacturer," he said using Mehta's analogy. "So people have to buy the V-6 car from Google because there’s nowhere else to go.”
Google defends its conduct by arguing that, just as with the popularity of its search engine, companies buy its search ads because Google has the best product on the market.
Further, Google says it has raised prices because it does in fact face competition, specifically from social media companies like Facebook and TikTok.
One reason so many advertisers were drawn to Google was its trove of “high intent” data, which is used to understand potential customers and improve targeted marketing — but those competitors now have similar data, said Google’s attorney, John Schmidtlein of the Washington firm Williams & Connolly.
“Let’s not fool ourselves, all of these companies have very detailed and useful information that gives advertisers a lot of information about their users,” Schmidtlein said Friday.
TikTok has over 150 million users in the U.S. and is used increasingly for information gathering, Schmidtlein said. According to a January study by Adobe, 64% of Gen Z Americans use the app as a search tool.
In closing statements, Justice Department attorney Michael Dintzer said Google’s conduct was history repeating itself, following in U.S. v. Microsoft’s footsteps, and urged Judge Mehta to bring an end to Google’s monopoly.
“Without action, Google’s monopolies will continue tomorrow and tomorrow and tomorrow, today must be the day that this ends,” Dintzer said.
Schmidtlein rejected the idea that the case “fit the gloves” of Microsoft, arguing that in that case Microsoft won with an inferior product, while here Google beat the crowd by creating a superior product.
“This would be an unprecedented decision to punish a company for winning on the merits,” he said.
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