Beleaguered Google faces day in court as Biden cracks down on monopolies

google legal

google legal

The moment that Bill Gates turned from boy wonder geek to ruthless capitalist symbol is easy to pinpoint: it was captured on camera.

The Microsoft co-founder and chief executive, who had become the world’s richest man in 1995, had been the face of a bright new digital era in which millions of households were able to buy their first computer.

But his videotaped deposition, released as part of the US government’s landmark monopoly case against Microsoft in 1998, presented him as evasive, rude and superior.

It took years for Gates, who had believed the tape would never be shown to the public, to rebuild his reputation.

It took Microsoft even longer. While the company avoided being broken up in the legal battle, which centred around its dominance of the PC market, the years of litigation have been cited as a key reason why the company missed out on a new generation of technology such as internet search, social media and smartphones.

Bill Gates' reputation took a hit in the late 1990s after a recording of his deposition in a monopoly court case were made public

Bill Gates’ reputation took a hit in the late 1990s after a recording of his deposition in a monopoly court case were made public – JESSICA PERSSON/AFP via Getty Images

This week, a courtroom in Washington DC will host the biggest tech monopoly case since the US government came close to breaking up Microsoft a quarter of a century ago. Its subject is Google, one of the companies that took the innovation crown from Gates’ business.

Google is being sued by the US Justice Department under the same 19th century law used to go after Microsoft, and is accused of using similar tactics. In this case, prosecutors allege that the company used a web of illegal deals to freeze out competitors to its search engine, cementing its own vice-like grip over the web.

The agency is seeking an order forcing Google to stop its behaviour, but a judge could go as far as a breakup of the company.

Like Microsoft at the turn of the millennium, Google is also reckoning with a changing tide in the tech industry. For the first time in decades, its search engine is under threat, not from a traditional competitor, but from artificial intelligence chatbots such as ChatGPT that could replace the cascade of links that Google’s search engine offers with concise and precise answers.

The US case against Google is the culmination of more than a decade of growing regulatory pressure against the company, which last week celebrated its 25th birthday.

The European Union has repeatedly fined Google billions of euros and ordered it to make changes to its constellation of services, from price comparison to its Android phone software and internet advertising business.

The UK’s competition regulator has launched multiple investigations into the company, and forced it to make changes to its web browser.

The US case was first launched almost three years ago under the Trump administration but has been taken forward by Biden’s Justice Department. The case gets to the gravitational centre of the company’s power: its all-conquering search engine.

The Justice Department argues that Google’s dominance – accounting for nine in 10 search queries in the US – is not the result of having the best search engine, but the consequence of a series of exclusivity agreements signed with phone manufacturers and software makers that made it the primary search engine for almost all consumers and froze out potential rivals.

“It’s not about the tech anymore, it’s about the moat they put around themselves,” says Colin Hayhurst, who runs the British search engine Mojeek. “It’s the fact they have these agreements with the other big players.”

In particular, the Justice Department’s case zeroes in on a deal with Apple to be the iPhone browser’s default search engine, a contract believed to be worth up to $15bn (£12bn) a year.

According to the complaint, one Apple employee told their Google counterpart: “Our vision is that we work as if we are one company.”

Apple CEO Tim Cook

The regulatory focus on Google’s search prevalence on iPhones has drawn in deputies of Apple boss Tim Cook – Justin Sullivan/Getty Images

Apple has produced more than on million pages of evidence to prosecutors. Three executives, all of whom report directly to chief executive Tim Cook, are scheduled to appear in the witness box after the iPhone maker lost an attempt to block legal demands that they testify. (Apple says it makes Google the main search engine on its phones because it considers it to be the best on the market, not because of the billions that flow the other way as a result.)

Google’s top lawyer, Kent Walker, has called the case “deeply flawed” and says people use its search engine “because they choose to, not because they’re forced to, or because they can’t find alternatives”.

The trial is scheduled to take just over two months, with a string of high-powered decision makers, including Google’s chief executive Sundar Pichai, expected to give evidence.

The American government’s chances of success are unclear. The courts have been dealt a series of setbacks to efforts to rein in Big Tech. Regulators’ attempts to block deals such as Microsoft’s purchase of games company Activision Blizzard and Meta’s purchase of virtual reality company Within have been overruled.

Last week, a group of US states that had sued Google for breaking monopoly laws with its app store, settled with the company. The terms of the deal were kept private.

Google boss Sundar Pichai

Google chief Sundar Pichai is expected to give evidence when the US Justice Department’s case goes to court – Kyle Grillot/Bloomberg

Maurice Stucke, a former Justice Department prosecutor and law professor at the University of Tennessee, says the outcome of the case is hard to call.

“The problem today is that the courts are a moving target and it’s very hard to predict how they will rule,” he says. “There haven’t been many monopolisation cases brought by the agency, the last really was the Microsoft one.”

Even if the Justice Department’s case ultimately fails, it may not matter. The barrage of evidence and testimony will be its own form of punishment. Gary Reback, one of the government lawyers who took on Microsoft in the Nineties, is fond of saying “the trial is the remedy”, meaning the public scrutiny itself is punishment enough.

Google’s lawyers have attempted to prevent the case from being broadcast over Zoom, which opponents say is an attempt to suppress the amount of attention it receives.

Meanwhile, the distraction of a major court case is also likely to have an impact on day-to-day operations.

Former Microsoft executives say its own battle with the US government meant the company became bureaucratic and slow, with every product update having to go through layers of legal reviews before it would be released to the public.

Google’s case comes as its search engine faces a growing threat from AI. The company has declared an internal “code red” over the rise of ChatGPT. Engineers have warned that the company has “no moat” against the rise of free, open source models, and many of its AI experts have quit, citing a stuffy culture that impedes innovation.

Even if Google wins its battle with the US government, the encounter may do lasting damage.

Shivaun Raff, the co-founder of the price comparison service Foundem, who has campaigned against Google in Europe for over a decade, says of the US court battle: “This is the first step. I believe that there’s several arrows in their quiver, but it’s only just getting started.”

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