Five Highlights from the Google Antitrust Case at Midpoint

Alphabet’s Google is currently halfway through its court battle with the U.S. government, as it faces accusations of antitrust law violations for employing strategies to gain dominance in online search and certain advertising sectors.

In a trial that began Sept. 12 and is scheduled to continue until about mid-November, the Justice Department accused Google of manipulating online auctions — a multibillion-dollar industry controlled by Google — with these formulas to boost its own bottom line.

Here are five important points raised during the trial:

GOOGLE PAYS MILLIONS TO PROTECT SEARCH MONOPOLY

Witnesses from Verizon, Android maker Samsung and Google spoke about the company’s estimated $10 billion in annual payments to ensure its search is the default on smartphones and browsers. The CEOs of two privacy-oriented search engines, DuckDuckGo and Neeva, argued that these assumptions hurt their business. Neeva stopped operating this year.

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Google’s James Kolotouros, who negotiated search distribution agreements with Android device manufacturers and carriers, testified that the agreements give Google search exclusivity and that Google enforces them.

GOOGLE SEARCH DOMINATES ADVERTISING AND HIGHER PRICES

Google executive Adam Juda said it used the formula to determine long-term value — including ad quality — to determine which advertiser would win the quarter-second auction to place an ad in front of a user. Advertisers aren’t told their lifetime value, and Google uses “adjustments” to adjust ad prices, he said.

Joshua Lowcock, UM Worldwide’s global media director, testified that Google dominated the search ad market and has been raising prices over the past 10 years. Jerry Dischler, Google’s vice president and head of advertising, admitted that Google earned more than $100 billion in 2020 from search ads.

GOOGLE’S MASS SEARCH QUERIES COULD HAVE AN AI ADVANTAGE

Microsoft CEO Satya Nadella testified that access to search queries – as Google has on a massive scale – would not only help it improve its own search engine, Bing, but could help it master AI.

Improving AI requires computing power or servers and data to train software, he said.

GOOGLE’S DEFENSE #1: WE ARE BIG BECAUSE WE ARE GOOD

Google has argued that the government was wrong to say it broke the law to maintain its huge market share, saying its search engine is wild for its quality and that disaffected users can easily switch.

Eddie Cue, Apple’s director of services, praised Google’s search and admitted in an interview that the smartphone maker met with Microsoft and DuckDuckGo, which uses Bing searches, but found them insufficient.

GOOGLE’S DEFENSE #2: THE DEFAULTS ARE NOT THAT USEFUL

Although Google pays billions of dollars a year to be the default search engine on Apple and Android devices, its lawyers have argued that the default search engine doesn’t actually mean users will stick around if they’re unhappy.

John Schmidtlein, Google’s general counsel, said Microsoft’s success in becoming the default on some Verizon phones in 2008 and on BlackBerry and Nokia devices in 2011 ended with users bypassing Bing and doing most of their searches on Google.

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