USA vs Google Week 3

A key sticking point in Week 2 of the trial was the public’s access to trial proceedings and exhibits. The obstructions in the public’s way impaired their ability to form meaningful judgements about Google’s business practices; this has been a key component of antitrust trials in the past. Microsoft’s trial in 1998 had a large media component that could be viewed as part of the punishment for their anticompetitive practices. Bill Gates’s notoriously evasive testimony is still available on YouTube and its ‘highlights’ have amassed 263,000 views.

But it is also not uncommon for courts to limit reporting on antitrust trials; the risk of widespread public access is that the court functions as a vehicle for the publication of confidential business secrets and anticompetitive information. The court’s secrecy practices are only judicially reviewable when they create reporting asymmetries, as in this case: only some reporters have ‘public access’ to the courtroom and ‘online access’ is also limited to Attorney Generals. In the USA, this asymmetry could form the basis of a constitutional claim.

On Tuesday, Judge Mehta decided that the DOJ would be allowed to resume its practice of posting its exhibits to its website — with the caveat that Google can contest each exhibit. This step is an important one for the trial’s public dimension; we can once again directly quote from and refer to specific instances of the DOJ’s exhibits. And so, while the public still lacks the access to the Google trial that they had two decades ago with Microsoft, at least the court of public opinion is open for business.

The trial’s greater transparency this week has provided nuanced detail concerning Google’s Revenue Share Agreement (‘RSA’) with Apple. Tuesday’s proceedings saw Eddy Cue, a senior Apple executive, speak to Apple’s perspective on this matter. While Cue justified their arrangement on the basis that Google had the highest quality search engine, an email Cue sent to Tim Cook, Apple’s CEO, in 2016 reveals the economic foundations of this agreement. Cue’s email relates a negotiation with Google concerning the amount Google would pay Apple for search engine exclusivity — and the sticking point in this negotiation appears exclusively economic. Google’s argument that they ‘pay [Apple] more than anyone’ is met with the flat rebuttal that Cue and Google ‘need to sit down … and agree to the economic terms or [they] shouldn’t move forward’.[1] Notions of product quality and user-satisfaction are low down on these platforms’ list of priorities — a stultifying result of Google’s immense market dominance.

This theme recurred on Wednesday, when Mikhail Parakhin, Microsoft’s CEO of Advertising and Web Services, took the stand. Much of Parakhin’s testimony was familiar to those following the trial: Google relies on economies of scale and network effects to safeguard its market share instead of innovation or quality. But of especial interest was Parakhin’s claim that Apple admitted to Microsoft in 2016 that Bing was a superior product to Google Search — although there is no written evidence of this exchange occurring. If true, Parakhin’s testimony would illustrate the pernicious effects of Google’s domination of the search ads market since it actively reduces the quality of products.

The DOJ drew the Court’s attention to a case study of this effect in operation on Wednesday and Thursday; they illuminated the granular particulars of Google’s relationship with Samsung, a major Android handset provider and a company with whom Google have a revenue share agreement. Firstly, the DOJ produced an email exchange which depicts Google’s Senior Manager of Android Sales and Operations attempting to limit the capabilities of Samsung’s mobile internal search function because it contravenes their RSA.[2] The effect of Google’s operations here is clearly anti-innovation. Alex Austin, the founder of an integrated mobile search startup called Branch, testified that he was unable to obtain partnerships with any major handset providers because of Google’s RSAs. The DOJ was then able to produce internal memos from Google concerning this matter; Google hoped to reverse-engineer Austin’s innovations to give Samsung an alternative to Branch’s product for when Google would restrain Samsung.[3] The DOJ’s attention to this case study is significant because it reveals the deadening effects of Google’s enormous dominance in Search.

The DOJ closed off their week’s argument in a short session on Friday morning. This week of testimony has marked a key stage in the progress of the trial: it is not enough to prove that Google has a large market share — the DOJ have to give evidence that the effect of Google’s market share harms consumers (as they did in Week 2) and other businesses. It is this latter point that has been the crucial through-line in the DOJ’s activities this week — and will provide the basis of further investigations in the weeks to come.


[2]; p. 6.

[3]; p. 7.

Header Image Courtesy of Souvik Banerjee on Unsplash (Licensed for free use on the Unsplash Licence).