The US is slamming Google for paying $10 billion a year to eliminate search competitors
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The US is slamming Google for paying $10 billion a year to eliminate search competitors

The Justice Department and 38 states and territories laid out on Tuesday how Google systematically exploited its power in online search to intimidate rivals, as the internet giant countered sharply at the opening of the most consequential trial over the power of technology in the modern internet age.

In a packed courtroom at the E. Barrett Prettyman U.S. Courthouse in Washington, the Justice Department and states painted a picture of how Google had exploited its deep pockets and dominant position by paying Apple and others $10 billion a year to to become the default search provider on smartphones. Google viewed these agreements as a “powerful strategic weapon” to eliminate competitors and establish its search engine, the government said.

“This feedback loop, this wheel, has been turning for more than 12 years,” said Kenneth Dintzer, the Justice Department’s chief trial attorney. “And it always benefits Google.”

Google denied that it had illegally entered into agreements to exclude its search competitors and said it had merely provided a superior product, adding that users could easily switch the search engine they use. The company also said Internet search is broader in scope than its general search engine, noting the many ways people now find information online, such as Amazon for shopping, TikTok for entertainment and Expedia for travel.

“Users today have more search options and more ways to access information online than ever before,” said John E. Schmidtlein, the attorney who worked for Google.

The back-and-forth came in the federal government’s first monopoly trial since it tried to break up Microsoft more than two decades ago. In this case – US et al. vs. Google — is expected to have a profound impact not just on the Internet giant, but also on a generation of other big tech companies that influence how people shop, communicate, entertain themselves and work.

Over the next 10 weeks, the government and Google will present arguments and interview dozens of witnesses. It examines how the company came to power and whether it broke the law to maintain and expand its dominance. The final ruling from Judge Amit P. Mehta of the U.S. District Court for the District of Columbia could shift the balance of power in the technology industry, which is locked in a race to develop artificial intelligence that could transform and disrupt people’s lives.

A government victory could impose limits on Google and change its business practices, sending a humiliating message to the other tech giants. If Google wins, it could act as a referendum against increasingly aggressive government regulators, raising questions about the effectiveness of centuries-old antitrust laws and further emboldening Silicon Valley.

“It is a test of whether our current antitrust laws — the Sherman Act of 1890 — can adapt to markets vulnerable to monopolization in the 21st century,” said Bill Baer, ​​a former top antitrust official at the Justice Department , adding that Google is “undeniably powerful.”

The case is part of a broader effort by the Biden administration and states to rein in the largest tech companies. The Justice Department has filed a second lawsuit against Google over its advertising technology that could go to trial as early as next year. The Federal Trade Commission is separately seeking a trial in an antitrust case against Meta. Investigations into efforts that could lead to antitrust lawsuits against Amazon and Apple are still open.

The Justice Department filed a lawsuit in October 2020 accusing Google of illegally maintaining its search dominance. Months later, a group of attorneys general from 35 states, Puerto Rico, Guam and the District of Columbia filed their own lawsuit, arguing that Google had abused its dominant monopoly on search. Judge Mehta will consider both claims during the trial.

At the heart of the case are the agreements Google made with browser developers, smartphone manufacturers and wireless carriers to use Google as the default search engine for their products. Since the lawsuit was filed, more than five million documents and statements from more than 150 witnesses have been submitted to the court. Last month, Judge Mehta narrowed the scope of the trial but allowed the core allegations of monopoly abuse to remain in the search.

The trial took place Tuesday in Courtroom 10 of the federal courthouse in Washington, just minutes from Capitol Hill. It drew a large crowd, with some people lining up to gain entry as early as 4:30 a.m. Officials from Google competitors Yelp and Microsoft were also present, as were dozens of attorneys and employees from the Justice Department, federal states and Google who have been working on the case for years.

Judge Mehta began the proceedings on time. In the government’s opening statement, Mr. Dintzer focused on the search agreements that Google had with Apple and others. He pointed to internal company documents that described how Google wouldn’t share revenue with Apple without “default placement” on its devices and how it ensured Apple couldn’t redirect searches to its Siri assistant.

“Your honor, this is a monopoly position,” said Mr. Dintzer.

In blunt terms, Mr. Dintzer also argued that Google tried to hide documents from antitrust regulators by including lawyers in conversations and marking them as subject to attorney-client privilege. He showed a message from Sundar Pichai, the CEO of Google, asking to turn off chat history in a conversation.

“They eliminated history, your honor, so they could rewrite it here in this courtroom,” Mr. Dintzer said.

William Cavanaugh, a lawyer for the states, echoed Mr. Dintzer’s concerns about Google’s agreements to become the default search engine on smartphones. He added that Google restricted a product for placing ads on other search engines in order to harm Microsoft, maker of the search engine Bing.

In response, Mr. Schmidtlein, Google’s lawyer, argued that the company’s standard agreements with browser makers do not block the market in the way alleged by the Justice Department. Browser makers such as Apple and Mozilla both promote other search engines, he said, and it is easy for users to change their default search engine.

Using a slideshow, Mr. Schmidtlein demonstrated how many taps or clicks are required to change the default settings on common smartphones. People who wanted to change their search engine but didn’t know how could search for instructions on Google or watch a video tutorial on YouTube, which Google is a part of, he said.

The government’s evidence came from “clippings and out of context” emails, he said.

The lawyers also argued over whether Google was as dominant as the government claimed. The Justice Department and states said Google competes primarily with broad search engines that act as a central place to find different types of information. But Mr. Schmidtlein said Google’s competitive universe is broader, including online retailers like Amazon, food delivery apps like DoorDash and travel booking sites like Expedia.

That afternoon, the Justice Department called Hal Varian, Google’s chief economist, as its first witness to prove that the company had long been aware of its search power and was consciously trying to avoid antitrust scrutiny.

In the more than three hours of testimony, Mr. Varian was asked about views he shared with other Google employees about the power of default settings, the threat of Microsoft’s entry into search and his awareness of language that draws the attention of antitrust regulators could pull. The Justice Department relied on emails and memos from Mr. Varian from the early 2000s.

Mr. Varian is scheduled to return to the witness stand on Wednesday.

Nico Grant And Steve Lohr contributed to the reporting.