- Google has been slapped with a landmark lawsuit by the Justice Department, and it could have major implications for the company's search business.
- The lawsuit calls back to the Microsoft case of the late '90s. Experts say that modeling the Google lawsuit on Microsoft's is a smart move.
- Google will need to prove that consumers are choosing its search engine because they want to, not because it's the default. Its argument that users can easily switch may not be enough of a defense.
- The DOJ says "nothing is off the table" with regards to remedies, but experts see a forced breakup as a last solution.
- Visit Business Insider's homepage for more stories.
Google was hit with the biggest antitrust lawsuit since Microsoft was dragged through the courts in the 1990s — and it could have huge implications.
The lawsuit, which is being brought by the US Department of Justice and 11 state attorneys general, takes a relatively narrow focus on Google's dominance in search and search advertising.
Google, the suit argues, has leveraged its dominance to maintain partnerships, including a lucrative deal to be the default search provider on Apple devices, that has shut out rivals.
The complaint calls back to the Microsoft case of the late 1990s, where the company was accused of illegally bundling its internet browser and operating system together in a way that hurt competitors. The case against Google not only references that case, but explicitly calls back to it in certain places.
"The Justice Department is showing that it isn't just Silicon Valley who clones successful products: they've basically cloned the Microsoft case and added Google's name to it," tweeted Columbia University law professor Timothy Wu in response to the Justice Department's Google lawsuit.
Modeling the case after Microsoft's is in itself "smart," said Sam Weinstein, a former Justice Department antitrust attorney and Cardozo Law School professor. Meanwhile, maintaining a more narrow focus from the get-go could play to the DOJ's advantage.
"The big challenge for the government is, you have this model of Microsoft, but can you make the facts fit them?"
Weinstein predicts Google will try to "attack the market definition" and argue it is not a monopolist. He also thinks it may try to prove its agreements with partners "are better for consumers in some way."
Thirdly, Weinstein predicts that Google will double down on one of the core arguments it made Tuesday: users have a choice when it comes to search, even when Google is the default.
But according to Gary Reback, who convinced the Justice Department to bring the case against Microsoft in the '90s, that third one won't be enough.
"Antitrust does not deal with what consumers could do, it deals with what consumers did do," he told Business Insider.
"Consumers could do all this stuff, but the fact is they didn't," he said. "You could transfer dirt using a teaspoon, but most people use dump trucks. What you could do is not the antitrust test."
In the Microsoft case, the company argued that users were still able to download competing browsers, but it was difficult to do so.
Google has been more careful to sanitize its emails, experts say
One difference from the Microsoft case is that Google has been more careful about internal communications that could hurt its defence.
"The first thing that Google has obviously learned is: Don't let your CEO say stupid things." said Reback. "It's not important from an antitrust point of view, but when someone reads a Microsoft exec saying 'let's cut off [Netgear's] air supply, people suddenly get a lot more interested. So, Google learned that."
(Reback was referring to accusations during the Microsoft case that one executive threatened to "cut off" the air supply of one of its rivals.)
Indeed, Google has long stopped employees talking freely about issues that could attract antitrust concern. In August, The Markup reported that the company has a list of "taboo" words that employees must avoid using in internal communications.
Somewhat conveniently for Google, the search engine's co-creators Larry Page and Sergey Brin, have vanished entirely from view, leaving Sundar Pichai to lead both Google and parent company Alphabet.
During a press call, a DOJ official was asked if Larry Page had been contacted as part of the investigation. "I think we don't want to be in the posture of saying what we did or didn't do," they responded.
"I think the first tough mistakes Microsoft made was that they didn't engage Washington. They didn't lobby. Google learned that in spades," said Reback.
"The second is that they didn't sanitize their email."
A breakup is unlikely, but it isn't off the table
"Nothing is off the table," said a DOJ official during Tuesday's press call, but for now it's difficult to predict what Google could be faced with at the end of the day.
In the European Union, the company has been investigated over multiple antitrust concerns, resulting in three different fines. As the result of one of them, Google began offering a ballot screen for Android users in Europe so they could select their default search engine.
The New York Times reported earlier this year that DOJ officials were looking at what Europe had done, but they may also be interested in more dramatic measures.
In the lawsuit itself, under the list of possible remedies that could be pursued, "structural relief" is mentioned, alluding to the possibility of a judge ordering Google must break up part of its business.
"The government is not foreclosing anything here," said Weinstein. "I think typically in a case like this is what you would ask for is an injunction against the conduct, but because we're in this brave new world of thinking big with antitrust, maybe they'll ask for structural release."
While that leaves a Google breakup as a possibility, experts say it won't necessarily come to that. Instead, it could be used to scare Google into proactively making changes that satisfy regulators.
"If you look back at our antitrust enforcement, it has been most successful when the monopolist was fearful enough that they took action themselves to dissipate the monopoly. So AT&T broke itself up. IBM unbundled hardware from software," said Reback.
"The government is effectively saying, if you're not cooperative? Fine. No need for a scalpel, we've got a sledgehammer."
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