8 min read

A big trial for Big Tech

The U.S. government is going after an alleged Big Tech monopoly for the first time in 25 years.
A big trial for Big Tech
Photo by Solen Feyissa / Unsplash

1998 was the year that the iMac computer was launched and MP3 players were introduced. The most trafficked website was AOL; the most popular search engines were Yahoo, Lycos, and AltaVista. Apple, which is today valued at $3 trillion, had a market cap of $6 billion; it ranked #223 in the Fortune 500. The internet was still in its first few years of public use.

It was also the last time that the U.S. government launched an antitrust lawsuit against a tech company. The target was Microsoft, which the Justice Department alleged had illegally become a digital monopoly. A district judge sided with the DOJ, ordering Microsoft to be broken up into two companies; an appeals court later blocked the break-up. Eventually, the two sides reached a settlement.

In all the years since — even as Big Tech companies have become increasingly enmeshed in our daily lives and grown into the behemoths they are now — the government never took on a similar case. Until today.

U.S. et al v. Google kicked off at 9:30 a.m. ET this morning, the government’s first tech monopoly trial since 1998, which is also the year today’s defendant was founded.

In its initial 2020 lawsuit in the case, the Justice Department argued that the Google of its founding days — the “scrappy startup with an innovative way to search the emerging internet” — is “long gone.”

In its place, the DOJ alleged, “the Google of today” has become “a monopoly gatekeeper for the internet,” using illegal “anticompetitive tactics to maintain and extend its monopolies in the markets for general search services.”

The main tactic that the government takes issue with is Google’s signing of “exclusionary agreements” with companies like Apple to make Google the default search engine on their products. The DOJ also claims that Google illegally acted to preference its apps on devices manufactured by Android (which it owns), making it difficult for competing search engines to break through in the Android ecosystem.

“Google is so dominant that ‘Google’ is not only a noun to identify the company and the Google search engine but also a verb that means to search the internet,” the lawsuit pointed out, arguing that this lofty status in digital life was “largely” a result of anticompetitive conduct.

Google responds that it has done nothing illegal, attributing its market dominance — Google accounts for nearly 90% of search-engine queries in the U.S. — not to anticompetitiveness but to a higher quality of services.  

“People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives,” the company said in response. Google compared its agreements with Apple and other distributors to the fee a “cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level.”

“We negotiate agreements with many of those companies for eye-level shelf space,” Google said. “But let’s be clear—our competitors are readily available too, if you want to use them.”

The DOJ has also accused Google of destroying evidence related to the lawsuit (which Google denies), a dispute that will also play out during the proceedings.

The 1998 Microsoft trial will shadow today’s proceedings. The Justice Department’s arguments against the two companies hinge on similar conduct and were framed as violations of the same law — Section 2 of the Sherman Act of 1890, which makes it illegal to:

“monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations.”

Google’s defense will also be argued by lawyers who played key roles in the 1998 proceedings — from the opposite end, taking on Microsoft.

In 1998, the New York Times notes, the Microsoft trial commanded national attention, receiving the “kind of day-to-day coverage ordinarily reserved for very few courtroom dramas over the years, like the O.J. Simpson trial and the Lindbergh kidnapping trial.”

The Google trial is unlikely to wield the same cultural clout, but considering how much more powerful these tech companies are now compared to 1998, the ultimate impact of the proceedings could be larger.  

If the government wins its case, Google could be forced to unwind its distribution agreements, creating a major change in how search options are presented to users on mobile and web devices — and possibly allowing Google’s rivals, many of which claim to be more privacy-conscious, to gain ground. Like in 1998, the DOJ is also pushing for Google to be broken up into multiple companies, although it is considered unlikely that such an outcome will be ordered.

If the DOJ loses its case, expect antitrust advocates to swing their attention over to Congress, urging lawmakers to implement new updates to monopoly law. The U.S. has had the same core antitrust statutes — the 1890 Sherman Act, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914 — since the Progressive Era, with very little changes in the century-plus since.

There have already been bipartisan efforts to update these statutes for the internet age: Sens. Chuck Grassley (R-IA) and Amy Klobuchar (D-MN) just re-introduced their American Innovation and Choice Online Act in June. Win or lose, the Google trial could lead to more attention on the legislation.

Today’s trial is itself the culmination of a bipartisan effort, a sign of how much both parties have evolved in their approaches to Big Tech in just the past few years. As recently as the Obama era, Democrats were cozy with most tech titans; Eric Schmidt, then the Google CEO, was a leading Obama surrogate and informal adviser. Antitrust was far from a Democratic focus; for most Republicans, it was considered apostasy to interfere with the free market.

But Washington-Silicon Valley relations took a turn under the Trump administration, as both parties became disillusioned with Big Tech: Republicans over allegations that the companies were politically biased; Democrats over allegations that the companies were helping spread misinformation and hate speech. The two parties also moved simultaneously in a more populist direction, with trust-busting progressives like Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) becoming more powerful in the Democratic Party and more antitrust-minded Republicans like Trump and Sen. Josh Hawley (R-MO) rising in the GOP.

Both parties have had a hand in bringing Google to trial: the initial lawsuit was filed by the Trump Justice Department in 2020, then carried on by the Biden administration today. The lawsuit has also been backed by 18 state attorneys general: five Republicans and 13 Democrats.

The Google trial offers a key test for Washington’s attempts to rein in Big Tech, most of which have failed so far. Legislatively, efforts like the Grassley-Klobuchar bill to break up the tech industry have sputtered. In court, the Biden administration’s antitrust enforcers have repeatedly racked up losses.

Many of Biden’s top antitrust advisers are the same figures who inspired the Democratic Party’s more aggressive antitrust focus from outside government during the Trump years: Tim Wu, who left the White House last year; Lina Khan, the chair of the Federal Trade Commission (FTC), and Jonathan Kanter, the assistant attorney general for antitrust, who is leading the DOJ’s case against Google.

All three are associated with the “New Brandeis” movement, a collection of academics and attorneys pushing to modernize antitrust law, intellectually descended from the late Supreme Court justice — and noted anti-monopolist — Louis Brandeis.

This is Kanter’s biggest case in his role so far; Khan has mostly had a losing record in court, coming up short in lawsuits against Microsoft and Meta. Both officials are pursuing additional opportunities to reverse that trend. Kanter and a group of state AGs have filed another antitrust lawsuit against Google over its ad business, which is set to go to trial in January. Khan’s FTC, meanwhile, is attempting to take on Meta again, this time for its acquisition of Instagram and WhatsApp; she is also expected to launch a lawsuit against Amazon later this month.

The Google trial beginning today will be the opening salvo for them all, an early sign of whether this emerging crop of lawsuits will carry the day in court.

Judge Amit Mehta, an Obama appointee, will oversee the Google trial, which is expected to last for around two months. There will be no jury. If Mehta sides with DOJ, another trial will be held to decide the punishment.

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The day ahead.

On the Hill: The House is back, and all eyes are on Speaker Kevin McCarthy to see how he will manage the series of headaches headed his way: a possible shutdown, calls for Biden’s impeachment, and major must-pass legislative packages on defense, agriculture, aviation, and more.

Per Punchbowl News, McCarthy is poised to endorse an impeachment inquiry this week, an attempt to assuage Freedom Caucus conservatives, some of whom have said they will vote against any government funding bill unless an impeachment probe is underway.

The Freedom Caucus is set to hold a press conference at 3 p.m. to outline its opening message in the spending fight. Meanwhile, Rep. Matt Gaetz (R-FL) — who has been publicly threatening to spark a vote to oust McCarthy — will deliver remarks at 12 p.m. on his “vision for the House of Representatives moving forward.” McCarthy has brushed off Gaetz’s threats so far: “Matt’s Matt,” he said dismissively on Monday.

On the floor: The Senate will hold a procedural vote to advance a “minibus” package combining three appropriations bills: Military Construction/Veterans Affairs, Agriculture, and Transportation/Housing and Urban Development. The House will vote on bills related to crime, wildfires, and other issues.

At the White House: Biden, who returned to the White House from Alaska after midnight last night, has nothing on his public schedule today. Neither does VP Kamala Harris.

First Lady Jill Biden will host a White House event celebrating the 2023 recipients of Japan’s Praemium Imperiale, sometimes known as the “Nobel Prize of the Arts.” Hillary Clinton will also be on hand, her first public appearance at a Biden White House event.

Before I go...

Here’s something uplifting: The rainbow that broke out over the New York City skyline yesterday, on the 22nd anniversary of the terrorist attack that devastated the city.  

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Published by:

Gabe Fleisher