The way the feds tell it in their landmark antitrust lawsuit against Google, the Mountain View-based tech giant transformed in two decades from a beloved pipsqueak into a burly behemoth gobbling market share and squashing rivals with the ruthlessness of a mobster.
Google told its workers not to refer to its competition with the words “crush,” “kill” and “hurt,” according to the lawsuit, which went to trial Tuesday in Washington, D.C. federal court, with the U.S. Department of Justice acting on behalf of California and 13 other states.
The lawsuit starts off by saying the company 20 years ago was the “darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet.” But in the two decades since, it argues, the company frequently flexed its competition-killing muscle.
“We should be careful about what we say in both public and private,” a Google chief economist wrote, according to the government’s lawsuit. “‘Cutting off the air supply’ and similar phrases should be avoided.”
Central to the case, filed in 2020, are deals Google made with other companies allegedly to keep its competitors’ apps and services off consumers’ computers and phones, and out of the revenue stream that has propelled Google’s parent firm Alphabet to a $1.7 trillion valuation. Federal prosecutors claim the agreements broke the Sherman Act against anti-competitive business conduct. Google in a blog post last week described the lawsuit as “deeply flawed.”
Here are key accusations in the lawsuit:
Google the Gargantuan Gatekeeper: Google has purportedly built itself into the “unchallenged gateway to the internet for billions of users worldwide,” and that’s allegedly bad for consumers, advertisers, rivals, and innovation. “Countless advertisers must pay a toll to Google’s search advertising and general search text advertising monopolies,” the lawsuit alleges. “American consumers are forced to accept Google’s policies, privacy practices, and use of personal data; and new companies with innovative business models cannot emerge from Google’s long shadow.”
In its blog post last week, Google argued that “people don’t use Google because they have to — they use it because they want to.”
The Big Squeeze: Google has allegedly achieved dominance through illegal “exclusionary” deals with other companies providing internet services. “Largely as a result of Google’s exclusionary agreements and anticompetitive conduct, Google in recent years has accounted for nearly 90 percent of all general-search-engine queries in the United States, and almost 95 percent of queries on mobile devices,” the lawsuit alleges.
Google Search by Default: The lawsuit claims that Google pays billions of dollars a year to distributors, including device manufacturers Apple, LG, Motorola, and Samsung, and to major U.S. wireless carriers including AT&T, T-Mobile, and Verizon, and to browser developers including Mozilla, Opera, and UCWeb so its search engine is the default for users. In many cases, the deals prohibit those partners “from dealing with Google’s competitors,” the lawsuit alleges.
Google, in a court filing last year, attacked the government’s claim, calling the default-browser deals “important components of the extraordinary competition that has unleashed innovation and provided users more choices than ever to search the internet.” Companies including Apple and Mozilla have “chosen to design their browsers with a single default search engine upon first use which can be changed by the user,” Google said in the filing.
Who Hurts: Google’s dealings slashed consumers’ internet-search choices, reduced the quality of search services in general, and allowed Google to over-charge advertisers, prosecutors claim. As Google has grown increasingly dominant, internet users have seen ad after ad replacing information sources at the top of search results, according to the lawsuit.
Google in its blog post about the case said it makes thousands of improvements to its search platform every year, “so that we deliver the most helpful results, for free.” And its “Search Ads 360” program for advertisers facilitates ad campaigns on rival browsers including Microsoft’s Bing and Yahoo, making it “easier for advertisers to manage campaigns on multiple platforms,” according to the post.
A Big Bite for Apple: Google’s deals include paying Apple $8 billion to $12 billion a year to make Google’s search engine the default for Apple’s Safari browser, providing 15% to 20% of Apple’s total worldwide profit, the lawsuit claims, noting that “users rarely switch the preset default general search engine.” The Apple agreement covers about 36% of all U.S. search queries, the lawsuit alleges. In 2018, the CEOs of Google and Apple met to discuss working together to “drive search revenue growth,” and afterward, “a senior Apple employee wrote to a Google counterpart: ‘Our vision is that we work as if we are one company,’” the lawsuit claims.
Google in the court filing last year said its deal with Apple never prevented the Cupertino iPhone maker from promoting other search engines, and that Apple designed its browser to include a search box with a default search engine to enable the best customer experience.
Regulators and politicians have for years been looking for ways to rein in Big Tech and, depending on how the trial goes, the outcome could upend how Silicon Valley operates. Prosecutors are seeking a court order barring Google from anti-competitive practices, and restoring competitive conditions in the markets allegedly disrupted by the company.
The trial is expected to last 10 weeks.
— The Associated Press contributed to this report.