The Google antitrust trial, which began on September 12th, has shed light on the search giant’s dealings with advertisers and other tech giants. As the trial progresses, the possibility of Judge Amit P. Mehta ruling in favor of the U.S. Department of Justice (DOJ) raises questions about the potential outcomes and implications for the overall advertising market. In this article, we will explore the potential consequences of a major antitrust win for the government, the likelihood of a wholesale breakup of Google, the possibility of advertisers seeking damages, the impact on default agreements, and the importance of defining the market in question.
A Potential Outcome: No Wholesale Breakup
Many speculate about the possibility of a wholesale breakup of Google, but antitrust expert Eric Posner believes that such an outcome is unlikely. Courts are generally reluctant to advocate for the breakup of defendants, so a more feasible outcome could be the separation of different parts of Google’s business within the confines of its parent corporation, Alphabet. The court would carefully consider whether separating the businesses without destroying their value is a viable solution. Ultimately, the DOJ must convince a judge that a wholesale breakup is the only realistic resolution to a particular monopolistic practice.
Advertisers Seeking Damages
In the event of a ruling against Google, parties harmed by Google’s previous anti-competitive behavior, including advertisers, may seek “equitable remedies.” This could potentially lead to follow-on private litigation, where affected parties could claim damages for the financial losses they incurred due to Google’s practices. Posner cites Microsoft’s antitrust battle with the DOJ in the late 1990s as an example. While the government secured injunctions requiring Microsoft to make it easier for consumers to access other browsers, Microsoft faced numerous civil lawsuits and had to pay out significant sums of money. Alphabet may find itself embroiled in costly litigation for an extended period if similar lawsuits arise.
Potential Impact on Default Agreements
The DOJ alleges that Google acts as a “monopoly gatekeeper for the internet” through its default search engine agreements with hardware manufacturers and telco providers. If the court rules against Google, it could challenge these default arrangements. For instance, if the court deems it illegal for Google to pay Apple to make its search engine the default in Safari, alternative arrangements might be required. This could involve Apple providing a more explicit menu of default search engines for customers to choose from or voiding the existing contracts altogether. Posner suggests that conduct remedies, rather than a wholesale breakup, are more likely in this case.
The Importance of Defining the Market
One crucial aspect of the trial is how the judge will define the market in question. If the judge limits the market solely to search, the DOJ would likely have a stronger position, considering Google’s dominance, which accounts for approximately 90% of the search market. However, if the judge includes other areas, such as display and social advertising, in the overall ad market, the government’s case could be diluted. The word “market” holds a specific meaning in antitrust law, and the definition will significantly impact the outcome of the trial. Posner emphasizes that including other types of ads in the same market could lead to increased competition for Google.
Duration and Potential Relevance of the Trial
While the Google trial is scheduled for three months, it could extend much longer due to appeals and other factors. Similar cases involving IBM and Microsoft lasted years after the initial rulings, resulting in the legal basis for both cases losing relevance due to shifts in the technology landscape. The current AI boom and other changes in the advertising market may also influence the duration and impact of the trial. Additionally, revelations from this trial could be considered as evidence in a separate advertising-related antitrust case against Google. Posner suggests that the relevance of such evidence depends on its context and whether it directly relates to the specific market in question.
See first source: Digiday
Q1: Is a wholesale breakup of Google likely as a result of the antitrust trial?
Antitrust expert Eric Posner suggests that a wholesale breakup of Google is unlikely. Courts are generally hesitant to advocate for the breakup of defendants. Instead, a more feasible outcome could involve the separation of different parts of Google’s business within its parent corporation, Alphabet. The court would carefully consider whether such a separation can be achieved without destroying the businesses’ value.
Q2: What could happen if the court rules against Google in the antitrust trial?
In the event of a ruling against Google, parties harmed by its anti-competitive behavior, including advertisers, may seek “equitable remedies.” This could lead to follow-on private litigation, where affected parties could claim damages for financial losses incurred due to Google’s practices. Similar to Microsoft’s antitrust battle in the late 1990s, Alphabet may face costly litigation and financial penalties.
Q3: How might the antitrust trial impact default agreements involving Google’s search engine?
The DOJ alleges that Google acts as a “monopoly gatekeeper for the internet” through its default search engine agreements. If the court rules against Google, it could challenge these default arrangements. Alternative arrangements, such as offering explicit menus of default search engines for customers or voiding existing contracts, might be required. Conduct remedies are considered more likely than a wholesale breakup in this scenario.
Q4: How important is the definition of the market in this antitrust trial?
The definition of the market is crucial in antitrust trials. If the judge defines the market solely as search, the DOJ would have a stronger position due to Google’s dominance in that area. However, if the judge includes other areas like display and social advertising in the overall ad market, the government’s case could be weakened. The definition of the market significantly impacts the trial’s outcome.
Q5: How long is the antitrust trial expected to last, and what factors might influence its duration?
The Google antitrust trial is scheduled for three months, but it could extend longer due to appeals and other factors. Similar cases involving IBM and Microsoft lasted years beyond the initial rulings, with the legal basis losing relevance due to shifts in the technology landscape. The duration and impact of the trial could also be influenced by the current AI boom and changes in the advertising market. Additionally, evidence from this trial may be considered in a separate advertising-related antitrust case against Google, depending on its relevance and context.
Featured Image Credit: Christian Wiediger; Unsplash – Thank you!