The DOJ’s weak antitrust case against Google
Photo 99003667 © Veerapong Takonok |


The DOJ’s weak antitrust case against Google

Consumers have plenty of choices regarding search and other software products, but they often choose Google because they believe it provides the best results.  

Is Google engaging in anticompetitive behavior, or is it simply the best choice out there? A U.S. Department of Justice antitrust lawsuit against Google starts tomorrow.  

The case, USA v. Google, launched in 2020 when the state of Colorado filed a lawsuit claiming that Google used anticompetitive means to achieve its high market share. Since then, several other states and the Department of Justice have added several more antitrust claims, and the case is set to be heard starting Sept. 12.

Plaintiffs are asking the court to invalidate Google’s default search engine status across multiple platforms, as well as demanding changes to Google’s search results page. 

An August dismissal by the federal judge in the case rejected some of the plaintiffs’ claims that Google’s default status contracts on Android and Apple’s Safari web browser are illegal and unfairly demote specialized vertical providers (SVPs) like Expedia and Yelp in Google search results. 

According to the plaintiffs, the default contracts allegedly make it impossible for competing search engines to gain market share because Google blocks off competition by creating a default status favoring Google, leaving users with less choice about which search engine to use. Googles treatment of specialized vertical providers allegedly creates a gatekeeper effect where providers must pay for customer access and where users are unfairly forced to see Google’s product first. 

The August ruling by U.S. District Judge Amit P. Mehta of the U.S. District Court for the District of Columbia dismissed claims about specialized vertical providers, stating, “Simply put, there is no record evidence of anticompetitive harm in the relevant markets resulting from Google’s treatment of SVPs.”  

Here’s an example of the conflict at the heart of this particular part of the dispute: Google offers aggregated hotel and travel data and then displays summaries of multiple sites to users. Because Google’s product appears first, other providers appear below Google’s product in the search results page. This is sometimes called self-preferencing, where a software provider will elevate its own services above other third parties. Specialized vertical providers claimed this raised their customer acquisition costs and created a gatekeeper effect where Google directed traffic.  

Mehta wrote that plaintiffs’ evidence of harm to specialized vertical providers rested entirely on the theoretical speculations of a single professor and that actual data showing harm to SVPs was entirely absent. Third parties may have to pay Google to acquire customers by referral, but they benefit from a large customer acquisition source even when they are not prioritized in the search results. They also have other ways of getting consumers, like television advertising, but methods like these also cost money and are arguably less targeted than search engines. Search engines have the prerogative to design their results page, and lower placement of SVPs does not constitute any anticompetitive harm to them. In fact, search engines have become a critical pathway to customers even for small businesses. 

In terms of the consumer experience, Mehta noted that if a consumer wanted to bypass Google to directly access the specialized travel providers, they could easily do so and presumably would on any other search engine they were using, resulting in no competitive advantage for Google over other search engines. As Mehta described, “greater navigation directly to SVPs does not depress competition in the relevant markets because SVPs do not compete with Google in the general search … markets.” 

Specialized vertical providers provide such a specific service that they do not compete with general query search engines, so their placement on the search results page has no bearing on the case.  

Next, Mehta’s August ruling considered Google’s contracts with Original Equipment Manufacturers (OEMs) and web browsers that make Google the default search engine “out of the box” for Android’s operating system and Apple’s Safari web browser. Unlike the SVP claims, which were dismissed, the default status contracts will be fully considered in court, although the judge did cast some doubt on the plaintiff’s claims and saw a lack of evidence of harm.  

The plaintiffs claim these contracts create an exclusive channel for search engine distribution where others cannot compete. They claim this exclusivity violates rules developed during the Microsoft antitrust cases from the early 2000s. The rule states that default contracts are anti-competitive if they exclude one party from shopping other competitors. 

In this case, if the contracts would forbid Apple from shopping other search engines for default status, it may violate the rule. However, web browsers and original equipment manufacturers have considered other search engines in the past and can still do so under the current contract. Judge Mehta noted that Google presented evidence that since the mid-2000s, Apple has considered several different search engines but has always settled on Google because it consistently provides the best results.

In 2014, Mozilla switched its search engine to Yahoo!, but then quickly reverted to Google. There is no evidence of coercive conduct or any attempt to prevent original equipment manufacturers or web browsers from shopping or trying other search engines. The judge also acknowledged that many other search engines exist, such as Bing, Yahoo!, and DuckDuckGo, and are vying for consumers.  

Again, from the consumer perspective, the contract may also violate the law if it prevents users from changing the default search engine. Yet Mehta acknowledged Apple easily allows users to change the default search engine in Safari. Even though Android itself is developed and maintained by Google, it also allows users to change the default search engine.

Another potentially important piece of evidence: Users often select Google even when they have other choices. The most searched query on Bing, the largest rival to Google, is how to access Google. Even though Apple defaults to its mapping service, the “overwhelming majority” of iPhones have downloaded Google Maps, according to a Wall Street Journal story crediting Canalys. Consumers have plenty of choices regarding search and other software products, but they often choose Google because they believe it provides the best results.  

Yet even if the contracts did result in a somewhat exclusive channel for distribution, if there is “competition for the contract,” meaning if other providers can bid for the same contract on the merits of their product, then default status contracts don’t violate antitrust law. Mehta ruled that “market realities” may have to be explored to consider the case in totality. This means the court needs a full examination of Google’s dominant position and the extent to which default contracts foreclose competition. The nature of default contracts means that other providers cannot occupy that space for a certain period of time, which could result in “exclusive” foreclosure of competition. Given Google’s dominant position in the industry, the court ruled this contract in theory could be anticompetitive.  

The trial will now consider whether Google occupies a large market share because of anticompetitive behavior or if it has gained this position on the merits of its products. Mehta stated that Google will have the chance to prove, using some of the above data, that it has won its contracts based on merits and that there is fair “competition for the contract.”

Considering the court’s August ruling on the specialized vertical providers, it seems the court should recognize that Google often occupies the top spot in many markets, not because of anticompetitive behavior, but, because consumers believe it offers the best products.